Investing In The Times Of Covid-19

Avoid any speculative investment and add diversification to your portfolio for better returns

- Vishav

The crisis emerging out of the COVID-19 virus is no more just a health crisis but has taken the shape of an economic crisis of enormous proportions. And this crisis has not only affected those who are infected by the virus, but the entire population, whether directly or indirectly. Among the biggest victims, after those who were actually infected, are perhaps the small investors who had put in their hard-earned savings in the equity market through mutual funds route or otherwise. With stock markets correcting by over 30 percent due to the pandemic, before recovering a little bit, their portfolios have lost a huge portion of wealth and there seem to be no signs visible of recovering those losses in the near-term with the whole global economy coming to a standstill and possibility of a global recession becoming more and more real.

And it’s not just the stock markets that have been hit. Conservative investors would also have to settle for fewer returns going forward as the returns on Fixed Deposits (FD), Recurring Deposits (RD) and other fixed-income assets have already gone down and it is expected that interest rates are going to be lower in the times ahead. In such a scenario, many investors face the question of what they should do with their savings now: should they hold on to cash or should they invest, and where should they invest.

According to Joseph Thomas, Head of Research, Emkay Wealth Management, while equities are “clearly at buy levels” because the price to book value of the Nifty 50 is at an all-time low of close to 2.50, fixed income products and fixed return products should also be a part of the portfolio as they offer stability to the portfolio and provides the much-needed balancing factor especially in times of high volatility.