How to earn stable returns in a highly uncertain environment?

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Cash crunch and low-interest rates on fixed deposits have made investors opt for volatile options like equity markets. Some have gone for the extremely uncertain cryptocurrencies and have suffered heavy losses.

However, without a proper understanding of the uncertain environment, individual investors are always at risk of losing money. And hence it’s important to know how one can make stable returns in such a scenario.

Stay Invested

Bhavin Patel, Co-founder & CEO, LenDenClub, says that The returns on FDs will be low risk and less volatile but they cannot beat inflation in the long run. The best option he suggests is to create a diversified portfolio with a balance between high-risk and low-risk avenues. With experience, people tend to experiment in their investment techniques and diversification helps you to achieve stable and assured returns while still being invested in risky assets. 

Look for new low-risk options

Anshul Gupta, Co-Founder at WintWealth, says during times of uncertainty, most investors start looking for stable returns.

Gupta votes for covered bonds for a stable return in a highly unstable environment He also said that covered bonds have lower credit risk and have an additional layer of safety given the current financial stress. They are still a high risk but less risky than equity is invested incautiously. Retail investors who fall in the 30% tax bracket should mainly look at these bonds because they can be very profitable. Gupta told FE Online.

Smart Diversification

Any type of investment in any product comes with a little risk and uncertainty, but in situations like war, recession and pandemic it is important to have a stable income and that is why one should have a smart diversification in their portfolio. 

Sudarshan Lodha, Co-founder, Strata, said that One should always have a healthy mix of bonds, equity, commodities, and physical assets and should also opt for non-traditional, new-age platforms which enable one to invest in a small amount at regular intervals rather than waiting for the right time to invest in the markets. Also, these platforms offer access to asset classes not linked directly to stock markets and offer a reasonable amount of insulation during uncertainty. 

Backed by technology, these new-age platforms replace and reduce human intervention and offer investors the ability to control and monitor their investments and returns regularly. Like, in the case of partial investment in real estate, the investor gets a dashboard that keeps him informed on how the asset has performed and the returns that can be expected among other data specs. This allows the investor to change and adjust his investment strategy and time it with the market to avoid poor decisions and avoid further losses. Apart from diversification, helps to build financial immunity and reduction in losses, Lodha added.

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