The second wave of Corona virus has raised investor concern. Investors are losing money due to rising inflation and low interest rates. Let us know what is the better investment option for better profits?
A nationwide lockdown was put in place from the last week of March 2020 to prevent infection following the onset of the Covid-19 Pandemic. The economic activity came to a standstill due to the lockdown imposed. After this, the economy, markets and livelihoods all suffered heavy losses. The stock market rose to an all-time high in the first two months of 2021 due to a spurt in economic activity with a decline in active Kovid-19 cases at the end of the year 2020.
However, the high rate of inflation in 2020 affected those who were struggling after losing jobs or cutting wages. But instead of controlling inflation by the Reserve Bank of India (RBI), key policy rates were kept low to give priority to economic growth. As a result, the purchasing power of people investing in fixed-return instruments was reduced. At the same time, investors who invested money in fixed returns suffered losses due to the cut in interest rates by banks.
Economy improves before Corona’s second wave
The economy showed improvement before the second wave of Corona virus. The economy grew by 0.40 per cent in the third quarter of FY 2020-21. There was a decline of 7.5 percent in the second quarter and 24 percent in the first quarter.
Where to invest?
According to experts, investors should especially invest in AAA corporate yields and sovereign bonds to help fixed income investors beat inflation. Tax returns will also be saved along with returns in tax savings products. Apart from this, investors would be better off investing in mutual funds, stock markets.
In the Corona era, shares of many companies listed on the stock market have given bumpy returns. It would be better for investors to take risk and invest in stocks for the long term. Midcap and smallcap sectors are expected to boom and invest in it from the perspective of long term investment. Depending on the sector, you can invest in financial, healthcare and FMCG sectors.
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