Investing tips to make smart financial choices in 2022

Nifty, the 50-stock Indian stock market benchmark, has given more than 20 per cent return in 2021. Debt funds, however, remained subdued due to low interest rates. Now, with New Year round the corner, what should be your investment strategy? Harsha Chetanwala, co-founder of MyWeathGrowth, a Mumbai based financial planning firm, gives tips on the driving factors for 2022.  

BT: Where to invest in equities in 2022?  

Harsha Chetanwala: Equities could continue to be the most preferred investment avenue in the year 2022 as well.  While there could be few threats to challenge the pace of the growth but year 2022 can be the year of the return of normalcy. In equity investment the quality of the company along with the right valuations are important and these parameters become more important in surging markets. You may consider investing in large and mid-cap companies as far as market capitalization is concerned. In sectors, we expect Real Estate, IT, Banking, Metal and Auto to do well for investors in the year 2022. 

BT: How are debt funds expected to perform?  

HC: Debt funds have had a tough time as far as performance goes in the last two years particularly due to low-interest rates. When the interest rate starts increasing in the coming quarters you could see the performance of debt funds improving as well. At present, you can be in low or short-duration funds as the interest rates are expected to increase in the coming months. You can invest in medium to long-duration debt funds when the interest rate starts increasing  

BT: How will gold perform in 2022? 

HC: Gold should be looked at from an asset allocation perspective and it can be around 5-10 per cent of the overall portfolio depending on your comfort with gold investing. Gold may remain flattish in the year 2022 if there is no major bad news worldwide in the year. 

BT: Should one consider buying a house in 2022?  

HC: Real estate is one sector that is expected to pick up in the coming days. Buying a house has many subjective parameters like location, future development, etc.  As the home loan interest rates are low at present, those who are looking to buy a house can consider going ahead if the price and location work for them. 

BT: Should one consider investing in crypto in the New Year? 

HC: Crypto investing is only meant for investors who have a higher risk appetite and have the additional investment amount at their end. One should invest only in instruments that one can understand properly. Cryptocurrency is not an easy product to understand and hence we suggest most of our investors to stay away from it irrespective of how much attractive it may appear. It continues to carry a very high risk.  

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