Don't Let Volatility Interrupt Your Wealth Creation
The shorter your time horizon, higher the chances of you losing money
Equity is a great asset class to grow your money. In fact, for a huge majority, it becomes the only way to create wealth. But it is highly volatile and a double-edged sword.
The shorter your time horizon, higher the chances of you losing money.
The reality is that everyone has short-term expenses, but a lot of us don’t plan for them. We just secretly hope that the markets will do well. Every time you are forced to sell your equity investments for short-term goals, you interrupt your wealth creation.
“Compounding may or may not be the eighth wonder of the world, but interrupting it is surely the eighth sin", says Ajinkya Kulkarni, CEO & Co-founder of Wint Wealth.
Hence, fixed-income instruments are more suitable for short-term expenses.
The next natural question that would come to your mind will be – But what are these fixed-income instruments?
When we look at the options, there is the good old FD that can help you safeguard your money from volatility, but it doesn’t beat inflation.
If you're willing to take some risks and want to beat inflation, corporate bonds are a viable option. Companies use corporate bonds as a means of borrowing and, in return, give a fixed return.
There are corporate bonds that give 9-11% risk-adjusted returns for a duration of 12-24 months.
Please Note: These bonds are riskier than FDs. Only invest those funds in bonds that are above and beyond your emergency fund.
There are bonds that give even higher returns, but they are considered “junk bonds" and carry disproportionately higher risk.
Go through this quick checklist to find out if bonds make sense for you:
How to invest in corporate bonds?
Unlike bank FDs, corporate bonds carry credit risk, i.e. risk of a company defaulting. That makes investing in the right bonds very important.
This is where platforms like Wint Wealth will come in handy, where you can invest in carefully curated bonds.
Wint Wealth only brings bonds on the platform which meet their strict due diligence criteria and they personally feel comfortable investing in. They believe that unsecured bonds are too risky for retail investors and only bring secured bonds on their platform.
“Bonds are a fairly new investment option in India. Awareness is low, and that is why it is very important to first educate investors and build trust in the asset class.
To solve this, we hold webinars before each bond and explain how bonds work, the risks involved, and answer any query that investors have even before users make their first investment" says Ajinkya Kulkarni.
Since its launch, Wint Wealth has sold bonds of over ₹700 crores to 40,000+ investors. More than ₹300 crores have already been repaid to investors on time with 0 defaults.
Check the corporate bonds that are currently live on Wint Wealth.
The next step: How do I buy these bonds?
While there are different avenues to invest, we would suggest doing your own due diligence. Don’t just look at bond rating. Avoid unsecured bonds. And in corporate bonds, you should stick to shorter duration bonds(< 2 years).
To explore a selection of carefully curated corporate bonds that offer 9-11% fixed returns, click here.
Disclaimer: This article has been produced on behalf of Wint Wealth by HT Brand Studio.
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