So far in 2022, there is a growing risk from the ongoing health crisis. That is why basic financial planning and having money set aside for unexpected future expenses has now become more critical than ever.
Here are four different ways you can invest your money for this year.
1. Investment Baskets
Investing in baskets allows you to trade multiple securities in a single order. You can choose a pre-defined basket or make your own that aligns with your needs.
The assets in a basket are determined by the strategy or theme used. They are created and follow the data gathered by the experts whose main occupation involves doing just that.
Multi-Asset Baskets
Multi-asset baskets are suitable for investors with a low appetite for risk. This investment basket usually consists of equity, debt, and exchange-traded funds (ETFs).
Rebalancing a multi-asset basket on a periodical basis helps fight off the risks from volatility and concentration in the market. It can also gradually deliver steady returns to help you achieve your long-term financial goals.
Baskets with Sector Rotation
A basket with a sector rotation strategy can do well during volatile situations. That is because different sectors become the center of attention based on the economy’s current state.
Sometimes the pharmaceutical segment may show excellent performance, and at other times defensive stocks may be the ones performing well.
2. International Investments
Adding international investments to your portfolio is worth considering because not only are they excellent for diversification, they can also let you participate in the global economy. Plus, globalization and digitization are not going away anytime soon.
3. Model Portfolios
A diversified portfolio that consists of complementary assets helps you reduce the risk in your portfolio and tidy up the returns in times of volatility. A model portfolio built on an investor’s risk and return preferences is ideal during volatile conditions.
This portfolio can be created with a different weighted average between cyclical and non-cyclical stocks. Model portfolios are also built with solid research and review, and they focus on three things: sector diversification, market-cap diversification, and rebalancing.
Sector Diversification
Model portfolios usually hold cyclical stocks in banking, automobile, metals, infrastructure, and real estate sectors. On the other hand, non-cyclical stocks include the IT, pharmaceutical, consumer, and fast-moving consumer goods (FMCG) sectors.
Market-Cap Diversification
Model portfolios should have a balanced mix between large-, mid-, and small-cap companies. Large-cap stocks offer stability and reasonable returns, while the mid-cap and small-cap ones can deliver higher returns than large-cap stocks, although they are more volatile.
Rebalancing
Model portfolios require rebalancing, as their risk and returns are significantly related to market volatility. Rebalancing helps secure profits in well-performing stocks and bet on the underperforming ones that are likely to deliver better returns.
4. Corporate Fixed Deposits (FDs)
Corporate FDs are term deposits offered by financial firms and nonbank financial companies (NBFCs). They offer higher interest rates when compared to bank FDs and savings accounts and are periodically rated by agencies to evaluate the issuer’s financial strength.
You should consider investing in high-rated corporate FDs if you’re looking to minimize some credit risk. Corporate FDs can provide diversification by allocating your money across debt investments. There are also no lock-in periods with this investment, allowing you to cash out based on your financial plans.
