How to protect wealth in a slowing economy: These are tensed times for common investors. Economic growth of the country hit an over six-year low of 4.5 per cent in the July-September quarter this year. The growth rate has been below par in the first six months of FY 2019-20. The country’s economy has grown at 4.8 per cent in this period as against the 7.5 per cent in the same period of the previous year. Naturally, the slowing economy has left a lot of common investors worried about how they can keep their wealth safe and what could be the best options for them to invest. We asked these questions to Rachit Chawla, registered investment advisor with SEBI and founder of Finway – an RBI approved NBFC company. Chawla suggests the following steps to protect wealth in a slowing economy:
Chawla suggested that common investors should stop spending unnecessarily in challenging times. Also, one should no increase debt burden for buying luxury items with loans or credit card. "In such a challenging scenario, one should refrain oneself from an extravagant lifestyle and must stop buying things which can be avoided or delayed. Every penny matters so don't increase the debt burden with expensive loans and buying luxury items using a credit card."
Create emergency fund
Chawla further said that one should create an emergency corpus for facing unexpected challenges that may arise in a slowing economy. "Also, create an emergency corpus to meet the unseen needs of tomorrow, and protect your entire family under a medical cover," he told FE Online.
In a slowing economy, investors should focus on long-term goals before taking any hasty financial decision. "During the slowdown, one needs to focus on long-term financial goals instead of making hasty financial and investment decisions."
Where to invest
"Patience is both remedy and key to success, and for intelligent investors, it is time to infuse more in the selected instruments such as SIP, Gold, Foreign Currency, and Short-term Debt Funds. These four investment options are considered ideal during the economic slowdown as SIP and Gold bring lucrative returns in the long-run, Foreign Currency like the US dollar is a good investment option for the mid-term, and Short-term Debt Funds are goof for short duration," said Chawla.