How to invest confidently amid risks during huge market fluctuations

When investment markets are prone to huge fluctuations, economic slowdowns, and uncertainty, some of you may lack confidence in investing your money, especially for financial novices and those who are not familiar with high-risk investments. That’s why, many of you decided to keep cash in your pocket, or just put it in a bank as you feel more confident that such financial institutes will be totally safe.  

However, due to the current crisis, the “Policy Interest Rate” of Thailand dropped to as low as 0.25%*, which is the lowest rate in the history, resulting in too low bank returns to cope with inflation. As a result, no matter how fluctuating the market is, investment is still necessary, and you should never ever stop investing. No investment equals risk, as the value of cash you have in your hands will have gradually decreased.   

Then, what should we invest in? If you’re not a risk person, during this kind of situation, keeping your money in a “mutual fund” is an interesting choice as your money will be taken care by a professional fund manager who will always assist minor investors to distribute their risks throughout their existing assets.  

So, today, we’re bringing you a friendly manual that can help you choose funds that fit your goals. 

1. Rely on a short-term investment, wait for the market to get recovered 

If you’re still unconfident in putting your money in a high-risk asset and want to keep it in a more secured place, but with needs to also obtain “a chance to get competitive returns” and to invest in a fund that has “high liquidity” at the same time… 

Money market funds and short-term fixed income funds are deemed to be good choices for you, as both funds prioritize investments in bank deposits, government bonds, short-term debenture—all of which are assets subject to low risk and interval returns. Importantly, this group of funds has high liquidity, meaning that you can obtain cash within only 1 business day (T+1). 

It is a suitable place to keep your money for a short period of time in order to wait for the market to get recovered, and to wait for an appropriate time to get back on track and invest in a fund that focuses on stocks or alternative assets to achieve a higher return.  

- Recommended money market funds provided by PRINCIPAL, please click. 

- Recommended short-term fixed income funds provided by PRINCIPAL, please click. 

2. Look for a chance to establish stable growth 

For those of you who wish to invest and grow in the stock market, but also want to limit risks to an acceptable level, a choice recommended here is to go for an investment in index funds. 

As “equity funds” which focus on indices, such as SET50, SET100, or stocks in the ESG group, generally employ passive strategies by contributing returns that are close to those of the market as much as possible, it is suitable for long-term savings as, according to the nature of the stock market, the longer you invest, the lower the risk will be. 

- Recommended equity funds provided by PRINCIPAL, please click   

Besides, there is also another alternative for those of you who want to stably grow your money, that is, “Super Savings Funds (SSF),” as this fund was designed for long-term savings—10 years or more. Importantly, it can be used for tax deduction, allowing us to enjoy double benefits, including investment returns and tax incentives obtained from the invested money. 

- Recommended SSF provided by PRINCIPAL, please click

3. A long-term plan for retirement 

Long-term investments for retirement are something you should consistently do regardless of what crisis the market is currently facing. This is because, when talking about retirement, it concerns both financial and life planning. Let time lessen risks and enhance opportunities to obtain compound returns on and on.  

Certainly, “Retirement Mutual Fund” or RMF is the best choice, as one advantage that can be assured is the tax deduction, and this fund is undeniably designed for retirement. 

Moreover, RMF also offers several investment plans, ranging from low risk to high risk. We’re therefore able to formulate a plan that meets and is appropriate for your needs. If you don’t want to take high risk during this time, you may go for an RMF, as with this product, you’re investing your money in money market funds, treasury bills, government bonds, etc. 

- Recommended RMF provided by PRINCIPAL, click 

In summary, as you can see, if you choose an asset that suits the ongoing situation, you can limit risks posed by investments. So, don’t be overly scared of short-term fluctuations and don’t let it make you miss the chance to gain long-term profits. Importantly, do choose suitable funds and period of investment, as well as studying on policies and risks, in order for them to generate returns that fit your targets in the future.   

*Source: https://www.bot.or.th/Thai/PressandSpeeches/Press/2020/Pages/n1663.aspx  

Each investor should first understand the nature of products (funds), conditions, returns, and risks before making a decision./ The investor should study about mutual funds, especially the investment policies, risks, and performance of such mutual funds which are disclosed in different sources, or request for further information from responsible staff before making a decision./ Past performance shall not be considered as a guarantee of future results.