It's the time of the year when someone writing a newspaper column is wondering what exactly did the past year signify in aggregate. For anyone writing about politics, 2013 is an easy year to figure out. It's pretty clear which were the most important events and trends in the year and the direction in which they are leading. However, the year doesn't look so easy to understand if you're thinking about savings and investments, of what was important and what wasn't and what lies in the year ahead.
While I'll do the looking ahead part next week, it's useful to see what the year past has done to us. In the middle of the year, we all had a big fright when the word 'tapering' was added to our vocabulary, much in the same manner that 'subprime' was, five years ago. The rupee, equity markets and fixed income investments all plunged in a panic somewhat reminiscent of the darkest days of 2008. Along the way, even as the panic subsided, or was postponed, we learned that one of the methods that the authorities used in bringing stability to the rupee was to redefine the meaning of the word stability on almost daily basis.
Anyhow, the upshot of it all was that savers and investors realised anew that our immediate wellbeing seemed dependent on unrelated actions of foreign government because our country's macros were in a terrible shape. However, the biggest problem for investors remains the abysmal real returns from fixed income investments. There is simply no investment in the country that can keep up with the ferocious rate of consumer inflation that we face. The RBI has made a beginning with its new inflation indexed bonds but the adverse tax treatment and the low per-investor ceiling means they are of limited utility.
Ultimately, even as gold and real estate floundered, it actually became harder to make an argument for financial savings on anything except faith. That's not a great place for 2013 to end.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
