Dear readers, against the current economic backdrop, where should investors put their monies now?
In the stocks markets? Well, given the volatilities that investors are seeing now, I do not think it is a wise idea. Upside gains are really limited. And there are more downside catalysts than any upside catalysts. I have a short-term target for the Singapore stocks markets benchmark indicator STI to reach 2,500 first.
In fixed deposits? Currently, the average returns of the fixed deposits are very modest, at about 0.35% per annum.
In bonds? Well, I am not an expert in bonds. But given the state of businesses post Covid-19, returns of some bonds may not be really guaranteed.
At this current juncture, investors should not invest into the stocks markets since the current trend is bearish. At the same time, investors should not lock up their liquidity into bonds or fixed deposits that give very modest returns since this liquidity could be deployed to better uses when it comes to stocks markets corrections. This brings me to my final point.
The best place investors should put their monies now is in the bank. These monies will be invaluable in the eventuality of any impact caused by the economic downturn. These monies will be also great as a warchest to invest in the stocks markets when markets corrections render many investors to flee.