Today’s world is continuously changing, and not always for the better. The COVID pandemic harmed economies across the globe, and now there’s the war in Ukraine. The war placed a further toll on the global economy against an already tumultuous backdrop of global inflationary pressures. India is suffering stagflation, characterized by poor economic development, relatively high unemployment (or economic stagnation), and rising prices. Concerned about the disruptions, deficits, and increasing costs caused by geopolitical tensions and sanctions, the RBI hiked the repo rate by 50 basis points (bps) to 4.9%, the second such rise in a month after cutting interest rates by 40 basis points (bps). The GDP projection for India has stayed constant at 7.2%. Inflation has been erratic and outside the RBI’s comfort zone. Given the current financial situation, it’s essential to consider wealth preservation and alternative, solid investments to complement equities. HNIs, UHNIs, family offices, and other young, high-net-worth individuals with a lot of cash to invest and preserve must create the best ways to fulfill their financial goals. While no one can predict the future or how the markets will evolve, it’s always a good idea to diversify your portfolio across several asset classes, including fixed-income instruments, depending on your risk tolerance and investment horizon. Investing in Fixed Income The stock market has been rising over the last two years. However, the market has dramatically corrected from peak levels, owing to hostile macroeconomic conditions and persistent withdrawals of foreign investors. In the short term, volatility is projected to stay high. Most retail investors, including HNI and UHNI, have seen considerable capital erosion in their portfolios. Fixed-income instruments that provide both capital protection and reliable yields might be excellent during such times. While returns are limited, they offer a secure investment alternative. Corporate Bonds: These products provide capital protection and promise consistent cash flows and guaranteed returns. Investors should put their money into higher-value, higher-liquidity publicly listed bonds. Bond rates have recently climbed dramatically, making this investment choice more appealing to investors. Market-Linked Bonds (MLD): Listed MLDs can provide superior after-tax returns than other debt instruments due to their lower tax burden, making them an excellent alternative for HNI portfolios. For individual investors in the highest income group, the effective tax rate on MLDs (with surcharge and cess) might be less than 12%, compared to roughly 43% for corporate bonds. Commercial Paper (CP): CP may be explored by HNIs and young high-net-worth people seeking a short-term investment. They’re unsecured, short-term investments extensively issued by businesses and financial organizations to raise debt for a short period – often between 30 and 180 days with interest rates ranging from 4% to 10%. Asset-Backed Securities (ABS): These securities are backed by collateral and deliver regular monthly income and cash flows. The structural elements and credit enhancements that are typical in ABS transactions offer the investor an extra layer of capital and return protection.
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After spending many years studying information technology, specializing in web development, digital marketing, and search engine optimization (SEO), I enjoy applying my skills and experience in helping others achieve their goals online.As a marketing specialist at Credkeeper, I help people get the most out of their online reputation. Your prospects perform Internet searches for your name before they buy from you. What they see on the first page of Google outweighs almost all other marketing! What do people currently see when they search your name on the Internet?If you would like to know more about Credkeeper and what we can do for you, feel free to reach out to me!
