2014 is a particularly hard year to look ahead to. More than at any time in the last quarter century, it's politics that will define what happens to the economy. In the middle of the year stands a mountain to cross, and no one knows what lies on the other side. The elections could yield a government that manages to revive the economy and people's confidence. Or it could actually give us something that is even worse in every way in the current one. It's entirely possible that May 2014 could see a dysfunctional coalition coming to power that could make the UPA look like a model of action and good governance.
However, that's not to say that savers should follow some special strategy based on what they think will happen in the elections. Markets are uncertain even at the best of times and I'd always recommend an approach that can be followed without regard to the events that could happen.
So here's the ideal investing strategy for 2014, which is the same as it has always been: Take a look at your own life and try and make a liberal estimate of how much of your savings you would need to tap into over the next five to seven years. This would include some sort of an emergency amount, plus predictable big-ticket expenses like weddings, education, the down payment on a house and such things. This is the amount you should hold in debt investments which could be anything from PPF to short-term debt mutual funds. The rest should be in diversified equity mutual funds with a good long-term track record. Any fresh investments into equity funds should be done gradually and continuously regardless of the state of the markets. Don't invest in too many funds--four or five is enough diversification.
Much could possibly change during 2014. On the other hand it's possible that nothing could change. It could change for the better, or for worse. However, there would be no need to change this investment strategy. And that's the way it should be.
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