Explore Your Investment Options

January 18, 2007	(1 votes, average: 5 out of 5)  Loading ...
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Indians are traditionally savings oriented. From stashing away cash, to hoarding gold, the Indian householder has made a gradual move to the banks after independence. As the middle class struggled to make both ends meet, they often found lack of investment options as the major hurdle making their smooth ride an uphill climb. Only a small number of daring Indians ventured into the stock market, but the average householder maintained a safe distance from the bourses, eyeing it mostly with suspicion. Life insurance policies and unit funds, fixed deposits and other savings schemes by banks, post offices secured his future.

In the 1980s, the government woke up to the fact that large funds could be mopped up in the form of mutual funds and a flurry of activity was seen in the stock markets. There were mutual funds galore, and the returns gave investors the confidence to participate more actively in the stock exchange.

Enter Harshad Mehta in the 1990s and an entirely new avenue to make money came out of nowhere. Then followed the crash, and along with it, the fortunes of many a starry-eyed Indians.

The market has resurfaced with a vengeance, but the BSE Sensex remotely controls the heartbeat of every investor, as it nose-dives and shoots up in response to news and events in industry and politics.

So how can one ensure a risk-free investment?

The mantra is: “Never put all your eggs in one basket”. Your investment cocktail should have a balanced mix of assets to minimise the risk of overall negative returns.

What are the options available for investment? Plenty. Apart from the traditional, low-return ones like cash (read savings account), and fixed interest securities with banks, companies and corporate bonds, equity, real estate and bullion are worth considering.

The stock market, though volatile, is reasonably secure for a long-term investment, and offers good liquidity too. Within the range available, diversify your portfolio to minimise risk. Returns from the Sensex were 47% in 2006, and Nifty‘s was at 40% in 2006.

Real estate has proved itself, with appreciation at an all-India average of 30% in 2006. Here again, spread your investment to different areas to counter negative returns from any quarter.

Gold in 2006 the metal appreciated 18%, and certified gold is a worthwhile buy. Since there is no income from holding gold, it is not liable to income tax. However bullion is subject to capital gains tax and wealth tax.

“Great works of art live many times before their deaths.” What about encashing this phrase? Wondering How? A majority of genuine art dealers are there that you may look upon as your financial advisors for art investment. Risks and prospects always go hand in hand. Thus, invest in medium-priced work which could give you reasonable appreciation over a period of time.

However, the choice will always be yours. Therefore, try to curtail the risks and maximize the profit which is every investor’s sole motive. A simple rule of thumb for you to follow: Choose such an investment option that aims to maximize total returns over a long period, preferably closure to 10 years.

News Published Under:   Real Estate Trends |

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