Investment Strategies for the Covid-19 World: Takeaways from our Online Masterclass
With financial uncertainty hitting our homes and work, it’s time to plan better and make wiser decisions. While the impact of Covid-19 has been devastating on the market, our experts have insights on how you can help mitigate this impact on your personal finances.
We held an online session with a panel of financial experts – Kriti Makhija, Chief Financial and Compliance Officer at Genesis BCW; Rajiv Inamdar, Former MD, Heidrick & Struggles’ Global Knowledge Management Center; and Himanshu Kohli, Founder Partner, Client Associates. To address your most pressing financial concerns.
Here are some excerpts from the insightful session.
What we are seeing today is a medical crisis and not a financial crisis, which is leading to an economic crisis
India will see a de-growth of 4% to 5% in the current year but will recover from the second half of next calendar year
For the economy, the recovery will be U-shaped while it will be a W-shaped recovery for the markets
As far as businesses are concerned, the recovery will be a combination of L-shaped, U-shaped and V-shaped
Investors should continue to accumulate equity, not buying at one go, but in stages
No matter what the frequency of investment, whether weekly SIPs or monthly, further investment should only be made to the extent of the gap between the current and desired equity allocation in the portfolio
As for Fixed Income, we remain positive on the shorter end of the curve and advise an exposure into corporate bond funds, Banking & PSU funds or short term funds with maximum allocation to AAA papers
We also recommend diversifying outside India to other emerging and developed markets via feeder funds and/or LRS
Risk perceptions generally reduce dramatically during bull markets, while it is the risk tolerance that reduces significantly in bear markets
During this heightened phase of volatility, asset allocation is the best formula to add value to our client portfolios
If we have a well thought through asset allocation model that works across cycles, then our investors will make more money during bull markets and loose less money in bear markets
Asset allocation also works as the perfect foil to investor nerves during market extremes, and helps prevent investors from becoming overly risk averse or overly risk tolerant in market extremes