Investing in turbulent markets is really tough. We are in testing times now, with inflation peaking and Central banks rushing to increase the rates to ease the inflation. The stock markets are moving sideways, and all investment avenues don’t look so attractive as it did 6 months back.
One of the biggest problems I personally feel is the sideways movement of markets with no idea where it will go. I am more scared of this market than a market which is actually falling altogether.
Apart from investing towards my goal via SIPs, I was looking at avenues to invest and was thoroughly confused mostly.
Directionless Equities
They are moving sideways and not sure of the direction which tends to point downwards.
Increasing Bonds/Interest rate products
Interest rates in the near term seem to be increasing (since the Central banks are all increasing the interest rates to battle the inflation). Now when the Interest rates increases the bond prices decreases (inverse relation). So, if I enter now there is going to be short term pains in unless I keep the bonds till maturity. So again, bonds are not at the right price to enter clearly.
Generally, the idea when Equities are down, and Interest rates are increasing is to invest in Real Estate. I personally believe that there has been a real paradigm shift in real estate because of Covid. This for me is too early to say if I want to invest in Real Estate yet. Cities are not yet seeing full occupancies; people have settled in their hometowns and are happier there. So, I am personally avoiding taking any new positions in real estate (directly).
So where do we invest then? I am personally following a three-step approach here:
Floating Interest Loans
Close off pending (floating interest) loans – With increased interest rates in sight, this is the best time to close off the loans, even if the loans give me a tax benefit.
Commodities
Increase the allocation to commodities – personally I invest in Gold/Silver (strictly the online route)
REIT
I am going to invest a small percentage of my investments in real estate indirectly via Real Estate Investment Trusts. These are more liquids and allow easy exit than Real Estate investments.
By now you would have figured out, I am a bit old school and do not consider Cryptos as an investment. I intend to throw 2% of this into Cryptos (with no intention to look at its value or returns in the near future). I am simply considering that as buying a lottery ticket, because I can afford to do that now.
So, what are you investing on (after investing for your goals)? Drop a comment below.
