My Investment Strategy For 2022 | Market Crash | Inflation | Russia-Ukraine War

When it comes to investment, the first half of 2022 has been really strange. A lot has happened in these couple of months and it is really difficult to stick to the same investment strategies that we did a year or two ago. Is the market crashing? What strategy changes have I been employing? What are my financial goals for 2022? Let's discuss all in this article!

The last two years have been really different from anything we have seen before. Most of the world was on a lockdown because of the Covid. The industries and markets were shut in a way. Many of the companies had to stop their business or had to devise some other way out to survive the lockdown. All these also led to a global economic decline. The GDP of countries started shrinking. This led to a lot of currency getting printed by the major economies around the world. Rupees, Dollars, and Euro were printed in an abominable manner. If you have a slight understanding of economics, you will know that when new currencies are printed, the value of the currency that you own starts going down. What happened due to this policy? There was a huge supply of money. This money was injected into markets, given as loans to businesses, and for various other purposes. This injection of money made the stock markets reach newer heights. The markets recovered quite quickly, within 2-3 months of the lockdown, and went to reach their all-time highs.

And just when the fear of Covid started fading, there started supply chain disruptions. Semiconductor shortages, Russia-Ukraine war. And the excess of cash printing that was done 2 years ago is showing its negative side now. It is one of the primary causes behind the growing inflation across the globe. All of these unfortunate events are having global implications.

If we look at the Indian stock market, it has shrunk by more than 5% in the last one month and more than 7% in this year to date. The same is the case with the USA, where markets are down by more than 13% in 2022 YTD. The story from the crypto side seems more horrific with Bitcoin falling by nearly 37% in 2022 YTD.

As per my analysis, it is really tough to predict how the 2nd half of 2022 is going to unfold. And hence, I am incorporating these changes that I am making in my portfolio for the rest of the year.

Stock Market Portfolio Changes

Prior to now, approximately 40% of my stock market investments were in the Index. Now, around 60% of investments will be in the Index i.e. double the previous value. If you do not know what an Index is, I recommend you to go through my article by clicking on the link mentioned below.

What Are Index Funds? What are NIFTY and SENSEX?

The rationale behind this move is that the index has the largest companies in the country and it is highly unlikely that these companies will fade away or not recover from a market crash. And this increase will be compensated by a decrease in my investments in mid-caps and small-caps.

Crypto Portfolio Changes

The Crypto market used to comprise up around 15% of my total investment value. But looking at the current circumstances, I will be bringing it down by 5% and will be stopping investments in altcoins. Henceforth, my crypto investments will be equally divided between BTC and ETH.

What Are Cryptocurrencies - Bitcoin, Ethereum?

Debt Market Portfolio Changes

To date, less than 7% of my total portfolio used to be invested in the debt market. But with the growing uncertainty, I am increasing my debt market portfolio from 7% to 15%. The debt market tends to provide stable returns and will be kind of an anchor while my other portfolios are going down.

How Does My New Portfolio Look Like?

Suppose I used to invest ₹100 every month. The following image will help you understand what my new portfolio looks like in comparison to the old.

And finally, we have made it to the end of the article. I hope this imparted some value in your life. Consider giving a like and share it among your peers. To get notified of new articles, sign up to the NerdyTree.

Let me know your thoughts in the comments.

Note: This is not a recommendation. Please do your due diligence and/or contact your financial advisor while investing.