Volatile Markets Ahead? Where to Park Your Money

It's no exaggeration to say we are in turbulent times.

- SURESH SADAGOPAN

The war in Ukraine continues unabated, the Israel-Gaza conflict is festering, Iran and its proxies are active in the Middle East, as is the US; Bangladesh has descended into chaos, and now Pakistan has provoked India.

Donald Trump has also been stirring the pot with his tariffs and other pronouncements. Global markets have been in a tizzy ever since he assumed office. No one is sure where this trade war is going, which countries may benefit or lose, or whether the global economy will grow or enter a recession.

Investing during uncertain times

These uncertainties are showing up in stock markets and other places. Gold has been going through the roof. Bond yields are still high, even though the Federal Reserve cut rates by 50 basis points in September 2024.

The question on investors' lips is whether there is a type of portfolio that can help tide over these uncertain times. It is my endeavor to simplify this. My suggestion? Invest in just two mutual funds!

Equity markets are volatile at the best of times. In these uncertain times, choppiness increases. While allocation to equities cannot be avoided, we can choose to diversify across asset classes. Also, it helps if asset levels can be adjusted appropriately, based on the gyrations of markets.

Dynamic asset allocation to the rescue