1. Equity
Tips:
i) One may diversify across sectors and market capitalization to hedge against the risk of investing directly in stocks.
ii) Those who don’t have time or little knowledge of stock picking can simply invest in ETFs of Nifty, Sensex, Bank Nifty.
2. Mutual Funds/ ELSS
Tips:
i)The investment adage “Greater Risks = Better Returns” is common. As a result, knowing what level of danger or risk appetite you can tolerate in advance is critical.
ii) Always buy Direct Mutual Fund.
iii)Be conscious about Total Exchange Ratio charged on MF. 1% reduction in cost each year can make significant impact on your returns over longer period of time. Remember TER gets debited from your NAV on daily basis and hence, lower TER cost results in higher returns.
iv) Within a category, always choose funds with higher AUM as it will lower the cost impact of Total Expense Ratios.
3. Gold as Investment (not personal use): For detailed article, Click here
The demand (and the price in turn) for gold usually increases when the stock market crashes or falls thus, providing hedging to your red portfolio during difficult economic times. The price of gold also rise by a significant margin if major currencies, like dollar, tend to fall weak. Thus, it is advisable to allocate some percentage of your portfolio into Gold.
–Sovereign Gold Bonds are the most suitable choice if you plan to stay invested for a period of 5 years or longer. Not only will you receive regular interest payouts while you stay invested, but you will also have the option of redemption of these bonds at maturity i.e. after completion of 8 years is also tax-free.
-In case you are looking to stay invested in Gold for the short term i.e. no more than 3 years, you can opt for Gold Mutual Funds or Gold ETFs, which have high liquidity and availability.
4. REITs
Gone are the days when you have to invest large sum of money to own commercial buildings. REITs opens option of investing in commercial real estate with as small capital as required for investing in Mutual Fund unit. Their comparatively low correlation with other assets makes them an excellent portfolio diversifier that can help reduce overall portfolio risk and increase returns.
REITs in India currently offer yields in the range of 5.1-5.5%. These yields may further escalate depending upon the rental renewal rates of tenants (Re-leasing). One can invest in REITs either by applying IPO/FPO or through stock exchanges by opening Demat Account or by investing through Real Estate Mutual Funds.
Expecting astronomical growth from your investment in REITs may be unrealistic. However, as a way to diversify into real estate, REITs present the perfect opportunity for investors at all income levels
5. P2P Platforms
It is a relatively recent option and is a form of crowd-funding used to raise loans which are paid back with interest by bringing together people who need to borrow, from those who want to invest. For the funds that you invest, the interest rate may be set by the P2P platform or mutual agreement between the borrower and lender. The most popular options are 12% Club wherein you get 12% returns on your investment;
Risks: This is an unsecured loan where there is no face-to-face interaction, a P2P lender, i.e., the investor needs to be aware of the risks involved such as default on the part of the borrowers.
Disclaimer:
The information herein is meant only for general reading purposes and the views being expressed only opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information and other sources believed to be reliable.
Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Recipient alone shall be fully responsible for any decision taken on the basis of this document.
Stay blessed and Keep rocking!
