How to Invest in 2024? with Craving Alpha

As we stand at the threshold of 2024, India’s burgeoning economy pulsates with exciting possibilities. Recent growth, fuelled by a resilient domestic market and robust exports, paints a promising picture for equities. However, even amidst this optimism, navigating the complexities of the market demands both prudence and informed strategy.

A. Getting Started: 5 Tips for New Investors in 2024

1.Know your risk appetite: India’s equities, while promising, are inherently volatile. Assess your comfort level with risk before diving in. Start small, diversify, and prioritise long-term goals over short-term gains.

2.Embrace SIPs: Systematic Investment Plans (SIPs) are a godsend for new investors. They inculcate disciplined investing habits, average out market fluctuations, and offer a convenient entry point with minimal capital.

3.Seek guidance: Don’t go it alone! Consult a registered financial advisor or leverage online resources to understand market dynamics and formulate a personalised investment strategy.

4.Invest in knowledge: Reading financial publications, attending workshops, and engaging with experienced investors are invaluable investments in your financial future.

5.Patience is key: Remember, Rome wasn’t built in a day. Building wealth through equities takes time and patience. Stay invested, avoid panic selling, and trust your long-term strategy.

B. Top Themes that can Shape 2024

1.Digital Dhamaka: The digital revolution is sweeping India. Look for companies disrupting sectors like fintech, e-commerce, and cloud computing. More businesses today understand the value of higher IT spending for automation and outsourcing

2.Infrastructure Blitz: Government spending on infrastructure development is on the rise. Invest in companies involved in construction, logistics, and renewable energy infrastructure

3.Healthcare Heroics: India’s healthcare sector is primed for growth with the high level of consolidation this sector has experienced over the past two years. Explore opportunities in pharmaceuticals, diagnostics, and medical devices

4.Consumer Confidence: Rising disposable incomes and a young, aspirational population bode well for consumer-driven sectors like FMCG, retail, and entertainment

5.The Green Rush: India’s commitment to renewable energy presents boundless opportunities. However, most of the companies in this space might appear frothy and the prospects might be building non- plausible expectations. Often in such sectors investors might mistake commodity business as speciality and buy at high valuation

C. How to Turn Financial Resolutions into Actionable Goals?

1.SMARTify your resolutions: Make your goals Specific, Measurable, Achievable, Relevant, and Time-bound. Instead of “save more,” aim for “invest 15% of my salary by Q2”

2.Automate your finances: Set up automatic investments like SIP that eliminates the need for willpower, preferably around the date you get paid. Instead of save what’s left after expense, spend what’s left after saving

3.Track your progress: Regularly monitor your portfolio’s value proposition. In a bull market it is common to realise value faster than anticipated. Always ask what value your portfolio is giving you. Celebrate milestones and learn from setbacks.

4.Seek Professional Advice: Share your goals with financial advisor for support and encouragement. Remember time value is crucial the sooner you start the larger you grow, but wrong decisions can set you back drastically !

5.Celebrate wins!: Don’t underestimate the power of positive reinforcement. Reward yourself for achieving milestones, keeping your financial journey fun and motivating.

D. Simple Guide to Budgeting in the New Year

1.Pay yourself first: Treat your savings and investments as essential expenses. Automate transfers to dedicated accounts before allocating funds to wants.

2.Track your expenses: Start by understanding where your money goes. Utilise budgeting apps or create a simple spreadsheet to track income and expenses for a month. Think of your personal finance as your company with your children as the shareholders 🙂

3.Categorise and prioritise: Classify your expenses into needs (rent, groceries), wants (entertainment, dining), and savings/investments. Prioritise needs and allocate remaining funds to wants and savings.

4.Embrace frugality: Look for ways to cut back on unnecessary expenses, start with checking all those auto- renew subscriptions. Ditch expensive subscriptions, and negotiate bills.

5.Review and adjust: Regularly review your budget and adjust as needed. Life changes, so your budget should too.

E. Investment Habits to Ditch in 2024

1.FOMO-driven investing: Don’t chase hot stocks based on hype or rumours. Stick to your research and long-term strategy. We tend to stick with the strongest near- monopoly companies where “business continuity” is not a doubt

2.Overtrading: Frequent buying and selling incur hefty fees and erode returns. Focus on long-term holdings and avoid impulsive trades. Remember, not all traders are wealthy but any one with over 20% CAGR is often wealthy

3.Ignoring diversification: Don’t put all your eggs in one basket. Diversify across sectors, asset classes, and company sizes to mitigate risk.

4.Market timing: Predicting market movements is a fool’s errand. Invest for the long term and avoid jumping in and out based. In a bull market people often mistake luck for skill

5.Don’t Wait to start saving: As you age your responsibilities will grow and so will your expense commitment

Craving Alpha is a SEBI Registered (SEBI Registration No. INA300017038) Investment Adviser. The research and reports express our opinions which we have based upon generally available public information, field research, inferences and deductions through are due diligence and analytical process. To the best of our ability and belief, all information contained here is accurate and reliable, and has been obtained from public sources we believe to be accurate and reliable. We make no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results obtained from its use. This report does not represent an investment advice or a recommendation or a solicitation to buy any securities.