Where to invest today?
A look at some of the
attractive investment opportunities that you can consider at this point in
time.
Stick to investment
fundamentals
As with everything else in
life, investments too will have their ups and downs. It is the reality after
all. There will be good periods and also the bad ones. In this scenario, using
a sensible approach is the only way out. Disciplined savings habit, wise
investments with adequate diversification and a clearly defined asset allocation
pattern based on a financial plan aren’t just bookish knowledge to be brushed
aside. Just as sound technique is essential for success in cricket, a strong
commitment to fundamentals is the secret of investment success. Here are some
attractive investment opportunities that you can consider at this point in
time.
Fixed Maturity Plans (FMP)
When everyone expected interest
rates to fall, it surprisingly rose! This has given an unexpected but excellent
investment opportunity. Since interest rates are considered to be at or near
the peak now, this is good opportunity to lock into these attractive rates
through FMP. As FMPs have a fixed maturity date, invest for the full tenure of
the FMP; this will help you get the prevailing high interest rate for the term
of the fund. Depending on your investment horizon, you may choose FMPs with
tenure of up to 5 years.
Short term funds
Bond funds come in a variety of
investment terms. There are long term and short term funds depending on the
tenure of the bonds that they hold. Short term mutual funds have been offering
attractive returns. Since low tenure bonds and funds experience lower
volatility due to interest rate movements, these are good options for a 12 to
18 month investment period.
Long term funds
Bond funds that invest in
relatively longer term bonds would benefit tremendously when interest rates
fall. The current high interest rates are expected to fall in the near to
medium term. By investing in these long term funds, you not only get higher
interest but also an attractive capital gain when interest rates start falling
(market prices of bonds rise when interest rates fall). If you can remain
invested for more than 3 year and are comfortable with short term price falls
and rises, you can consider these funds.
Equity SIP
Most successful equity
investors invested when everybody preferred to stay away from equity. There is
very little enthusiasm for equity shares among investors now and hence their
prices are at an attractive low. By investing regularly in equity funds now,
you have the potential to earn attractive returns when the market does turn
around eventually in the near future.
Systematic Investment Plans are
an automated way of investing a fixed sum at fixed time intervals. All it takes
is a standing instruction to your bank through the mutual funds scheme and your
money would start flowing into the scheme without any further effort.
Investing bit by bit through
this period of gloom, you not only reduce your investment risk but also enhance
your return potential. You may start and more importantly, continue an SIP in a
good equity fund.
To conclude, don’t despair!
There will always be some investment avenues that would make sense in a given
situation. Happy investing!
