Running The Interest Rate Race

In inflationary times fixed income instruments may not be such a great idea , especially if the interest rates are just not that high.But there is no way we can avoid these instruments.

1.We need them to add steadiness to our portfolios especially when the stock markets show volatility.

2.We need  them to  park the money we plan on using within a definite time horizon.

3.We need them again  when we have to route a steady stream of  payments into another investment and want to simultaneously avoid both the risk of a capital loss due to a short term investment in a mutual fund and the low returns of a liquid fund.

In such a situation we just need to find the highest possible interests which our funds can earn in a given time over and above the rate of inflation while simultaneously reducing the risk of capital loss. Read more of this post