Knowledge Faqs with Gaurav Jain (Knowledge Yagya- 13)

3 min read

Here are some questions asked by the viewers in the Yagya dated 13th October 2021. These questions can provide you with insights on some grounds. Please read these questions for knowledge purposes only and make any investment decisions only based on your research or the advice of your financial advisor.

Q  ​ Who should invest in hybrid funds?
Gaurav Jain:

Hybrid funds are a big type of category.
• There are many types of funds.
• In Conservative Hybrid Funds, 15% -20% allocation is in equity.
• In Aggressive Hybrid, 70% -75% allocation is in equity.
• Hybrid funds are good for medium-term goals for 4 to 5 years for aggressive players.
• It is a very good fund for retired people.
• There is the option of managing the asset allocation using hybrid funds.

Q  ​ What will be an impact on compounding if there is tax harvesting?
Gaurav Jain:

• Tax Harvesting is considered to be done from the point of capital gain tax.
• The compounding is never stopped.
• It very complicated process to do it.
• In the short term, it will be felt that money can be saved. But from the long-term view, the benefit of tax harvesting goes on to reduce.

Q  ​ View on investment highly on dips?
Gaurav Jain:

• Firstly one needs to understand the dip and there is no formula for finding a dip.
• If the investment is for the long term then there should not be curiosity related to dips.
• When the vision of the Sensex is around 2 lakhs. It doesn’t matter where the buying was done at 60,000, 59000, or 58000.
• If an investor is actively monitoring the market then it is good to have stock that is corrected to 10% to 12% which is having good fundamentals.
• Don’t complicate things it will not give the benefit.

Q  Can accumulation be created due to QE tapering?
Gaurav Jain:

• Valuation is not crazy in the Indian market. Valuation is premium it is like overvalued
• If we see PE or market to GDP ratio. The GDP and earnings went down last year during covid. The falling PE and GDP prices therefore price has also increased.
• The Indian markets are only doing well as compared to other global markets.
• The earning expectation is also increasing very well.
• There can be some correction due to QE tapering, but there might not be a bigger impact. Also, it’s impossible to predict the market actions in the short term.

Q  Which sectors should retail investors stay away from apart from cyclical sectors?
Gaurav Jain:

• Should stay away from the highly capital-intensive sector. Where you need to invest Rs 100 to earn Rs 1. It is not that it applies to everyone.
• There is a thumb rule but for an exception. Invest in a company that is service-oriented such as IT, FMCG, etc.

Q When the portfolio gives too many returns then the comfort zone is gone and there is speculation of the crash?
Gaurav Jain:

• Need to follow asset allocation.
• If the equity allocation has grown more than the thought process. SIPs should be continued. If there is a long-term goal then it should be continued. There is no requirement to invest more in lumpsum.
• As per global indicators, this decade is going to be India’s decade.
• Also need to keep cash or debt allocation if a crash happens.

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