Markets at an all-time high – Mistakes to avoid
1 min read
Markets at an all-time High. Interest Rates at an all-time low. The FED is printing money and everyone is making merry. Everyone has a playbook/ WhatsApp University on what to buy and what to do
Here is a shortlist of what NOT to buy and a few mistakes we often end up committing
- Exiting your SIP/ Index Fund allocation – Unless you’re the genius who can time the market, do NOT stop your SIPs. People have been calling the top (including me) since 11500 and have been proven wrong. FIIs are doing a daily SIP of 2000crs into equities. If they can’t call out the top, so shouldn’t you
- 2.GILT Funds – Simply put, Gilt funds have an inverse relationship with interest rates. They have done really well in the last 3 years ( 16% cagr) as interest rates have fallen
Rock bottom Interest rates won’t sustain and when they start turning, every 1% increase in rates lead to an 8% negative return
- Savings account – 3% interest Rates. 5% CPI Inflation. If you have studied a bit of economics – you would realize this is almost criminal
- Perpetual Bonds – These are basically Tier 1 bonds of bank with much better returns
The flipside? – You will not be paid back if the banks fails and the corporate bond market is so thin its near impossible to sell if you sense trouble.
