How to Invest in a Low Interest Rate Environment?


When you hear or read the word Investment, the first names that may come to your mind, could be Warren Buffet, Mukesh Ambani, Benjamin Graham, Peter Lynch, etc. 

We often feel that only rich people can invest in Stock, Bonds, Mutual Funds, etc. 

But this is the Myth.

The reality is anybody and everybody can invest.

Why are Investments necessary?

Top 4 Benefits of Investing in Market Linked Assets

  1. It helps you build wealth and create financial stability.
  2. Helps you beat inflation 
  3. The compounding effect helps you multiply your wealth exponentially
    “Compounding Interest is the eighth wonder of the world. He who understands it EARNS IT… He who doesn’t…PAYS IT” - Albert Einstein


  4. Higher returns help you achieve your financial goals faster.

Despite knowing all the benefits investment offers, are you still apprehensive about investing?

What are the questions that run in your mind that stop you from deciding to invest?

should i invest, how to invest, where to invest emoji

  • I have savings. Should I Invest? Is it safe? 
  • I don’t have enough knowledge; how do I start?
  • I am not aware of market sentiments; I might make a wrong decision.
  • How can I rely on someone’s else experience?
  • How do I protect my capital when the markets are going down?
  • When it comes to investing, there is so much fine print, what if I miss crucial information?
  • How to choose a good Portfolio?
  • Is now a good time to invest, and how much should I invest?
  • How do I know when is the right time to exit?
  • Do risk-free investments yield good returns?

And many such more questions might keep you puzzled all through.

 They may also make you believe that investing involves a lot of money and has a high probability of losing money.

Don’t worry, you are not alone, a majority of residents feel the same way, and so they choose only to save with banks and invest in property.

How to Invest in a Low Interest Rate Environment?

While UAE bank deposits, FCNR, NRE Fixed deposits and property were ideal investments in the past, but they are not as rewarding now.

Banks in the UAE and FCNR deposits pay 0.50% - 1.50% interest pa. NRE deposits pay 5-6% interest, but they are exposed to the currency risk.

Property prices and rental yields are falling in UAE, India and globally.

Additionally, there is the uncertainty of income due to global economic conditions; people are perplexed where to invest safely with good returns without losing the liquidity of funds.

While more people are now keen to invest in Market linked investments; they are also scared of losing their hard-earned money as they perceive investments as too complicated, risky & volatile.

And to make our fear worse, the terms and conditions attached to these instruments leave us with more questions than answers.

But what if I say, Investments can be safe, rewarding, and can have a certain level of liquidity as well!

Sounds Interesting? Right

With Proper planning, Investment risk can be mitigated and designed to generate higher rewards than savings in a bank.

Warren Buffet is the living legend of how investments can be rewarding and turn you into a millionaire.

Now the million-dollar question is, can you Invest with a minimum risk with relatively Higher returns?

The answer is Yes!!!

It is a Simple Six-Step Process:

  1. Emergency Fund  

 It is always advisable to keep an emergency fund of 6 months – 1-year expenses to combat any financial emergencies. It acts as a safety net, provides psychological security, and helps you overcome any crisis without running into debts or cashing out on your investments.

2. Investment Horizon 

How to invest in a low interest rate environment?

It is better to be clear on the time horizon for which you are expecting to hold the securities. Investments can be planned for the short term, medium-term, and long time. 

However, the longer the period of investment, the better the reward and lower the risk. 

3. Attitude to Investment Risk and Volatility

We all know that investments are subject to market risks and susceptible to market fluctuations. 

When looking to invest in stock markets, you must take calculated risks with proper planning and in line with your attitude to risk and horizon.

You must not jump into the pool without testing the depth of waters; the same holds true for investments as well.

4. Pre-determine the Expected return

It would help if you had a clear idea of what returns to expect before choosing a particular investment. This can help you determine the ideal risk/reward trade-off

Risk/Return Tradeoff - Image by Sabrina Jiang © Investopedia 2020

Image by Sabrina Jiang © Investopedia 2020

5. Get the Asset allocation right

 It is an efficient risk management strategy that balances the risk by diversifying the portfolio into different asset classes.

Typically a higher diversification into non-correlated assets means a lower the risk and lower reward.

As we commonly say “Don’t put all your eggs in one basket.”

Click here to read more about asset allocation.

6. Review your portfolio at regular intervals 

Review your portfolio at regular intervals

It is imperative to review your investment portfolio at frequent intervals to ensure they perform as per your goals.

It gives a fair insight into which stocks/funds are performing well? How much returns are they generating? and which stocks/funds to sell or buy. We can balance our portfolio and realign it with the market scenario and our financial goals. 

We must build assets rather than liabilities by investing intelligently, earning strong returns, and increase our financial worth.

Expert Help

As an Independent Financial Advisor, I can help you create a Holistic financial plan and an investment portfolio aligned to your goals.

I can also help you manage your investments to ensure that your goals are achieved with the desired ease.

Don't wait arrange a Free Consultation today and jumpstart your journey towards wealth creation.

Happy Investing!!!

Click Here to Arrange a Free Consultation

Share this article on

Read more