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Be Careful About Changing Your Investment Plan To Adjust For Inflation – Forbes

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If one financial term is the hot topic for 2022, it is “inflation.” Inflation worries are showing up in everything from political news asking how inflation will affect the political landscape to daytime shows giving thoughts on how to make ends meet in an environment of rising prices. Now the Federal Reserve has stated that it is aware of the inflationary environment and it intends to take steps to slow the rate of inflation.

While this does mean something to all our budgets in 2022, what does it mean to you as a long-term investor? Should you be making major changes to your long-term portfolio considering inflation? The key to having minimal stress in your investment portfolio is to know that you built your portfolio based on a few key factors. These factors include the nature of your financial goal and your comfort with risk – the chance you could lose value in your investment.

When something like inflation dominates headlines, it is easy to find articles that point to strategies to offset inflation, but is the ultimate goal of your portfolio to offset inflation? In this case, you see suggestions about upping exposure to commodities, inflation-protected securities or equities. In theory, implementing these suggestions may help with offsetting inflation, but if you implement anything new to your investment portfolio, it is time to reassess your entire investment plan.

In the case of a retirement goal that is a couple of years away, you must manage multiple issues at once with your retirement portfolio. You may need to have funds ready for distribution as soon as you retire. You will likely need to have investments 15-20 years into your retirement as well. You must balance these needs with your comfort with investment risk and yes, inflation risk. Your investments should already have the means to address these goals and balance these risks before inflation becomes the next hot topic.

 At the writing of this blog post, the Nasdaq has had its worse month in a decade. Which short term news shock should you readjust for now? Which one is more important, a market correction or inflation? How long will either of these things last?  The fact is your investment plan should already be constructed to offset inflation and have taken into account that the market can drop at any time.

Spend time on getting your investment plan in order

You may be wondering how you can adjust your investment plan if you don’t have one. It starts with setting your goals and then understanding your own risk tolerance. This will tell you whether you should own more or less of any asset. Earlier this year, we published some steps to making your own investment analysis.

If you decide to add new assets classes into your portfolio like treasury inflation-protected securities (TIPS), make sure you understand how they work. Inflation-protected securities have been around for over a decade, but many diversified portfolios have not carried them because of their performance. It is hard to justify carrying bonds with negative yields.

Then consider whether this inflationary environment is transitory. The Fed can pivot and readjust if inflation drops. If you are making big changes because of inflation today, will you be able to pivot in the future without hurting your portfolio?

Gold and other commodities are another area you should not dive into without doing a lot of research or relying on an investment professional. If you’ve already held real assets, you have likely benefitted from owning them as inflation has crept up. Now you must ask yourself if buying real assets at their current prices offers you much upside unless inflation continues to creep up. If you buy them now and inflation cools down, this part of your portfolio can also cool down.

Ultimately the number of investment tactics you can employ are nearly endless. When things change, there will be no shortage of ideas to offset that change. However, it is your responsibility to make sure the tactics you pursue line up with what you want and what you understand.

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China proposes rules to regulate private pension investment via mutual funds – Reuters.com

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A Chinese national flag flutters near the building of China Securities Regulatory Commission (CSRC) at the Financial Street area in Beijing, China July 16, 2020. REUTERS/Tingshu Wang/Files

SHANGHAI, June 25 (Reuters) – China’s securities regulator proposed rules to regulate private pension investment via mutual funds, setting the criteria for qualified products and sales agents under a scheme that will channel fresh savings into the country’s capital markets.

The draft rules, published by the China Securities Regulatory Commission (CSRC) late on Friday, came after Beijing in April launched a milestone private pension scheme to tackle challenges of aging population. read more

Under the scheme, eligible Chinese citizens can buy mutual funds, savings deposits and insurance products via their own individual pension accounts, potentially boosting a pension market that has lured foreign asset managers including Fidelity International and BlackRock.

The proposed rules “have set a relatively high bar for products and institutions, and are designed to ensure safety of pension fund investment and protect investors’ interest,” the CSRC said in a statement on its website.

Initially, pension target funds with at least 50 million yuan ($7.48 million) of assets over the past four quarters are eligible under the pilot pension scheme, the CSRC said.

Other types of retail funds with clear investment strategies and good long-term track records will be gradually added to the eligibility list as the scheme expands, the CSRC said.

Currently, there are 91 pension target funds that meet the CSRC’s criteria, according to TF Securities.

In addition, fund managers and sales agents participating in private pension business must set up internal control systems, adopt long-term incentives, and ensure independent operation of the pension assets, according to the rules.

Independent consultancies estimate China’s private pension market will grow to at least $1.7 trillion by 2025, from $300 billion currently.

In 20 years, 28% of China’s population will be more than 60 years old, up from 10% today, making it one of the most rapidly-aging populations in the world, according to the World Health Organization.

($1 = 6.6878 Chinese yuan renminbi)

Reporting by Samuel Shen and Brenda Goh
Editing by Nick Zieminski

Our Standards: The Thomson Reuters Trust Principles.

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Not gold or bank FD, Jefferies finds this asset as top investment by Indians | Mint – Mint

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Amid soaring inflation and slowdown worries, investors are busy finding out save haven for their money. While some are batting in favour of gold, some investors are favouring debt instruments for short term like bank fixed deposits (FDs) and other deposits. But, if we go by the Jefferies findings, around half of the Indian household savings in March 2022 has been invested in real estate properties whereas bank deposits and gold are distant second and third most preferred asset investment options among Indian households.

As per the Jefferies findings, out of $ 10.7 trillion Indian households assets in March 2022, whopping 49.4 per cent have been invested in real estate properties whereas 15.10 per cent went to band deposits 15 per cent of the Indian households savings were invested in gold. Impact of Covid-19 pandemic was also visible in this Jefferies report as Indian households invested 6.20 per cent of their net savings in insurance funds and it was fourth most preferred investment option by Indians.

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Photo: Courtesy Jefferies

Provident funds and pension is at 5th spot after receiving 5.70 per cent of $10.70 trillion Indian households savings in March 2022. Despite heavy FIIs selling at Indian equity markets, DIIs have remained net buyers since October 2021. However, in Jefferies report, equities has received 4.80 per cent of the net Indian households savings in March 2022 and it is 6th most preferred investment option among Indians. As Indian households has a habit of keeping some part of its savings in liquid form. 

Jefferies report has a mention about it as well. As per the Jefferies findings, 3.50 per cent of the net Indian households savings in this period has gone to cash or liquid segment and it an obvious least preferred option among the Indian households.

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HomeFirst Home Healthcare secures investment from Fulcrum – PE Hub

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Harpeth Ventures also participated in the investment.




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