Investment Risks in the Current World Scenario

A Financial Guide for a 30 to 40 Year-Old Salaried Individual

Where to land my Money? 🧐

Introduction

In today’s volatile economic climate, investment risks are a significant concern for everyone, especially for a 35-year-old salaried individual with a savings of 10 lakh rupees. This blog aims to provide a comprehensive overview of the current world scenario of investment risks and suggest some strategies for managing these risks.

Current Global Risks

According to the Global Risks Report 2023, the world is facing several interconnected risks leading to potential ‘polycrises’. The cost-of-living crisis is seen as the biggest risk in the next two years, while environmental risks dominate over the next 10 years. Geopolitical instability, conflicts, inflation, and volatile energy prices are also cited as significant risks to global economic growth.

Investment Options

Emergency Funds

It’s crucial to have a portion of income saved as emergency funds, which could be parked in low-risk liquid funds or bank fixed deposits.

Short-term Funds

These funds primarily invest in debt funds and have a maturity period of 1-3 years.

Equity Linked Savings Scheme (ELSS)

ELSS funds primarily invest in equity and equity-related securities and provide good returns to investors.

High Growth Funds

These are value or growth funds that are equity dominated and suitable for investors with a moderately high-risk appetite.

Gold

Gold can act as an inflation hedge during uncertain times.

Public Provident Fund (PPF)

PPF is considered a risk-free instrument that provides tax benefits for both the interest and the principal component.

Conclusion

Investing requires careful consideration and understanding of various investment options. It’s essential to diversify investments across different instruments with a target return of 15% per annum. Remember, the key to successful investing is not only about choosing the right investments but also about managing risks effectively.

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