Prateek Pant, Head, Products and Solutions, Sanctum Wealth Management explains whether HNIs should review their portfolio for major events like budget, in a conversation with Himali Patel.
High Net Worth Individuals (HNIs) would be hoping for rationalisation of direct taxes and no additional surcharges on personal tax. Additionally, any favourable outcome on Long Term Capital Gains and dividend taxation would make a significant difference. Also, they would be hoping that no changes are made to current Wealth Tax provisions or Estate Taxes, if any should be introduced in a calibrated manner.
Our advice to HNI clients is staying the course with individual goals and not being swayed by market noises. In this context it is always important to review the strategic asset allocation of the portfolios and employing tactical strategies to benefit on the margin from volatility. In other words, a sound portfolio structure, a small number of tactical decisions and otherwise staying the course should remain the investing mantra. Budget expectations should not drive portfolio decisions.
Budget is just one of the many events that an investor faces throughout his investment journey. He should stick to asset allocation basis his investment goals. However, post budget review may present tactical investment opportunities due to favourable sector outlook or significant changes in taxation. A competent financial advisor should be able to make changes in the portfolio to enhance post-tax returns.
The upcoming budget needs to address challenges around a slowing economy, distress in rural economy and continued infrastructure spending, but still manage the fiscal mathematics. Since private capex is still lagging, need of the hour for government is to provide measures to boost affordable housing and infrastructure spend which shall indirectly revive consumption with lag effect.