Investment Benefits When the US central bank, the Federal Reserve, announces that inflation has been strictly controlled, it will be a great opportunity for equities to emerge as a major asset class.
Investment Tips For the past one year, there has been volatility in the stock markets around the world including India. In order to control the ever-increasing inflation, the central banks of the countries of the world are increasing the interest rates. However, amidst these challenges and volatile environment, one positive thing is that India remains a stable economy. Indian markets continue to stand out, outperforming almost all emerging markets on a one to five year basis. The Indian markets are still undervalued with their long term averages and compared to other markets. The RBI, government and corporate companies together have handled the situation very well so far. Still, it is wise to be risk conscious, as market valuations are not cheap.
Nimesh Shah, MD and CEO, ICICI Prudential Mutual Fund says that today the world is much more interconnected than it was before. In such a situation, if there is any problem in the world, then the equity market of India also cannot remain untouched by it. We believe that when the US central bank, the Federal Reserve, announces that inflation has been firmly addressed, it will be a great opportunity for equities to emerge as a major asset class. However, nothing can be said about how long this will happen. Till then we expect the market to remain volatile.
Global recession will not have a special effect on India
Nimesh Shah says that the possibility of recession in developed countries will not have any significant effect on India. Rather, the global slowdown will help India deal with concerns like high oil prices, current account deficit and inflation. There is no need to worry too much about the fall in the stock markets as India is one of the most structural markets in the world. The post-Russia-Ukraine conflict has also led to geopolitical challenges in Europe and Asia, but the Indian markets have ignored them. In such a situation, it will also have to be seen how the geopolitical developments progress at the global level. In this volatile and potentially bearish environment, it is necessary to diversify investments so that any losses can be minimized or avoided.
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Investing in Debt Mutual Funds
According to Shah, an asset class debt mutual fund has not gained much popularity so far, while good returns in the last 18-20 months have made it quite attractive. Due to the high price of consumer goods, RBI may increase the repo rate further in the coming time. Looking at the higher yield during investment, an asset class – debt – which has not gained popularity so far (from the last 18-20 months) looks attractive again. We expect the repo rate to be hiked in the coming meetings as consumer goods prices are high and this poses a challenge to inflation in almost all global economies as well as in India and the RBI.
In such a situation, one can invest in accrual schemes with high interest and schemes with continuously increasing tenure. Bonds are issued on your investment in accrual schemes on which companies pay interest. Apart from this, floating rate bonds i.e. interest converting bonds can also be selected for investment. It is expected to perform better in the coming time. Investors should keep in mind that debt mutual funds play a very important role in the portfolio and should not be overlooked.
Mutual Fund Offering Solutions
As long as the Federal Reserve is committed to adopting all measures to combat inflation, the market will remain volatile. In such a situation, investors, especially Indian investors, should ideally invest through SIPs with a time horizon of three to five years. From an equity investment perspective, investors should consider asset allocation such as balanced leverage or a multi-asset category. Features like Booster SIP, Booster STP, Freedom SIP or Freedom SWP can also be considered to achieve various financial goals in a planned, disciplined and systematic manner.
Investing in Gold-Silver ETFs and Fund of Funds
A diversified portfolio across asset classes will ensure that the concentration risk is minimized at any one point. Given the uncertainty, there is a better opportunity to invest in gold and silver. They not only act as a hedge against inflation, but also against currency depreciation. Investors can consider investing in it through ETFs. For those who do not have a Demat account, Gold or Silver and Fund of Funds are a better investment option.
English News Headline : No loss even during recession on invest in these three ways
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