With the stock markets down almost 50 per cent in the last 10 months, investors no longer have much confidence in equities.

The good news is that banks have been consistently hiking fixed deposit rates — 10-10.5 per cent for deposits of between one and two years.

And gold, whether the metal per se or exchange traded funds, has been quite a hit.

With returns of around 25 per cent from gold ETFs in the last one year, it well ought to be.

But while fixed deposits and gold ETFs look attractive, parking my entire funds in them would mean that I will have no exposure to equities. While I might be tempted to do this in the present market, when the situation changes, my returns in debt would start coming down.

Also, it would imply that I would be scrambling to move my money from debt to equity, and vice versa, every few years. Since I would be inevitably entering the stock markets when they are on the rise, my returns would come down, and substantially at times.

Image: Commuters walk past the Bombay Stock Exchange in Mumbai. | Photograph: Sebastian D'Souza/AFP/Getty Images

Also read: Lalu Yadav, the management guru!

Powered by

Back

Next