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Where to invest money in turbulent markets?

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Where to invest money in turbulent markets?
Sanchari Ghosh - 19 January 2019

Since September last year volatility gripped the markets, wiping out gains and mutual funds showing no positive returns. And, things aren’t going to get any better before the elections and before a stable government is formed.

Financial advisors are of the view that investors should consider buying mutual funds at this phase. They diversify over time and the best time for buying them are during the lows. However, considering the fact that most Indian investors don’t have a high-risk appetite, they are apprehensive about shelling out hard earned money when there are no immediate or assured returns. And most of them are pondering over one question – where to invest money in this turbulent market?

Kalpen Parekh, President, DSP Investment Managers, opines, “India is known to be a country of savers. Many of us park huge sums in savings accounts, term deposits, fixed deposits and small savings schemes.” But, considering that such fixed assets don’t offer very high returns, the money doesn’t get the opportunity to grow much.

Speaking about a smarter yet safer option in the volatile times, he says, “Investing via debt funds is a more contemporary way of investing in the fixed income category which offers a smarter option of flexibility, tax efficiency and diversification. If you invest for over three years you also get the benefit of indexation.”

However, it becomes very risky if an investor puts all his money in one asset – whether it is secure or insecure, high or low risk. Sanjay Kao, Chief Business Officer, Ujjivan Small Finance Bank, “In this turbulent phase when the market is uncertain, I believe that Mutual Fund is not the most ideal investment option. One should always opt for safe investment that assures guaranteed returns even in difficult times.”

An ideal portfolio should always follow a balanced approach despite the market conditions. One should put 20 per cent in low risk assets like fixed deposits and recurring deposits. About 60 per cent in medium risk assets like mutual funds. And another 20 per cent in shares which is highly volatile.

“In case, if the markets are down and returns are not coming mutual funds or shares, then fixed assets will give you the returns as they are usually not affected by market positioning,” says Sandeep Bisht. If you plan your investments in this ratio for a long-term period, then even in the worst scenario, you will be at the break-even point, he concludes.

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