Five ideal destinations to safely park your money
0 views
Skip to first unread message
Sukumar.N
Oct 20, 2008, 3:10:04 AM10/20/08
to Kences1
Five ideal destinations to safely park your money
====================================
Sensex and Nifty were sitting on a high wall but when the sub-prime
crisis dragged the US economy into recession, they had a great fall!
Usually nursery rhymes sound amusing to people. The catch words,
however, here are the major indications of the economy and not Humpty
and Dumpty.
The poem, therefore, may not sound all that enchanting to investors,
especially with high exposure to equities. In fact, with investors
around the world reeling under the shadow of a financial crisis,
SundayET brings you five ideal investment destinations where you can
safely keep your money.
TAX SAVING FDs & FMPs
====================
As they say, old is gold. The safest place where you can bet your
money in the current financial turmoil is the good old fixed deposit
schemes (read tax-saving). The best part about tax-saving FDs is that
not only they protect your earnings against inflation but also entitle
you to tax rebate under section 80C.
The deposits are close-ended, and you need to lock your funds for at
least a period of five years to avail of the key benefits. Currently,
tax-saving FDs offer more than 11% pa returns.
“To enhance returns, you can also consider fixed deposits offered by
high rated housing finance companies. The returns offered are a little
higher then bank deposits. It is, however, advised to go for only AAA
rated companies,” says Mukesh Gupta, director of Wealthcare
Securities. Experts say that you should not invest in Post Office
schemes such as monthly installment schemes, NSC and others as they
still offer lower interest rates.
FMPs are another option you can explore. For the uninitiated, FMPs
score over bank deposits in terms of tax efficiency. “Currently one-
year yields for FMPs stand close to 11% while liquid funds and short-
term funds average one-year annualised yield stands close to 9%,” says
Hitungshu Debnath, executive director, Angel Broking.
GOLD
=====
The yellow metal can never lose its glitter. Wealth managers believe
that inflation is likely to stay in the global system as a result of a
global liquidity injection and therefore gold will be the flavour of
the season. Also, gold is a good hedge against inflation and it has a
weak or even negative correlation with equity markets. “Throughout
September, 2008 when the Sensex was down, gold ETFs were up by almost
30-40% (one year annualised),” says Kumar.
According to Gupta, “Returns from gold may or may not be great but it
will act as an insurance if economic conditions further deteriorate.”
Experts, however, say that if gold is bought purely for investment
purpose, then gold ETF are a better option.
SOVEREIGN DEBT
==============
Next on the list are government securities. These instruments are
easily exchangeable for cash, and are available both in the primary
and secondary market.
They can be bought from banks and primary dealers. Wealth mangers
strongly support debt-based financial instruments in the present
scenario.
“The best place to invest is sovereign debt. So G-Secs would be a good
buy at present which, along with providing ‘risk free’ return, will
benefit from the softening interest rate environment,” says Kumar.
MUTUAL FUNDS & SIPs
==================
Ranked fourth in the list are the heroes that were topping the
investments charts six months back — mutual funds and SIPs. Although
markets are witnessing a fall since the beginning of the year, there
is still a scope of investing here. “Investors with an investment
horizon of more than three years should look at investing into equity
mutual funds or direct equities. In fact, in the current scenario, SIP
in equity mutual funds is a very good option,” says Debnath.
Experts believe that for long-term investors, investing in large-cap
stocks is also a safe idea, as it will result in a good
diversification strategy. “The recommendation of large-cap stocks is
made because when markets recover, it is the large cap stocks that
will recover faster,” says Kumar.
RENTED PROPERTIES
==================
Yes, you read it correctly. Rented properties can also make a good
investment proposition in the present scenario. Rental yield is
usually higher in commercial properties in comparison to residential
properties.
At present, rental yield on commercial properties is in the range of
8-10%. “Commercial lease agreements with respect to malls and office
space range from three to nine years. Buying a space in a high-quality
development and leasing it to a good brand is a wise investment
decision,” says Gupta.
N.Sukumar
Research Analyst
www.kences1.blogspot.com
====================================
Sensex and Nifty were sitting on a high wall but when the sub-prime
crisis dragged the US economy into recession, they had a great fall!
Usually nursery rhymes sound amusing to people. The catch words,
however, here are the major indications of the economy and not Humpty
and Dumpty.
The poem, therefore, may not sound all that enchanting to investors,
especially with high exposure to equities. In fact, with investors
around the world reeling under the shadow of a financial crisis,
SundayET brings you five ideal investment destinations where you can
safely keep your money.
TAX SAVING FDs & FMPs
====================
As they say, old is gold. The safest place where you can bet your
money in the current financial turmoil is the good old fixed deposit
schemes (read tax-saving). The best part about tax-saving FDs is that
not only they protect your earnings against inflation but also entitle
you to tax rebate under section 80C.
The deposits are close-ended, and you need to lock your funds for at
least a period of five years to avail of the key benefits. Currently,
tax-saving FDs offer more than 11% pa returns.
“To enhance returns, you can also consider fixed deposits offered by
high rated housing finance companies. The returns offered are a little
higher then bank deposits. It is, however, advised to go for only AAA
rated companies,” says Mukesh Gupta, director of Wealthcare
Securities. Experts say that you should not invest in Post Office
schemes such as monthly installment schemes, NSC and others as they
still offer lower interest rates.
FMPs are another option you can explore. For the uninitiated, FMPs
score over bank deposits in terms of tax efficiency. “Currently one-
year yields for FMPs stand close to 11% while liquid funds and short-
term funds average one-year annualised yield stands close to 9%,” says
Hitungshu Debnath, executive director, Angel Broking.
GOLD
=====
The yellow metal can never lose its glitter. Wealth managers believe
that inflation is likely to stay in the global system as a result of a
global liquidity injection and therefore gold will be the flavour of
the season. Also, gold is a good hedge against inflation and it has a
weak or even negative correlation with equity markets. “Throughout
September, 2008 when the Sensex was down, gold ETFs were up by almost
30-40% (one year annualised),” says Kumar.
According to Gupta, “Returns from gold may or may not be great but it
will act as an insurance if economic conditions further deteriorate.”
Experts, however, say that if gold is bought purely for investment
purpose, then gold ETF are a better option.
SOVEREIGN DEBT
==============
Next on the list are government securities. These instruments are
easily exchangeable for cash, and are available both in the primary
and secondary market.
They can be bought from banks and primary dealers. Wealth mangers
strongly support debt-based financial instruments in the present
scenario.
“The best place to invest is sovereign debt. So G-Secs would be a good
buy at present which, along with providing ‘risk free’ return, will
benefit from the softening interest rate environment,” says Kumar.
MUTUAL FUNDS & SIPs
==================
Ranked fourth in the list are the heroes that were topping the
investments charts six months back — mutual funds and SIPs. Although
markets are witnessing a fall since the beginning of the year, there
is still a scope of investing here. “Investors with an investment
horizon of more than three years should look at investing into equity
mutual funds or direct equities. In fact, in the current scenario, SIP
in equity mutual funds is a very good option,” says Debnath.
Experts believe that for long-term investors, investing in large-cap
stocks is also a safe idea, as it will result in a good
diversification strategy. “The recommendation of large-cap stocks is
made because when markets recover, it is the large cap stocks that
will recover faster,” says Kumar.
RENTED PROPERTIES
==================
Yes, you read it correctly. Rented properties can also make a good
investment proposition in the present scenario. Rental yield is
usually higher in commercial properties in comparison to residential
properties.
At present, rental yield on commercial properties is in the range of
8-10%. “Commercial lease agreements with respect to malls and office
space range from three to nine years. Buying a space in a high-quality
development and leasing it to a good brand is a wise investment
decision,” says Gupta.
N.Sukumar
Research Analyst
www.kences1.blogspot.com
Reply all
Reply to author
Forward
0 new messages