Smart investing is actually sticking to the basic principles of investing. It focuses on investments that align with your unique requirements to achieve future financial goals. Smart Investing includes the following:
In the present scenario with numerous investment options, the challenge is to steer clear of choices unsuitable for your needs. Being a smart investor is vital for adequate time and money management.
1. Diversify Your Portfolio
You should spread investments across various asset classes (stocks, corporate bonds, securitised debt instruments (SDI), fractional real estate, etc.) and market sectors to hedge risk. If one asset class declines, others may remain stable or appreciated.
2. Do Your Due Diligence
You should research investments thoroughly to understand potential risks and rewards before committing capital. Also do your diligence on the investment platform you are using and make sure they are regulated by SEBI. You should consult authorised financial advisors for insights if you feel the need.
3. Optimise Taxes
You should structure investments to minimise taxes. Holding equity investments for over one year qualifies for the lower 10% long-term capital gains (LTCG) tax rate. Debt instruments like bonds held over three years receive the 20% LTCG tax treatment. Different holding periods and LTCG rates apply to various asset classes.
4. Control Your Emotions
You should create and stick to a plan, avoiding being swayed by fear or greed. Ignoring market swings and hype and following a financial advisor’s guidelines helps eliminate emotional investment influences.
5. Generate Passive Income
Don’t only focus on capital appreciation. You should also seek regular passive income through investments like dividend stocks, corporate bonds, SDIs, etc. This provides cash flow without selling assets and supplements salary income.
Bonds are a great investment option and can help achieve the above objectives for smart investing.
Corporate bonds are debt instruments companies issue to secure additional capital for expansion and operations. These bonds are sold to investors, enabling them to earn fixed returns through regular (monthly/quarterly/annual) interest payments. The company's assets, backed by its ability to generate future cash flows, provide security.
Corporate bonds are popular among investors seeking higher returns than fixed deposits (FDs) while maintaining lower risk exposure than stocks. With a sound strategy and thorough research, they can be a vital component of an investor's bond portfolio management.
In India, corporate bonds receive credit ratings ranging from AAA (highest safety) to D (lowest safety) based on the issuer’s creditworthiness by the following agencies: CRISIL, ICRA, CARE, Brickwork Rating, India Rating and Research Pvt. Ltd, and Infomerics Valuation and Rating Private Limited. Higher-rated bonds may yield lower returns but entail minimal default risk, and vice versa.
Grip Invest, a SEBI-regulated online bond-providing platform (OBPP), curates many exchange-listed, investment-grade corporate bonds. The platform offers comprehensive details on different bonds and their issuers, helping investors with due diligence.
With inflation easing and positive demand-supply dynamics, the stage is set for appreciation in bond prices in 2024, creating an appealing buying opportunity for bond investors today.
As bonds issued by the Government of India constitute a large part of the market, the price of those bonds is a good indicator of the broader market. Experts anticipate a dip in India's 10-year government bond yields, currently at 7.3%, to go below 7% in 2024. As yields are inversely related to price, a lower yield means an increase in the price of bonds. Favourable factors include lower GDP deficit, slowing global growth and potential rate cuts by the Federal Reserve. On the domestic front, inclusion in JPMorgan indices will attract foreign bond inflows ranging from $25-40 billion.
Fixed-income investing forms a crucial pillar of smart investing and intelligent portfolio management. Bonds contribute predictable, stable income, acting as a counterbalance to stock market volatility and risk.
Corporate bonds, in particular, present higher yields than fixed deposits from issuers with solid creditworthiness. Intelligently integrating corporate bonds into your portfolio can be an astute investment decision.
Explore stable corporate bond investment strategies on Grip Invest to achieve your financial goals. The platform offers curated, rated, SEBI-compliant, and listed opportunities.
1. What are the benefits of bond laddering?
Bond laddering offers liquidity as bonds mature at intervals, providing flexibility to adapt to changing market conditions or personal financial goals. Therefore, bond laddering is a disciplined approach that balances risk and return. It furnishes investors with systematic strategies to manage interest rate risk, ensure liquidity, and enhance overall investment returns.
2. What are the benefits of SMART goals?
SMART is an acronym representing Specific, Measurable, Achievable, Relevant, and Time-bound goals. Employing SMART goals offers various benefits:
Overall, SMART goals enhance the likelihood of accomplishing set objectives.
3. Are corporate bonds the same as fixed-income investment options?
Yes, corporate bonds fall under the category of fixed-income securities. Fixed income encompasses investments providing fixed periodic payments and returning principal at maturity.
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Disclaimer - Investments in debt securities are subject to risks. Read all the offer-related documents carefully. The investor is requested to take into consideration all the risk factors before the commencement of trading. This communication is prepared by Grip Broking Private Limited (bearing SEBI Registration No. INZ000312836 and NSE ID 90319) and/or its affiliate/ group company(ies) (together referred to as “Grip Invest”) and the contents of this disclaimer are applicable to this document and any and all written or oral communication(s) made by Grip Invest or its directors, employees, associates, representatives and agents. This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip Invest does not guarantee or assure any return on investments and accepts no liability for the consequences of any actions taken based on the information provided. For more details, please visit https://www.gripinvest.in/.
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