Combining SIP (systematic investment plan) investments with lump sum mutual fund investments or direct investments in equity can help you consistently grow your wealth over time. If you are a seasoned investor, you must know that the performance of a stock depends on a variety of factors including macroeconomic factors that determine market trends. Going through an overview of the market trends in 2024 can help you increase your mutual fund returns in the medium to long term.
Key market trends to look out for in 2024
Here are the key mutual fund market trends that you must look out for in 2024 –
- Food inflation might rise in the second half of 2024: As per a report published in July 2024[rlink], mutual fund managers expect food inflation to rise in the second half of 2024. The government of India is expected to provide relief to consumers in rural and urban areas via loan waivers and direct benefit transfers in the Union Budget of July 2024. The monsoon season is expected to ease food inflation in India, providing some room for monetary policy adjustments.
- Fiscal consolidation efforts might significantly influence economic stability: Monetary policy decisions and the government’s policies on economic reforms versus populist measures will significantly impact economic stability and growth in India. The policies of the US Federal Reserve, too, will impact this growth.
- The Union Budget will impact market trends for the remainder of the fiscal year: The government of India released an interim budget before the 2024 Lok Sabha elections and is expected to come up with the Union Budget in July 2024. The budget can help mutual fund investors know the key trends of investment for the next fiscal year.
- You must track any changes in the monetary policies of the Federal Reserve and the RBI: The Reserve Bank of India (RBI) and the Federal Reserve are expected to change their monetary policy stances, especially regarding interest rates. Mutual fund investors expect the FMCG (fast-moving consumer goods) sector to grow significantly along with the banking sector [rlink2].
- Elections in India and the USA might have an impact on market trends: The Assembly elections in India and the Presidential elections in the USA might have an impact on market trends and volatility in the second half of 2024.
- The sectors of infrastructure, railways, and IT have a higher growth potential: Mutual fund managers are optimistic about the continuing stable growth of the railways, infrastructure, and IT sectors. Other sectors such as renewable energy and private banking too, might contribute to the evolving market landscape.
Tips to consistently grow your wealth via mutual fund investments in 2024
Here are three points that you must consider while investing in mutual funds in 2024 –
- Do not quit or switch a mutual fund scheme due to short-term market volatility: If you are already invested in a mutual fund scheme and have been recently noticing a fall in profits, you must think well before quitting the scheme or switching to another mutual fund investment. SIP investments will help you significantly grow your wealth in the long run.
- Note down your investment goals and reassess your investments regularly: Having a good idea of your investment objectives can help you reassess your returns efficiently, and thereby help you gauge whether your investments are performing as expected.
- Gradually increase your SIP contributions to grow your wealth: You can use a step-up SIP calculator to calculate your ‘step-up amount’ – the amount by which you intend to increase your SIP contributions. You can choose to increase your amount by a fixed percentage or amount.
Consuming financial news and having regular conversations with your financial advisor regarding market conditions can help you be more aware of the macroeconomic factors affecting your mutual fund investments. You can use an online mutual fund returns calculator to know your returns for a fixed investment horizon before investing in the fund. These are free, online tools that help you better plan your mutual fund investments.
