24 Feb 2023 • 4 min read
Just as we say, mutual funds are subjected to market risks; we must also understand that India is a volatile market where inflation is dynamic and affects the market deeply. Inflation and the stock market go hand in hand; where one increases, the other market is bound to crash or get influenced heavily. As per IMF, the inflation rate in 2022 was 8.8%, and in 2023, it will be 6.6% and 4.3% by 2024, an excellent chance for investors to hedge their investments.
A good and patient investor must forecast such opportunities and use the excessive inflation and investment market to their advantage to seek investment, also known as inflation hedging, which helps investors safeguard the value of the investment in the market.
To keep your savings safe and get maximum returns on your investment without hitting inflation, one must plan their investments, make financial goals and learn how to move forward with inflation hikes. The safest investment method in equities is through mutual funds or direct investments, but in the new age, many other sectors are also taking away the market.
A few ways by which you can benefit from the effect of inflation in the stock market are as follows:
Invest in the tradition, Invest in Gold
Gold has always been a symbol of our culture and one of the most reliable sources. Gold is proven to be an asset during the volatile emotions of inflation and the stock market, as its value may get high or low. Still, it never depreciates its value after a specific limit and tends to give higher returns.
Sovereign Gold Bonds (SGBs) are another secured form of asset investment. Gold is not affected, unlike the currency, by international market conditions, which also makes it a safe option for beginners. It is the perfect asset to go by if you are looking for long-term investments.
Real estate is the ideal market to invest in if you have a large sum of money or savings and are trying to diversify because property values continue to rise relative to inflation. Real estate is tangible, and it can also help to fight inflation if you own property by renting them out for residential needs or putting them on lease contracts to corporates and getting returns or a fixed source of income which helps to nullify the effect of inflation in the stock market.
Real estate investment trusts, i.e., REITS, also allow investors to convert their funds into liquid investments that can be used for active trading or providing buying and selling opportunities.
An intelligent investor can only sustain in the inflation and investment market conditions if they learn how you diversify to compensate for the losses and seek opportunities. Diversifying can be done in two ways:
Inflation is a natural condition that cannot be avoided but is only handled with brilliant investment ideas and seeking the right opportunities. Bitcoin, real estate, gold, and equities are emerging markets where even beginners can invest using mutual funds. If they learn and strategize, then inflation and the stock market are the perfect new age combination in the Indian economy which can generate huge returns with patience and learning.