Many people have asked me “Should I keep all my money IN CASH – is it the best asset class at this time?

So, I have been struggling to answer this question..and have instead said this –

Cash is surely one alternative – but please remember there is a huge amount of risk in terms of cash being stolen, fire, etc.

Bank deposits – another attractive place for many people to park their funds today is a “bank FD” – because they want to “preserve capital”.  Banks pay anything between 3% p.a. to about 11% p.a. if you see the pre-tax return. Both cash and bank deposits do not protect you against inflation and taxes. Post inflation and post tax you are losing you your capital – which is because of a negative return.

Income funds: If you think interest rates have peaked (Monika Halan came on Ndtv profit and said that interest rates have peaked, but I do not understand all that). So if you believe interest rates have peaked keep your money in Income funds.

Real estate: Ndtv profit says real estate markets will fall by 30% in the following months, so stay away from real estate. I do not understand how real estate markets move, so I cannot hazard a guess. If you think that real estate will give you a return in excess of the interest rates at which you are borrowing (fr the next 20 years) buy real estate.

Equity funds: Well the experts at all the channels seem to think that the markets are a bad place NOW to keep your money. Again I do not understand equity markets as well as the experts who come on TV. However I have kept my SIPs on – and now they have been on for 7-9 years….and I have not stopped them. Of course I find solace in that the experts who come on TV are only looking at a teleprompter and not at a crystal ball. Or in John Templeton’s statement “I do not know anybody who knows anybody who has perfected the art of Market Timing”.