Rising inflation, Covid variants, declining interest rates and dividend rates have altogether made the investing landscape difficult for retail investors. “Since the outbreak of the covid epidemic, Indian stock markets have seen a tremendous influx of new investors enticed by the bull market rally and looking to profit from the year-and-a-half-long bull market,” says Anshul Gupta, co-founder, Wint Wealth.
Investors, therefore, are increasingly seeking options that can yield higher interest rates and are less vulnerable to market volatility. One such instrument avenue is non-market linked fixed-income assets that are available in various time brackets anytime from a year to 10 years.
Gupta points out, “Investors are free to choose to invest in tranches as per their goals and requirements. Another opportunity this asset class offers is to create passive income sources that are offered as the interest rate at a specified frequency by the issuer – monthly, quarterly, semi-annually, or annually.”
He further adds, “With all the investment avenues available, diversification remains the key to building an effective portfolio that ticks all the boxes of investors – liquidity, low-risk options for an emergency fund, high interest, passive income source.”
Note that, while not one investment avenue can provide all the above-mentioned features, however, experts say investors can ensure including various investment assets that can fill their diversified requirements for a robust financial journey.
Another direction that Gupta says retail investors should be aware of is to proceed with caution. “Digital percolation and increased consumption of social mediums have exposed and encouraged investors to be experimental with their money game,” says Gupta.
He explains, “We are currently in the middle of the cycle, where policymakers are restraining but the overall earnings cycle has picked up and demand is actually chugging along nicely, regardless of policy. Equity markets perform admirably, but one should keep in mind that the reflation trade has already accounted for a major portion of the excess returns. This midcycle phase will last around one to two years, if not more.”
However, even in the midst of the exhilaration, experts say it’s a good idea to be cautious for retail investors. “Retail investors, in particular, must exercise extreme caution due to their growing exposure. Especially since many of them entered the market while stocks were being pummelling by the pandemic last year and have subsequently ridden the peak of the rally. In other words, they have never lost money or faced a downturn,” he adds.
Therefore, it is essential to be informative and educated on where your money is being financed.