Investment Trends To Consider In 2022

As we have entered 2022, there is a mounting risk from the new Omicron variant. The pandemic can end in one of the two ways, either we achieve "zero Covid-19" or the disease becomes an ongoing part of the infectious diseases coterie. We believe societies will have to adapt to living alongside Covid-19. Thereby, having a contingency fund kept aside for emergency purposes is of utmost necessity, now more than ever.

One of the methods that Central banks had resorted to was by reducing interest rates to raise demand. This, along with the major disruption in logistics (from chip shortages to shipping route disruptions), has resulted in a rise in inflation. One of the major factors – other than fresh waves of the pandemic, would be interest rates hardening as Central banks focus on taming inflation.

Here are the top four investment avenues for 2022.
1. Model Portfolios
Volatility is here to stay-As markets correct after touching the highs and losses start to loom, it becomes difficult to avoid taking emotional decisions to cut these losses. This behavioral mistake can be detrimental to creating long-term wealth. Your first defense against these mistakes is to craft a diversified portfolio across different asset classes that match your investment horizon and risk tolerance. During times of market volatility, while your risky investments – equities (domestic/global) may fall, the overall portfolio performance may not be so badly impacted. A diversified portfolio built of complementary assets helps you smoothen out the returns in volatile times and helps mitigate risk in the portfolio.

  1. Advised Baskets of Stocks and ETFs
    Avoid buying a single stock. When markets rise, it is easy to have FOMO and rush in on the next "hot" stock, be it an IPO or a "value" stock someone tells us about. Instead, look at investing in baskets. A basket is a set of multiple securities that can be traded in a single order. The components of the baskets are selected based on a particular strategy or theme. They are curated and are based on research done by professionals whose day job is to do just that. An investor can select a pre-defined basket or create a custom one based on her preferences.

  2. Global Investments
    Let's face it. More than 50% of all brands that you know of – whether it is Google, or Pepsi, Zoho, or Nike, that we know of well and consume in our daily lives are not listed in India. Making them a part of our portfolio is not only good for diversification but also provides us opportunities to participate in the global economy. Globalization and digitization have made the world a small place, and they are here to stay. Making a part of our portfolio strategy would probably be one of the best things that you could do.

  3. Corporate Fixed Deposits
    Corporate Fixed Deposits are term deposits offered by several companies and NBFCs. They offer higher interest rates compared to savings accounts and term fixed deposits. Corporate FDs are periodically rated by rating agencies to review the financial stability of the issuer. It is recommended to invest in high-rated corporate FDs to reduce the credit risk. Corporate FDs diversify the portfolio towards debt investments.

Bottom Line

While all these investment avenues look well suited for 2022, it is recommended to make investment decisions after consulting your financial advisor.

Comments (1)

Jan 1, 2022 - 11:38am

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