Amid turmoil in banking sector, follow these steps to weigh risk that the banks face
Live MintThe shocking collapse of America’s Silicon Valley Bank is all one is talking or reading about for the past week or so. Compare this with around Rs 40 trillion invested in mutual funds and Rs 22.8 billion daily cash market volume in equity for individual traders and it’s clear that the popular choice for individuals is to leave money in bank savings and fixed deposits. This price rise automatically reduces the value of your money by 6% every year; a basket of stuff which cost you Rs 100 last year is likely to be worth Rs 106 this year. Equity investing has a much higher short term risk of losing money thanks to volatility in values as compared to risk of losing money in the long run, but instead of opting for long term benefits of compounding returns in equities, the retail investor is more interested in chasing quick gains from trading. For example, emergency money can go into a bank account despite inflation risk, because you may need it anytime and can’t risk volatility in value.
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