Dhanteras and Diwali are the biggest festivals for investors as they believe that an investment made during this period can grow manifold and provide great returns. This year the investment market has been volatile with the rupee falling to new lows, petrol prices skyrocketing, and the stock markets plummeting.
In the last three months, the BSE SENSEX has fallen more than 4000 points from its peak this year. This has also resulted in poor short-term returns from mutual fund schemes. Amid so much volatility in the markets, there is a golden opportunity for investors looking to invest with a long-term view.
In the current market situation, it is better to avoid speculation and short-term investment. While investing with a long-term purpose, it is very important to select the right investment product to maximize returns and ensure the safety of funds. Let’s check out the various investment products in which you can make a fresh investment during this festive period for the long-term to get an attractive return and to achieve your financial goals.
Real estate is a time-tested long-term investment
With RERA coming into the picture, investments in real estate are safer than before. There are a large number of homeless people in India, with the population still growing and the per capita income improving, the demand for homes is expected to increase steadily in the future.
Realty investment can give you attractive capital gains in the long term along with steady rental income benefit. During the festive period this year, developers are expected to come up with attractive offers and discounts for property buyers. The interest rate is still in single digits, i.e. close to 9% per annum level. Therefore, you can also get loan support while investing in real estate. With inflation, the price of the property and the rental rate also increases, so your return on investment gets bigger the longer you stay invested in the property.
Invest in gold to beat inflation
Gold is a popular investment during the festive season. This year gold is expected to regain its charm that was missing in the last few years. With the falling rupee, investments in gold can protect your wealth in the long-term. There are various ways to invest in the gold: buying physical gold like jewellery, gold coin, gold biscuits and so on, or investing in the non-physical forms of gold such as gold ETF and Sovereign Gold Bond (SGB).
In terms of safety, the cost of holding and ease in transacting, it is better to invest in non-physical gold products. For long-term, if you invest in the sovereign gold bonds (SGB), then you can get capital gain as well as an interest income at 2.5% PA on the value of the SGB ticket price. Also, the redemption of SGB on maturity is free from long-term capital gain tax.
Mutual fund SIP can multiply your long-term investment return
Mutual fund schemes have come under redemption pressure with a recent slide in the stock markets. But this correction also gives an opportunity to new investors to make a fresh entry into the markets. With mutual fund NAVs at lows, you can buy more units now.
The markets go through cyclic ups and downs. In the future, they will rise again and give you attractive long-term returns. During this festive season, you can start investing in an equity mutual fund SIP scheme with a long-term view. It is crucial to continue the SIP for the long-term to get the maximum benefits of market volatility. Depending on your risk appetite and return expectation you can invest in the mid-cap or the large-cap segments. Consult your investment advisor before putting your money in a mutual fund scheme.
Fixed deposit is attractive once again
Fixed deposit interest rates have started to rise again. At present, the FD rate for the 5-year tenure is close to 7% with PSU banks while private banks are offering a rate of around 7% to 7.35%. There are a few private banks and small banks which are offering a slightly higher rate of above 8% PA. So while investing in the FD, you must explore the rates provided by various banks at that time and select the best one. If the interest rate increases significantly after you have invested, you can at any time liquidate your FD and reinvest it at a higher rate. You’ll lose only a few percent interest on premature liquidation.
An FD investment is especially suitable for risk-averse investors and people who are looking for a lump sum investment and do not want to take a risk with their capital. In the long term, the risk level comes down, and returns prospect improves. Therefore with the Indian economy growing fastest among emerging nations, this is the best time to invest your money with a long-term view.