Short-term deposits and funds
If you don't have the appetite for equities, then short-term deposits/debt funds will prove ideal for you.
During inflationary times, avoid investing in longer-dated debt investments. This is because inflation is usually countered by central banks by raising interest rates - this actually happened last week in the Indian context.
When rates are raised, issuing banks/institutions raise the coupon rates on their offerings.
Investors in existing securities witness a fall in their investment value, while fresh investors will get the opportunity to earn a higher coupon rate.
So when it appears that interest rates could rise, invest in short-term deposits/debt funds so as to be sufficiently liquid. This way when interest rates do rise, you will be in a better position to benefit from the situation.
Your family's future depends on this. Read now
Image: The bronze bull outside the Bombay Stock Exchange | Photograph: Pal Pillai/AFP/Getty Images
Also read: Why is Ambani buying cinemas in the US?
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