How Your Investment Portfolio Can Beat Inflation, Recession: A Guide to Diversification | FE Manage your money


In an effort to get your portfolio to dodge the double-edged sword of recession and inflation, it’s important to have both fixed income assets and gold on one side, and stocks on the other, said Gurmeet Chadha, CEO of Complete Circle Consultants. During the FinancialExpress.com Manage Your Money roundtable, Gurmeet Chadha and market veteran Sanjiv Bhasin, Director, IIFL Securities, helped guide investors in building a well-diversified portfolio that could weather the threat of inflation and recession, which threaten Dalal Street and stock markets around the world.

How to diversify

While Gurmeet Chadha said there was no standard formula for diversification, he added that younger investors should have more exposure to equities. “We call it bucketing. Anything short-term or medium-term should be fixed income with less risk,” he said while advising investors to stick to long-term stocks. “In cricket they say you need a batsman to preserve and another to attack, so Pujara and pants are needed,” Gurmeet said while emphasizing the need for asset class diversification. .

The CEO of Complete Circle, bullish on equities, said young investors should have a 5-10 year time horizon and invest 60-70% in equities. He said investors should split the rest between fixed-income assets or interest-earning assets and gold. Gurmeet continues to advise investors to invest in stocks over the next few years, adding that it is time to rebalance portfolios after the recent market turmoil.

Sanjiv Bhasin favored equity investments with a long-term horizon. He said fixed income returns will always be below expectations. “There are four classes of assets: gold and silver, real estate, fixed income and stocks. Of all these (physical) real estate is not in your budget. Gold is an emotional asset. Fixed income doesn’t give the returns of yesteryear. So equities become the only asset class where a monthly SIP can create wealth over a period of time,” Sanjiv said. Bhasin.

However, Bhasin added that investors over the age of 50 should invest a large part of their portfolio in fixed income securities, while again reminding that the yields will not beat inflation. “The days of government borrowing at all costs are over, now Indian market bond yields are stabilizing,” he said. Sanjiv Bhasin added that it is time to look at our own markets which have withstood the recent test of the exit of foreign institutional investors. “Our domestic retail investor has now realized that equities as an asset class are here to stay,” Bhasin said while highlighting the strong SIP inflows domestic markets have seen recently.

Previous The Motley Fool: bonds, investment bonds
Next Don't Skip Your Mid-Year Investment Portfolio Balance Sheet This Year