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“Digital gold, on the other hand, offers a more modern and convenient approach. It allows for seamless online transactions without the need for physical storage or security concerns,” says Rajesh Cheruvu – MD and CIO, LGT Wealth India. In an interview with ETMarkets, Cheruvu said: “From a taxation standpoint, both physical and digital gold are treated similarly, with capital gains taxes applied if the asset is held for more than three years,” Edited excerpts: With Sensex and Nifty touching fresh highs and then pausing due to geopolitical tensions, what is your outlook on the markets for the next Diwali? As we look towards the next Diwali, the outlook for Indian markets remains largely positive, despite recent volatility sparked by geopolitical tensions.
Sensex and Nifty have hit fresh highs this year, supported by robust domestic institutional investments and rising retail participation. Corrections caused by external factors have been absorbed, with Indian stocks consistently outperforming their Emerging Market peers. Stock Trading Technical Analysis Demystified: A Complete Guide to Trading By - Kunal Patel, Options Trader, Instructor View Program Stock Trading Market 103: Mastering Trends with RMI and Techno-Funda Insights By - Rohit Srivastava, Founder- Indiacharts.
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However, India’s long-term growth potential remains strong due to its structural advantages. A clearer political landscape, coupled with the potential for global economic recovery in 2025, could further improve capital flows into India. The possibility of Western central banks cutting interest rates as inflationary pressures ease may also spur additional investment, enhancing private sector growth and exports.
In sum, despite short-term hurdles, India’s compelling growth story and resilient economy are set to drive continued optimism in the markets, making it a favoured destination for long-term investments. Gold has shown remarkable strength in 2024, reaching new highs. For HNIs looking to allocate fresh capital into gold this Dhanteras , what strategies should they adopt to optimize returns while balancing risk? Gold ETFs offer exposure to gold prices without the hassle of physical ownership, providing liquidity and no storage costs, making them ideal for portfolio balance.
Gold Mutual Funds focus on gold mining companies, potentially yielding higher returns but with added equity market risks. Sovereign Gold Bonds are attractive for risk-averse investors, offering a fixed 2.5% annual interest along with gold price tracking.
Monitoring inflation trends and central bank policies (especially from the U.S. Federal Reserve and RBI) will be key in timing entry and exit points to maximise returns.
HNIs should balance gold investments with other assets, as gold’s value can fluctuate during periods of deflation or falling inflation. A blended approach using both physical and financial gold products while keeping an eye on macroeconomic factors will help mitigate risk and enhance portfolio resilience. For high-net-worth individuals planning to purchase physical or digital gold this Dhanteras, what should they prioritize in terms of value preservation, taxation, and overall portfolio synergy? Physical gold has long been regarded as a safe haven, providing security during times of market volatility, currency depreciation, and geopolitical tensions.
It holds cultural significance, particularly during festivals, and is seen as a strong hedge against economic downturns. However, it comes with costs related to storage and insurance, which can eat into long-term returns. Liquidity can also be a concern, as selling physical gold may involve delays and higher transaction fees.
Despite these drawbacks, for many, the tangible aspect of owning gold is valuable, making it a reliable long-term asset. Digital gold, on the other hand, offers a more modern and convenient approach. It allows for seamless online transactions without the need for physical storage or security concerns.
This makes it highly liquid, with the added benefit of low transaction costs. However, digital gold lacks the tangible, emotional connection that physical gold offers, which might be important to some investors, especially during culturally significant times like Dhanteras. From a taxation standpoint, both physical and digital gold are treated similarly, with capital gains taxes applied if the asset is held for more than three years.
When considering overall portfolio synergy, digital gold provides more flexibility, particularly for those seeking to integrate it into a broader, more agile investment strategy. Ultimately, high-net-worth individuals should consider their liquidity needs, cultural preferences, and long-term financial goals when choosing between physical and digital gold. What would be your recommended asset allocation strategy across equities, fixed income, and alternative investments for someone aged 30-40? For individuals aged 30-40, asset allocation should balance growth potential with risk management, recognizing that your risk exposure will naturally reduce as you age.
In your thirties, with a longer investment horizon, a higher proportion of your portfolio can be allocated to equities, as these higher-risk, higher-reward assets offer the potential for substantial returns. As you move into your forties, it’s wise to begin rebalancing, incorporating more fixed-income investments like bonds to reduce volatility while still maintaining some equity exposure for growth. A mix of low-correlation assets, like debt and equity, will help manage risk effectively.
Understanding your personal risk appetite, which includes both risk capacity and attitude, is key to crafting a balanced, diversified portfolio that evolves as you approach retirement. Some experts believe the phase of easy money in this bull market is over. How can HNIs focus on wealth preservation, and what strategies would you recommend to safeguard their portfolios in these conditions? Staying the course with long-term goals, rather than making drastic portfolio changes, ensures resilience even during market turbulence.
Minor tweaks based on current conditions are advisable, but overhauling a portfolio could lead to counterproductive results later. Managing liquidity is equally important—maintaining adequate cash buffers during volatile periods can prevent forced exits from existing positions, safeguarding overall portfolio health and ensuring long-term stability. For HNIs with a long-term investment horizon of five years, how should they approach stock selection this Diwali? What key parameters—like earnings quality, corporate governance, and growth potential—should they focus on? When selecting stocks, business quality can be evaluated through indicators such as superior asset turnover, strong gross margins, dominant market share, and scalability.
These factors reflect a company’s ability to operate efficiently, maintain profitability, and grow its presence in the market. Additionally, companies with a strong business moat—such as high entry barriers, unique offerings, or cost advantages—are better positioned to sustain their competitive edge. This moat, combined with the potential for scalability, ensures long-term resilience and consistent performance, making such businesses ideal for long-term investment.
A clean balance sheet is another critical factor. Prioritize companies with low or no leverage, superior return ratios, and healthy cash flow conversion. A robust financial position ensures resilience in volatile markets.
Equally important is the quality of the promoter and management. In India, promoter integrity plays a significant role, as they often maintain substantial control over the business’s direction. Promoters with significant “skin in the game,” clean governance standards, and consistent stakeholding indicate a vested interest in long-term success.
Ultimately, HNIs should focus on companies that exhibit sustainable earnings, strong balance sheets, and are led by ethical, visionary promoters capable of navigating complex business environments while maintaining growth momentum With the wide array of AMC offerings, how can HNIs construct a mutual fund portfolio that generates alpha with minimal risk? Should ETFs be a significant part of this strategy for efficient diversification? HNIs can adopt a Core-Satellite approach where the Core Portfolio (60%-70%) should focus on low-risk, broad-based funds like index funds or large-cap equity funds that track established benchmarks, ensuring steady returns with lower volatility. Selecting funds with a lower beta (which measures a fund’s volatility relative to the market) helps reduce portfolio risk. ETFs are also ideal for this portion due to their low cost, liquidity, and tax efficiency.
The Satellite Portfolio (30%-40%) aims to generate alpha by investing in more volatile yet high-potential funds such as mid-cap, small-cap, and international funds. It's advisable to select funds with lower AUM, which gives enough flexibility to invest in stocks with conviction & prioritize seasoned fund managers with a strong track record of consistently outperforming benchmarks. HNIs with a higher risk tolerance may also consider sectoral or thematic funds, though these should be a smaller part of the portfolio.
ETFs can play a crucial role in ensuring efficient diversification due to their liquidity and cost advantages, especially in the core portfolio, where the goal is to minimize risk while maintaining broad market exposure. This balanced strategy offers the potential for high returns while effectively managing risk For HNIs with a higher risk appetite this Diwali, what are the key considerations when deciding between investing in Portfolio Management Services (PMS) or Alternative Investment Funds (AIFs)? How do these options align with wealth maximization goals? The choice between PMS and AIFs hinges on their risk tolerance, investment preferences, and wealth maximization goals. PMS offers a more personalized and transparent approach, where investors directly own the securities in their portfolio, allowing for greater control and tax efficiency.
It is well-suited for investors who prefer active involvement in managing their investments and have specific financial goals in mind. PMS typically carries moderate risk, as the strategies focus on traditional assets like equities and bonds, with a tailored approach to meet individual preferences. On the other hand, AIFs engage in higher-risk strategies, including leveraging and investing in non-traditional assets such as private equity, real estate, or hedge funds.
These pooled investments can yield higher returns but come with greater volatility and less transparency than PMS. AIFs are ideal for those seeking to diversify into alternative investments and willing to accept higher risks in exchange for the potential of higher returns. They are also typically more suitable for investors looking to tap into opportunities that are not correlated with conventional markets.
Ultimately, the decision between PMS and AIF should align with the investor’s overall risk tolerance and financial goals. While PMS offers customized management with a focus on individual needs and risk control, AIFs provide access to high-return, high-risk strategies that cater to investors looking for broader diversification into non-traditional assets. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own.
These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel ).
