As we bid farewell to 2024, it’s the perfect time to reflect on the financial lessons the year taught us. Whether it was managing volatility, exploring new investment opportunities or learning the importance of patience, each experience offers a stepping stone towards better financial decision making in 2025. Here are some key learnings from the year that can guide us in setting meaningful resolutions for a financially fit 2025.

Key Learnings from 2024

• Market Volatility: A test of Patience and Strategy

In 2024, Indian markets witnessed significant growth, with Nifty 50 TRI growing to 21.8% from 1st Jan, 2024 to its peak on 26th Sept, 2024. Thereafter, a sharp correction followed, with the index down by ~12% upto 21st Nov, 2024.

Lesson: Market corrections are inevitable, but staying invested could ensure participation in long term growth. Asset Allocation and patience may often yield better results over time.

• SIP’s Provide stability during market swings

Despite market volatility, SIP contributions hit record levels with Monthly SIP Inflows increasing by 48% from Rs 17,073 Crore (Nov’23) to Rs 25,320 Crore (Nov’24). Advantage to investors from rupee cost averaging, acquiring more units at lower prices.

Lesson: Staying consistent with SIP’s regardless of market corrections, could help in building wealth over the long term.

Source: AMFI

• The Power of Compounding in Long-Term Investments

Investors who stayed invested in Nifty 100 Index (TRI) for the last 5 Years saw CAGR returns of 17.43%*, demonstrating the power of compounding. Also, this is the 9th Consecutive Year of Positive return.

Source: MFI

*CAGR – Compounded Annual Growth Rate returns as on 5th December, 2024. ^CYTD - Calendar Year to date returns as on 5th December, 2024. Past performance may or may not be sustained in future and is not a guarantee of any future returns.

Lesson: Staying invested for the long term, irrespective of market conditions, could help maximize returns through compounding.

Review your asset allocation and check if rebalancing required

Asset allocation, one of the most crucial part of financial planning for an individual, requires periodic review. Change in market value of your assets is likely to have changed your original allocation. More importantly, what worked for you few years ago, may not work in future. Sometimes, we get too involved in tracking each individual investment that we forget the big picture. Set aside time this weekend to revisit and refine your overall asset allocation plan.

Maintain and Increase SIP Contributions

Consider to continue SIPs consistently, even during market downturns, which aims to benefit from rupee cost averaging. Increasing SIP contributions annually by 10-15% could help in Wealth Creation.

Build and Emergency Fund

Maintain an Emergency Fund covering 6-12 Months of living expenses, preferable in Liquid or Ultra-Short-term Debt Funds, to ensure liquidity in case of emergencies.

Learn about equities / MFs

This is a difficult one for most of us. It is normal for non-professionals to find financial concepts tough to understand or simply boring. The uncertainties in the world of equity investing makes the challenge even harder. How about a resolution to understand the “Knowledge Stack” section of ‘hdfcfund.com’? Go ahead with confidence, as these resources are meant for beginners.

Talk to an expert

For most individuals, even those with a basic knowledge of finances, it may make sense to take advice from an expert. Investing is a complex world full of uncertainties. Let us acknowledge that we may have inadequate knowledge or time to manage our own money, and we may suffer from certain biases and blind spots. In such a case, taking professional help may turn out to be a smarter choice.

Wish you a happy new year and a very prosperous future!

Disclaimer: HDFC Mutual Fund/HDFC AMC is not indicating or guaranteeing returns on any investments. Investors should seek professional advice before taking any investment related decisions.

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