This Diwali, dispel 3 evils and refresh your portfolio
financial markets have delivered impressive returns, rewarding investors handsomely. Even portfolios that underperformed compared to benchmarks like the Sensex or Nifty likely still outpaced other asset classes. Indian stock markets posted strong gains, with Nifty 50 and Sensex delivering 11-12% annualized returns over 5 years and 15-16% over 3 years. Mid-cap and small-cap indices outperformed, offering 12-20% returns. Real estate showed moderate growth, with residential properties yielding 3-6% and commercial real estate 8-12%. Gold surged, providing 8-12% returns, while debt instruments and fixed deposits offered lower but stable returns of 4-7%. Equities clearly outperformed.
But as we celebrate these gains, Diwali 2024 brings with it an important reminder: the need to re-evaluate and refresh our investment portfolios. No matter how successful the past has been, the spirit of Diwali encourages us to let go of the old, stale, and non-performing elements—making room for a fresh start.
Diwali: A Time to Destroy the Old and Stale and Start Anew
Diwali, the festival celebrating Goddess Laxmi, the goddess of wealth, is not only a time for material prosperity but also a time to cleanse and renew. Just as we deep-clean our homes and remove the clutter, we should perform a similar “deep cleaning” of our investment portfolios. However, beware of the common traps most investors fall into when reviewing their holdings.
How Not to Clean the Portfolio
A common misconception among investors is to hold on to stocks that
