Start the New Year with Financial Growth: Invest in Index & Multi-Cap Funds; Add Gold for a Smart Portfolio!

December 29, 2024December 29, 2024 Akash Shrivastav

Welcome 2025 with Smart Financial Planning

As we step into 2025, it’s the perfect time to embrace new opportunities in the financial market. With changing trends, understanding what worked in 2024 may not guarantee success in 2025. Whether you’re an experienced investor or just starting, staying updated with the latest strategies is crucial.

5 Key Financial Trends to Watch in 2025

1. Index Funds Offer Stability at Low Costs

The bull market of 2024 saw significant investments in equity-focused growth plans. Assets under management (AUM) for these plans grew by 49%, reaching ₹30 lakh crore. Multi-cap funds showed a 73% rise, highlighting investor preference for diversification. However, index funds emerged as the real stars, with their AUM soaring by 82%, surpassing ₹1 lakh crore. These funds offer disciplined, low-cost, and passive strategies, making them an attractive choice for long-term gains.

2. Insurance as Protection, Not Investment

Indians are now viewing insurance as a protection tool rather than an investment vehicle. Traditional endowment policies and Unit Linked Insurance Plans (ULIPs) are losing their appeal. Changes in tax laws have also reduced the attractiveness of life insurance products. A 2024 survey revealed that only 37% of salaried individuals invested in insurance-linked products, compared to 46% in 2022.

3. Direct Equity Investment is Risky

Managing a stock portfolio can be challenging due to market volatility. Passive index funds are becoming a preferred option for many, offering better post-tax returns without the stress of timing the market. If direct equity investments feel overwhelming, it may be time to adopt a more practical approach.

4. Liquid Funds for Steady Returns

Liquid funds, with their tax efficiency and flexibility, are gaining popularity over fixed deposits (FDs). While FDs attract annual TDS, debt funds are taxed only upon redemption, making them an attractive option for those seeking stable returns.

5. Gold as a Safe Investment

Gold delivered over 20% returns in 2024, driven by strong demand from retail investors and central banks. As inflation and uncertainties persist, gold remains a safe and smart addition to portfolios. Even if prices dip slightly, it presents an excellent buying opportunity.