Will Raghuram Rajan get a second term as Governor, Reserve Bank of India? Will Rajan cut repo rate further in the coming credit policy? Will crude oil head higher from the $50 or down from here? Are these events bothering you as an investor? In case you are a short-term stock trader or taking a commodity bet for the near future, these may impact your decision. However, from the long-term perspective, leading financial planners advice not to get swayed by short-term external events and instead focus your goals and structure your portfolio accordingly.
“Rate cut cycles, fluctuation in rupee and interest rate movement will always be there. But your financial goals should remain constant. Once you have the goals in place, stick to a financial plan and your beliefs to achieve those goals. I respect Raghuram Rajan. However, from a financial planner’s perspective, I am indifferent to the debate on whether he will get a second term or not,” Gaurav Mashruwala, a leading certified financial planner, said.
He says working out finanical goals and planning accordingly will help build wealth. “Wealth creation will happen if one sticks to one’s financial plan,” Mashruwala says. He advises investors not to get swayed by events like rise in crude prices. “We have seen oil at $140 and then below $40. You can’t base your financial planning on these. Stay focussed on goals.”
Anil Rego, CEO & Founder, Right Horizons, agrees. “Remain focused on goals. However, one should continue to invest. We expect Indian economy to do well in next 2-5 years,” he said. Rego said Raghuram Rajan has laid the foundation for sustainable economic growth. “Governor Rajan has brought clarity and vision to the RBI. What is good for the economy benefits everyone including investors. Pressure by RBI on banks to clean up their books has caused some short-term stress to the sector, but is a bold action that will aid the economy to a stronger base for sustainable growth,” he said.
Rego, however, says that investors should be prepared for a slight change in portfolio in case of events like the recent rise in oil prices. “Investors should always be ready to rejig their portfolios for stress. However, a strong rise in oil prices from current levels may not occur. It may remain in the current range, or appreciate marginally from current levels.