Financial Turmoil

What with Options for financial planning taking a beating, the million $ question of the day is how to think clearly in the era of "Financial Turmoil"

To begin with let's first identify the status quo issues that appears inescapable

a) Inflationary pressure - at decade high. This force would off course would have its impact on input cost for manufactures, wage hikes for firms, etc. The investors* would always aim to obtain greater return from the markets beating inflation

investors* - any aspiring investor whose one of the aim for investing, would be to beat inflation

b) Securities performance - Reaching new record lows, making difficult for the retail investors to stay invested and expect reasonable returns - thanks to the systematic pull out of foreign investment and claiming the market to be less attractive

c) Industry performance - Thanks to the low average wage inflation across industries, would prompt investor to have a rethinking on the investment and financial planning

d) High Interest rates - This would make loans dearer and would leave us with less savings for reinvestment and expenditure

e) Housing market - Following the trend of metal bust, it is witnessing a slow down at a global level

Having identified some of the basic burning issues handy, an appropriate optimal solution has to be applied for the same.

(i) For retail investors, who have already invested should stay invested and not press the panic button. They should look for averaging and buy more stocks to make the security more cost effective. They should also consider investing in blue chip firms. They must avoid speculation and take rational decisions

(ii) Identify commodities that seems to be giving good returns, say they must consider investing in Gold deposits which has proved to be a decent investment, considering a good 10 % returns per annual.Investment in gold could happen in the form of certificates or bars or accounts or they can be even traded like shares in Gold Exchange traded fund.

(iii) Identify dormant amount in the savings which would not be disposed of say 1 year. Keep certain percentage of dormant amount (depending on financial goals) in Fixed deposits and/or Mutual funds for a period <= 1 (an example)

(iv) Never seeking a loan with the objective of investing in "investables", except for real estate/housing

(v) Like Gold, certificates of the Silver to can be obtained which follows a direct co-relation. Silver accounts could also be opened

(vi) For low risk appetite individuals, the Debt investment is a good option which can return more than the average inflation.