As per the Reserve Bank of India (RBI) data, net financial savings of households fell to a nearly five-decade low of 5.1% of GDP in FY23, down from 7.2% in FY22. For India, which has been known as a country with good savings habit, this news is worrisome.
Calendar year 2023 has seen some record numbers in car sales which have crossed 4 million units for the first time in history. iPhone sales also hit never-before-seen numbers in India in the year. While we have made record spends on luxury in the year, we cannot afford ditching savings for a secured future.
We will have to come out of this concerning situation on savings quickly and what better than a New Year to take a resolution to save and invest more to correct this. To support savings and investments, 2024 has great green shoots which are shared here for the readers to consume and capitalise.
Greenshoots for savers and investors in 2024
· As proposed by IRDAI (Insurance Regulatory and Development Authority), non-participating policies would have higher surrender value from this year which is good news for investors who wish to surrender their policies and will have higher money in hand to invest.
· CY 2024 is expected to see interest rates correcting which is music to the ears for existing home loan customers and for those who wish to buy a home. For existing home loan customers low interest rates means increase in savings to increase their investments.
· SEBI has planned to introduce same day settlement for shares by March 2024 which would lead to faster liquidation of shares and equity mutual funds, taking them close to the most favoured investment options like fixed deposits, in terms of liquidity.
· Debt fund investors are poised for better returns with interest rates being poised to soften from this year. The returns of debt funds which were tepid in the past 2 years are set to see their sunshine days.
· 2023 was a blockbuster year for IPOs with regards to number of issues and gains from them. 58 companies raised $7.1 billion in 2023 through IPOs. Of these, 12 IPOs gave listing gains of over 50% and 14 gave listing gains between 20 and 50%. 2024 also has a huge pipeline of IPOs with some popular names like Ola Electric, Swiggy, Firstcry, Oyo, PhonePe, etc., in the anvil. This would open doors for investors to reap handsome returns in quick span.
· From June 2024 India will be part of JP Morgan Global Bond Index which would mean an inflow of about $25 billion into the country which brings more optimism to the markets.
· India would potentially see inflows of nearly $3.5 billion from a revision in the benchmark index by the US federal government’s primary pension fund. This is positive news for the markets.
· The clouds of US recession concerns which were lingering in the past 2 years are getting cleared with the improvement in employment numbers and fall in inflation. This has led to the US Federal Reserve announcing the likelihood of a drop in interest rates by 75 basis points in 2024. This should add to the market momentum with more money from US getting channelised to equity markets, especially India.
· The impact of the Russia-Ukraine and Israel-Hamas war has been insignificant on the markets in the recent months and they are likely to hardly impact the markets in 2024 which is a concern clearing off for investors.
· Large-cap stocks which are widely held and form higher weightage of the portfolio of most investors are set to deliver well in 2024 which means more wealth creation for investors.
· Health insurance policies are set to be more transparent from 1st Jan, 2024. Policy holders will be quickly able to access key information including coverage details, waiting period, limit, sub-limits and all exclusions. Policies would also include a 15-day free look period to withdraw in case of mis-selling.
· The mutual fund industry witnessed great inflows in the year with monthly SIP inflows breaching the ₹17,000 crore mark in November. The year saw ₹1,66,131 crore of fresh inflows through SIP till November. This monthly inflow figure could see the Rs. 20,000 crore mark behind in 2024 and the overall industry AUM which is at ₹49 trillion is set to cross the landmark figure of ₹50 trillion in the year with increased participation seen from retail investors and smaller cities.
While optimism can be drawn from these factors, investors need to stick to basics like proper financial planning, risk profiling, asset allocation, adequate insurance coverage, controlled debt, etc. for their financial well-being.
V. Krishna Dassan is Director, Dhanavruksha Financial Services Pvt. Ltd.
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Published: 03 Jan 2024, 01:37 PM IST