Kavan Choksi- An Overview of Stock Versus Cash Investments

Since the financial crisis of 2008, stocks have been in a long bull market generating good returns for several years. These profits have been high enough to invoke potential investors to the share equity market. This trend, along with the low rates offered in savings accounts, is attracting many more people toward stock investments.

Kavan Choksi- managing risk optimization

Kavan Choksi is an eminent wealth management consultant and an expert in business and financial management. He is an investor and has helped many companies earn lucrative returns with their money in the past.

Never rush into stock or cash investments without financial knowledge

According to him, when it comes to stock investments, there are certain things that you need to remember about the market. It flows with the times, and so you will have phases of bear slumps and bull runs. There have been several ups and downs that have been witnessed in the past few decades. The S&P 500 has increased by 195% for a ten-year period that ended on the 9th of October in 2020, or it can be said that it had an annualized return of +11.4% returns.

Consider the market timings – should you take this step before any investment?

It is very challenging for a potential investor to predict the path of the market, so banking on market timings is not advised. Instead, potential investors should allocate their money to index funds through the dollar-cost averaging technique instead of retaining their cash on the sideline.

With this step, one of the most effective steps is to increase a portfolio that reduces losses. The market timing with strategic share purchases and cash is vital for keeping the levels of loss as low as you can.

Consider monetary policy and market volatility

Remember, when it comes to stock investments, or for that matter any other type of investments, you need to consider the market volatility. This means how fast the prices rise and fall. If the market volatility is high in the market, investors will sell off their stocks in a panic. Several investors do not have the ability to handle market volatility daily. For instance, the financial instability that is taking place in Italy.

It would help if you examined the monetary policy of the region closely

Business and finance expert Kavan Choksi states that along with market volatility, you should also consider the monetary policy of the region. It influences the investment demand prevailing in the market, and this allocates how they will give their cash. If the interest rates in the market are low, it stimulates more borrowing. On the other hand, if the interest rates in the market are high, people tend to save more with their investments. However, you should also note that low rates of interest boost fixed income from their savings accounts.

The Federal Reserve 2015 increased the rate for federal funds in seven years for the first time from 0% to 0.25%. Again, the rates for the federal funds range fixed by the Federal Reserve increased from 0.25% to 0.50% the same year to 2.25% to 2.25% in 2018, in December.