Financial Yearender 2023: Long term investing is a game of patience, says expert

As the pages of 2023 turn and the global financial landscape continues its dynamic evolution, it becomes paramount for stakeholders to pause and reflect. The past year has been a tapestry of economic shifts, technological advancements, and societal reckonings, all of which have left indelible imprints on our financial systems. 

From the resurgence of emerging markets to the implications of new digital currencies, 2023 has presented both challenges and opportunities that demand keen analysis. Digital Content Creator Niyati Mavinkurve shares her opinion on the pivotal financial lessons from the year, offering a comprehensive overview of the trends, decisions, and revelations that have shaped the monetary world.

These key takeaways from 2023's financial landscape are valuable for all investors, entrepreneurs, and curious observer, so we can gain valuable insights from the past year and apply the learnings to reap rich dividends in 2024. So, let's dive in — 

Takeaway #1: Don’t time the market

"We began the year with Nifty50 at 18,000 levels and Sensex at 61,000 levels," Niyati says, adding that many people have debated whether markets are too expensive, and whether they should invest.

"People have this habit of waiting for the time the markets will fall to enter. However, when the markets actually fall, the same people feel scared of volatility and further losses to their investments. They don’t take action at that time. But if you look at the Sensex, it has given year to date returns of 17.5 per cent and Nifty 18.5 per cent. Waiting for the right time is the wrong strategy to apply when it comes to the stock market. There may be some years where the market gives negative returns like 2015. Or there may be some years with bumper returns. Long term investing is a game of patience," she opines.

Takeaway #2: Have a well rounded portfolio

"One of the lessons taught to us early on was to do different things. All work and no play makes Jack a dull boy," Niyati says.

"This applies to finance as well. Focusing on only one asset will not give you the result you want. If you are saving for a short-term goal, equities are the wrong investment. On the other hand, if you are saving for retirement, it does not matter if the market is fluctuating in the short term. You need to review your accounts periodically, not every single day," she adds.

The digital content creator opines that one must pick a mix of assets like gold, mutual funds, FDs, equities, and PPF in order to get a good return regardless of what is happening in the economy. One thing to remember is in times of uncertainty, many people choose gold -- a fact that is reflecting in higher prices.

Takeaway #3: Don’t ignore taxation

Niyati says that one cannot escape income tax, but everyone must learn how to optimize it. "For example, if you sell equity shares after holding them for 1 year, you don’t have to pay any income tax if the gain is less than Rs 1 lakh. But, at the same time, if you face losses, you can carry it with you in the future and set off your future gains," she avers.

She signs off saying that everyone must take some time out to understand the tax laws, and once they know how it works, it can be optimized to their benefit.

(Disclaimer: The opinions expressed above are the personal views of the author. Consult a qualified financial professional before investing.)