» Stock Market Investments
Pawan Parakh, Director, Renaissance Investment Managers thinks that equity is the most rewarding asset class to bet on.
There isn’t enough of an increase in interest rates to keep up with inflation. As the economy has become more regulated, a great deal of capital that formerly went into real estate has shifted elsewhere. Consumers, rather than investors, are the primary drivers of real estate demand today. Given India’s high economic development prospects, Parakh suggests putting money into the stock market.
In that case, how do you divide up the pie?
If your risk tolerance is medium to high, you should invest more of your money in the stock market. However, “if you’re a conservative investor, you may allocate just 30-40% of your portfolio to stocks and the rest to debt,” he says.
According to Parakh, a greater proportion of an investor’s equity portfolio should be invested in big cap companies and, more crucially, good quality mutual funds.
To maximise profits while minimising risk, investors shouldn’t merely chase gains. Warning that “large drawdowns in equities portfolios may entail both financial and emotional damage in the absence of risk frameworks,” he explains the importance of having a plan in place.
» Investing In A Pooled Fund
Mutual funds are another option for investors who want to reduce their exposure to systemic risk. Mutual funds only face systematic risk, also known as market risk, as opposed to the unsystematic risk that comes with investing in individual stocks.
» Additional Investment Opportunities
Nikhil Aggarwal, Founder & CEO of Grip, recommends Alternative Investment choices for investors who have a diversified portfolio of low-risk, low-return goods and exposure to equities via stocks or mutual funds.
These assets, as their name implies, provide diversity to an investor’s portfolio without being directly tied to the fluctuations of the stock market. Asset leasing, inventory finance, startup equity, and commercial real estate are all good investments to have in a diversified portfolio. For your medium- and long-term aims, Aggarwal says, “diversify your investments and achieve reliable returns this way.”