Domestic equity markets rose initially on expectations of policy easing by the RBI following the weaker-than expected GDP figure in the second quarter of FY25 of domestic economy. Meanwhile, the RBI monetary policy committee In its Dec2024 policy meeting kept repo rate unchanged at 6.5%for the eleventh consecutive time but reduced the cash reserve ratio by 50bps to 4.0% to boost liquidity.
Author: Growthfiniti@admin
Wealth Creation in a Dynamic Financial Landscape
In today’s dynamic and ever-changing financial landscape, wealth creation requires a combination of sound principles, innovative strategies, and the ability to adapt to new opportunities.
As global markets evolve, investors are increasingly focused on sophisticated investment approaches that enhance returns while minimizing risks. Among the best global practices for wealth creation are diversified investment portfolios, sustainable investing, the adoption of financial technology, and financial literacy. A deeper understanding of modern financial theories, such as the efficient frontier and modern portfolio theory (MPT), also plays a crucial role in guiding investment decisions and optimizing returns.
Diversified Investment Portfolios
One of the fundamental strategies for wealth creation in the current financial environment is portfolio diversification. Investors are advised to spread their investments across a range of asset classes, including stocks, bonds, commodities, and real estate. This strategy helps mitigate risks associated with market volatility and enables investors to capitalize on different sectors and regions.
In today’s globalized economy, investing in alternative assets like private equity and venture capital has become a key aspect of diversification. The key is to look for post-tax yield. Fixed income yields extremely poor post-tax returns, whereas investments via alternate funds may yield better post-tax returns, but they come with their own embedded risks.
Incorporating digital assets such as cryptocurrencies is also becoming increasingly common, though these present higher risks. Nevertheless, with a diversified portfolio, the potential for high returns from one asset class can offset potential losses in others.
Sustainable and Impact Investing
Sustainable investing, also known as Environmental, Social, and Governance (ESG) investing, has gained significant momentum in recent years. Wealthy individuals and institutional investors are increasingly focused on aligning their portfolios with ethical and sustainable principles. ESG factors are integrated into investment decisions, allowing investors to target not only financial returns but also a positive impact on society and the environment.
This approach includes investments in green energy, social enterprises, and companies that prioritize diversity and responsible governance practices. Impact investing, which aims to generate both financial and social/environmental returns, is also gaining ground. Investors are more willing to accept lower financial returns if it means creating a positive societal or environmental impact. This shift aligns with the growing awareness of global challenges such as climate change, poverty, and inequality.
Wealth creation is not just about finding profitable investments; it also involves effective management and long-term planning. Financial literacy is critical for understanding complex investment options, managing risk, and making informed decisions. High-net-worth individuals often work with financial advisors to implement comprehensive wealth strategies, which may include tax optimization, estate planning, and risk management.
Efficient Frontier and Modern Portfolio Theory (MPT)
A key component in wealth creation strategies is the application of Modern Portfolio Theory (MPT), developed by Harry Markowitz in the 1950s. MPT focuses on maximizing returns for a given level of risk by creating a well-diversified portfolio. It emphasizes that investors should not focus on the performance of individual assets but rather the performance of the entire portfolio.
A core concept of MPT is the efficient frontier, a graphical representation of the optimal portfolios that provide the highest expected return for a given level of risk. At Growthfiniti Wealth, we have been ardent adopters of these concepts. Portfolios that lie along the efficient frontier are considered optimal because they offer the best return for the amount of risk taken. Any portfolio that lies below the efficient frontier is suboptimal, as it fails to provide adequate returns for the level of risk.
Investors using MPT and the efficient frontier concept aim to balance risk and reward by allocating their assets in such a way that maximizes their returns while minimizing unnecessary risk. For example, adding assets with low correlation to each other (such as stocks and bonds) can help reduce volatility and improve overall portfolio performance.
Conclusion
In a rapidly changing global financial landscape, wealth creation requires a multifaceted approach that blends traditional investment strategies with new, innovative concepts. By diversifying their portfolios, embracing sustainable and impact investing, adopting fintech, and understanding modern financial theories like MPT and the efficient frontier, investors can position themselves to navigate the complexities of the financial world.
Through diligent planning and strategic decision-making, individuals and institutions can maximize their wealth while minimizing risk in an ever-evolving global market.
This article has been featured on BSE Broker’s Forum’s January 2025 issue. Click here to access the full magazine.
Disclaimer: Growthfiniti Wealth Pvt Ltd is an AMFI Registered Distributor (ARN168766). Investments in all securities is subject to market risk, please read all offer documents carefully. CRN: U65990MH2019PTC334051
Market Outlook for 2025
India’s growth story remains intact, powered by structural reforms, expanding global competitiveness, and robust economic resilience. Explore key insights and strategies to navigate the year ahead.
The US Federal Reserve’s December 2024 Policy Update: Implications and Risks
In its December 2024 policy review, the US Federal Reserve substantially revised its inflation projections for calendar year 2025. The Personal Consumption Expenditure (PCE) inflation forecast was raised by 40 basis points (bps) to 2.5%, reflecting the recent elevated inflationary pressures and the anticipated effects of Donald Trump’s proposed tariff policies. Furthermore, the Federal Reserve’s updated dot plot signaled fewer rate cuts in 2025, reducing expectations from three cuts to two. The median projection for the Federal Funds Rate for CY25 now stands at 3.9%, reflecting an upward revision of 40 bps.
The implications for India could include a delay in interest rate cuts. This is due to the lowest interest rate spread over the US in recent history and the inflationary risks posed by Trump’s tariff policies. Even with an expected moderation in food prices, overall inflation in India may remain elevated, supported by a resurgence in growth in H2 FY25. The latter could be driven by the tapering of election-related uncertainties, weather-related disruptions, and the positive impact of a 50-bps CRR cut by the Reserve Bank of India (RBI). A strong flash Purchasing Managers’ Index (PMI) reading for December 2024 at 60.7 suggests that the growth recovery in H2 FY25 has already begun.
US Fed Maintains Optimistic Growth Outlook Amid Rising Risks
Despite the evolving challenges, the Federal Reserve remains optimistic about the US growth trajectory, reflected in an upward revision of the GDP growth forecast for CY25 by 10 bps to 2.1%. However, the Fed’s policy statement was notably silent on critical risks posed by rising twin deficits.
- Current Account Deficit (CAD): The CAD surged to 4.2% of GDP in Q3 2024.
- Fiscal Deficit: The fiscal deficit climbed to $1.8 trillion (6.4% of GDP) in 2024.
Additionally, while the labor market continues to exhibit a gradual cooling, with the unemployment rate edging up to 4.2%, these structural imbalances pose longer-term concerns.
Key Risks to the US Economy
Several risks threaten the US economic outlook in 2025, including:
- Rising Twin Deficits:
- The widening CAD (4.2% of GDP) and fiscal deficit (6.4% of GDP) are compounding inflationary pressures and reducing fiscal maneuverability.
- Inflation and Policy Uncertainty:
- Revised inflation projections and the potential inflationary impact of Trump’s tariff and mass deportation policies add to macroeconomic risks. The effects of these policies on growth and the labor market remain uncertain.
- Federal Budget Cuts:
- Recommendations from the D.O.G.E. committee to reduce federal spending could adversely impact GDP growth and federal employment prospects in 2025.
- Narrow Growth Margin:
- While the US economy benefits from a slowing yet stable growth outlook, the risks of policy missteps are rising, leaving “very little margin for error.”
These factors collectively underscore the precarious balancing act for US policymakers, with potential spillover effects for global economies, including India. The interplay between growth, inflation, and fiscal dynamics will be critical to watch in the year ahead.
Key points from the press conference:
– Future decisions will be made on a meeting-by-meeting basis, relying on incoming data.
– The initial 50bps cut reflects confidence that inflation is trending toward 2%, though this does not suggest similarly aggressive rate actions will continue.
– The labour market will be closely monitored, as the current cut aims to maintain its strength.
– No recession indicators are evident at this time.
Changes in economic forecasts compared to June’s projections:
– GDP: Growth for 2024 was lowered to 2.1% (-10bps), with 2025 and 2026 growth unchanged at 2%, and 2027 growth projected at 2%.
– Unemployment rate: Revised higher to 4.4% (+40bps) in 2024, 4.4% (+20bps) in 2025, and 4.3% (+20bps) in 2026. The 2027 rate is projected at 4.2%.
– PCE inflation: Lowered to 2.3% (-30bps) for 2024, 2.1% (-20bps) for 2025, with the 2026 forecast unchanged at 2% and 2027 also at 2%.
– Core PCE inflation: Reduced to 2.6% (-20bps) for 2024, 2.2% (-10bps) for 2025, remaining at 2% for 2026 and 2027.
– Federal funds rate: Expected to decline to 4.4% (-70bps) in 2024, 3.4% (-70bps) in 2025, and 2.9% in both 2026 (-20bps) and 2027.
Need personalized guidance? Contact our team of experts today to chart a path toward financial resilience and growth or reach us at ma*******@gr**********.com.
Disclaimer: Growthfiniti Wealth Pvt Ltd is an AMFI Registered Distributor (ARN168766). Investments in all securities is subject to market risk, please read all offer documents carefully. CRN: U65990MH2019PTC334051
Tailored Investing: Mutual Funds vs PMS for Your Financial Goals
When it comes to growing your wealth, one size doesn’t fit all. Your financial journey is unique, and so are the investment options available to help you achieve your goals. At Growthfiniti Wealth, we understand that choosing between Mutual Funds (MFs) and Portfolio Management Services (PMS) can feel overwhelming, especially when you’re not sure which is the better fit for your needs.
Let’s simplify this for you.
The Common Pain Points
- “I don’t know where to start.”
- With so many options, taking the first step can feel overwhelming.
- “I’m afraid of losing money.”
- Market ups and downs can make investing seem risky without proper guidance.
- “I’m too busy to manage my investments.”
- Finding time to handle investments is tough when life is already packed with responsibilities.
The good news? Both MFs and PMS can be excellent options, depending on what you need. Here’s a clear comparison to help you decide.
What Are Mutual Funds (MFs)?
Mutual Funds collect money from many investors and use it to create a mix of investments like stocks and bonds. A professional manager handles all the decisions, making it an easy and straightforward option for most people.
Why Choose Mutual Funds?
– Lower Entry Point: You can start investing small amounts via SIP (Systematic Investment Plans).
– Diversification: Your money is spread across various assets, reducing risk.
– Ease of Access: Mutual Funds are easy to buy, sell, or switch, and their performance is transparent.
– Regulation: They are closely monitored by SEBI, ensuring investor safety.
What Is Portfolio Management Services (PMS)?
PMS provides customized investment plans designed to meet your financial goals and match your risk preferences. Unlike MFs, PMS lets you directly own the assets in your portfolio, with a dedicated manager handling everything.
Why Choose PMS?
– Customized Strategies: Each portfolio is uniquely designed to align with your financial objectives.
– Transparency: You have direct visibility into the stocks or assets you own.
– Active Management: Portfolio managers actively adjust your investments to maximize returns.
– Higher Growth Potential: PMS can deliver superior returns for those willing to take calculated risks.
Key differences MFs vs PMs
How to Decide?
Ask yourself these key questions:
1. What is my investment budget?
– If you’re just starting out or have a limited amount to invest, MFs are a great way to begin.
– If you have significant capital and want a bespoke solution, PMS is worth considering.
2. What is my risk tolerance?
– MFs are generally less risky due to diversification.
– PMS is ideal for those who can handle higher risk for potentially higher returns.
3. What are the tax implications for my investments?
- MFs are taxed only when you redeem your investments and realize capital gains.
- In PMS, clients must pay advance tax whenever there is a sale of securities during the year.
Why Growthfiniti Wealth?
At Growthfiniti Wealth, we don’t believe in cookie-cutter solutions. Whether it’s Mutual Funds or PMS, we work with you to identify the right investment strategies based on your unique financial aspirations. Our team simplifies the process, guiding you every step of the way, so you can invest with confidence.
Still unsure about which option is best for you? Let’s talk or reach out to us today to discover how we can help you make informed investment decisions and grow your wealth, your way.
Disclaimer: Growthfiniti Wealth Pvt Ltd is an AMFI Registered Distributor (ARN168766). Investments in all securities is subject to market risk, please read all offer documents carefully. CRN: U65990MH2019PTC334051
Start Early, Invest Wisely: A Practical Guide for Young Entrepreneurs
When you’re building your own business, every rupee counts. As a young entrepreneur, you’re probably juggling multiple roles—from managing operations to meeting clients and brainstorming ideas for growth. Amidst this chaos, thinking about investments often takes a backseat.
But here’s the thing: the earlier you start investing, the stronger your financial foundation will be. And as an entrepreneur, a robust investment portfolio can act as your safety net and your growth booster.
The Struggles We Hear From Entrepreneurs Like You
- “I reinvest everything back into my business.”
- It’s natural to want to grow your venture, but putting all your eggs in one basket is risky. Markets, industries, and even customer preferences can shift overnight.
- “I’ll start investing once my business is stable.”
- Stability is a moving target. Waiting too long can cost you years of compounded growth—the very thing that makes money grow exponentially over time.
- “Investing seems complicated and time-consuming.”
- Yes, the world of investments can seem intimidating. But with the right guidance, you can start small, build gradually, and make informed decisions without losing focus on your business.
Why Starting Early Is a Game-Changer
- Peace of Mind: When you have a diversified investment portfolio, you’re better prepared for unexpected challenges—whether it’s a cash crunch in your business or a personal emergency.
- Funding Bigger Goals: Beyond your business, you may have personal goals like buying a home, traveling the world, or securing your family’s future. A solid investment plan helps you work towards these dreams.
How You Can Start Today
- Start Small: Even allocating just 10-20% of your business cash flow towards investments can lead to significant growth over time when managed smartly.
- Diversify: Don’t rely solely on your business for financial security. Spread your investments across assets.
- Seek Expert Guidance: Partnering with a firm like Growthfiniti Wealth means you’re not alone in this journey. We simplify the investment process, helping you make confident and informed choices while you focus on scaling your business.
Don’t Wait for “The Right Time”
The best time to start investing was yesterday. The second-best time is today. At Growthfiniti Wealth, we understand the unique challenges entrepreneurs face. Our tailored investment solutions are designed to help you secure your future while pursuing your dreams.
Ready to take the first step? Contact us now.
Disclaimer: Growthfiniti Wealth Pvt Ltd is an AMFI Registered Distributor (ARN168766). Investments in all securities is subject to market risk, please read all offer documents carefully. CRN: U65990MH2019PTC334051
Money Trends November 2024
Domestic equity markets remained volatile during the month under review as markets rose initially after the former U.S. President and Republican candidate took a decisive lead in the 2024 U.S. election, which increased the expectation of tax cuts and increased government spending in the U.S. However, the trend reversed as sentiment was weighed on concerns over potential impact of the newly elected U.S. President’s protectionist policies on the global economy as investors awaited clarity on the President’s policy proposals on global geopolitics, U.S.- China relations, NATO, immigration, and economic policies.
Earnings Update – Q2 FY25
Explore key trends and performance insights shaping the quarterly market landscape.
India’s Inflation Peaks: What Rising Prices Mean for You
India’s inflation rose to 6.2% in October 2024, marking the highest rate in 14 months. We anticipate that November inflation figures will likely be around 5.3%, with the average inflation for FY25 now estimated at 4.8%-4.9%, compared to the RBI’s target of 4.5%. Inflation is expected to decrease from January onwards, primarily due to base effects.
State-Level Inflation Trends
Larger states continue to see inflation rates surpassing the national average. Among them, Chhattisgarh recorded the highest rate at 8.8% in October, followed by Bihar at 7.9% and Odisha at 7.5%. Notably, year-on-year changes in inflation are significantly outpacing year-to-date changes; for instance, seven states have experienced year-on-year inflation increases of more than 2%. This suggests that food price momentum continues to rise.
The gap between urban and rural inflation trends has remained substantial for the eighth consecutive month, with rural households experiencing inflation 1.07% higher than urban households. This disparity is largely driven by higher food prices, as food items make up 54.2% of the rural inflation basket, compared to 36.3% in the urban basket.
Vegetable Prices and CPI Outlook
We expect some moderation in vegetable prices in November, with retail data up to November 11 indicating a decline. Although headline CPI inflation peaked in October 2024, November and December figures could still exceed 5%. Amid currency market volatility, a higher inflation figure might serve as an advantage for the RBI, potentially delaying a rate-cutting cycle.
Food inflation remains a significant concern, particularly in vegetables, which saw a sharp rise from 10.75% in August 2024 to 42.2% in October 2024. An analysis of the components contributing to year-on-year food inflation shows that vegetables are the largest contributor to both year-on-year and month-on-month changes. We expect some moderation in vegetable prices in November, as retail price data up to November 11 indicates a decline.
CPI Inflation Across States
State-wise, larger states continue to show inflation rates above the national average. In October, Chhattisgarh recorded the highest inflation rate at 8.8%, followed by Bihar at 7.9% and Odisha at 7.5%. A comparison of year-on-year changes with year-to-date changes reveals that year-on-year inflation increases are outpacing year-to-date trends. For instance, seven states have experienced year-on-year inflation increases exceeding 2%. Only in Telangana has inflation declined since April 2024, although it rose slightly compared to October 2023.
Rural vs. Urban Inflation Comparison
The gap between urban and rural inflation trends has persisted for the eighth month, with rural households facing inflation rates 1.07% higher than urban households. This is largely due to higher food prices, as food items comprise 54.2% of the rural inflation basket compared to 36.3% in the urban basket. While urban inflation rose more year-on-year in September 2024, rural inflation saw a higher year-on-year increase of 0.82% in October 2024 compared to urban inflation.
Industrial production (IIP) grew by 3.1% in September 2024, after contracting by 0.1% in August 2024. The mining, manufacturing, and electricity sectors grew by 0.2%, 3.9%, and 0.5%, respectively. Consumer nondurables increased by 2.7% in September 2024 after a decline of 3.5% in August 2024, indicating continued momentum in rural demand.
We are now less optimistic about a rate cut in February, and we believe the first rate cut may be postponed beyond February 2025.
Disclaimer: Growthfiniti Wealth Pvt Ltd is an AMFI Registered Distributor (ARN168766). Investments in all securities is subject to market risk, please read all offer documents carefully. CRN: U65990MH2019PTC334051
Money Trends October 2024
October proved challenging for domestic equity markets, as mounting concerns over the Middle East conflict led to a broad decline across all sectors. Sectoral indices reflected this downturn, with each registering losses over the month. However, on a calendar-year-to-date (CYTD) basis, the pharmaceutical sector stands out as a resilient performer, showing the strongest returns amidst market volatility. The downward trend wasn’t limited to India; global equity markets also experienced a similar slide, impacted by international uncertainties.
