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Where to Invest in 2023?

We have a tendency to create goals around key dates - will start eating well from my birthday, will not argue with my spouse from my anniversary etc. New Year is one of those key dates - when everyone wants to review their investments!! I'm sure you are already bombarded with articles and tv shows about what will and won't do well in 2023!

How does a change in date from Dec 31, 2022 to Jan 1, 2023 change anything??

Where will the markets be in 2023?

Let's get this billion dollar question out of the way first. If I knew, I would be the richest person in the world!! What I do know is that there is a 67% probability that the markets will end high. If it does end lower, I will still end up right!! I know ..very funny!!

My Prediction for 2023: The markets will remain volatile. I'm expecting them to fall but they can rise. It's better to be cautiously optimistic. #sarcasm

On a serious note, the markets have been on an uptrend over the past 10 even 20 or 30 years. And in these periods we have had various hiccups - recessions, wars, viruses etc but for a long term unfazed investor, they were NOTHING.

Key Trends Im following:

  1. Inflation & Higher Interest Rates - Sticky inflation worldwide will mean higher interest rates will remain. This is very different to the world we have inhabited since 2008. A good place for Debt investors is to look at passive funds - medium term 3-5 year bond yields giving very good returns of 7.5% with indexation benefits for long term holders.

  2. International Funds - S&P closed down 19% and China closed down 23% in 2022 against a 3% gain in India. China is expected to be the largest economy soon and also expected to treble its GDP over the next 15 years. Chinese govt has also unveiled new policies and have opened up the economy, presenting a great counter-trend opportunity. USA is the largest economy currently and is expected to double over the next 15 years. Don't go by past trends - look at your asset allocation and get into owning great multinational brands at reasonable prices.

  3. Themes in India: India's GDP is expected to remain strong over the next years as various policy reforms - PLI, GST, Digitization would start manifesting in the economy. There are also expectations that the upcoming Union Budget will further drive Infrastructure demand. Strong credit off-take coupled with improvement in asset quality should help Banking sector as well.

2023 is just a change in calendar date and nothing more.

Stick to the basics:

  • 4 Pillars - Understand your Risk, Cash flow, Assets and Goals

  • Funds requirement in short term - good debt products

  • Funds required for goals in the long term - small number of good funds

  • Make volatility your friend - at every fall or rise and change in asset allocation, ensure you are able to move between debt & equity.

It took Messi 16 years and 26 FWC goals to finally claim the trophy for his country.

Just goes to show that discipline, persistence and being invested almost always pays off.

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