Best investments to make in the fiscal year 2018-19Apr 25, 2018(18:14)
It is the beginning of the new financial year and we are all considering starting new investments to use either the cash from the previous year, the year-end bonus or because of the recent pay hike.
While considering investing, we scrutinize our investment options and more often than not, the number of options available itself is overwhelming. This leads us to what is called the “analysis paralysis”. This occurs when one puts off investments due to over analyzing investment options. To save you from this and help you invest right away, I have come with the following recommendations for investments in the fiscal year 2018-19.
The Stock Market
Currently, we are witnessing a very strong multi-year bull market, which started around 2012 and the value of Nifty has almost doubled since then. Factually, the stock market has historically paid off. However, some do not trust the market and rule it out as an investment option, while some consider that the market is currently overvalued, and it’s crazy to jump in. These apprehensions might not hold much value, neither am I recommending pouring in every rupee. I am rather suggesting an investment strategy called “Rupee Cost Averaging”. Under this investment strategy, one buys shares when the market is high and a few more when the market lowers. This regular purchase of shares at different rates over a period gives a lower average share price.
Another reason to invest in the stock market is that the Indian economy is standing at the threshold of dramatic changes. In the next decade, India is likely to develop at a faster pace than ever before, more so as it is backed by strong regulations and solid reforms. You can participate in this by investing in the stocks of leading companies in various sectors like infrastructure, logistics, housing, data connectivity, etc.
Because why not? Mutual funds have something to offer for every kind of investor. It is a unique collection of funds managed professionally by a Fund Manager, whose prime interest is to make most of every opportunity in the dynamic financial market. Hence, letting the investors ease out on constantly monitoring of the performance of the funds. Mutual funds are classified as bond funds, equity fund, hybrid fund, etc. based on the combination used and the kind of returns it offers. Mutual funds offer systematic investment plans (SIP), which offer individuals to start investing with small amounts and get huge benefits over a period. It also offers simple withdrawal plans (SWP) with the flexibility to withdraw a certain amount on regular intervals on your lump sum investment. Mutual Funds have also given one of the most promising and consistent returns in the recent years and has attracted an increasing number of investors towards it. The question that may now arise is which fund to invest in and how much. However, choosing a fund out of the plethora of schemes available is a tough task, but should always be done on the basis of the requirement of your financial goals and your risk appetite.
Gold, also known as the crisis commodity, is the oldest, most tested and one of the most durable assets known to mankind. Considering the disruptive times, it is also a good hedging investment against inflation, financial uncertainty and geopolitical uncertainties. For instance, people often flee towards the safety of gold during world tensions and its price often sores when the confidence in the government is weak.
Gold is also a great investment for diversification of the portfolio. The key to best diversification is investing in tools not closely related to one another. Gold, as a matter fact of fact, has a negative correlation to the stocks and the financial instruments. A combination of gold, stocks, bonds, etc. significantly reduces the overall volatility and risk. And after several years of consolidations, the gold prices are also moving higher, suggesting a good time for investment.
It is commonly believed “Cash is King”. Regardless whether you are a risk-averse investor, an aggressive investor or somewhere between the two, we all prefer a share of handy cash. It is also strongly recommended by experts to set aside an amount equivalent to your two month’s income in the form of cash in a bank or any liquid asset which offers safety, flexibility and no penalty on withdrawal. This reserve cash investment is useful in volatile, disruptive times. For conservative investors, the reserve amount may be larger since it also offers more stability to their portfolio.
“Investing in you” sounds like the best cliché, but it’s definitely an investment with absolute payoff.
This investment should be a priority as you are the best asset you’ll ever have. There are several ways to invest in yourself and here I am not suggesting a healthy lifestyle and altered diet. But one of the best ways to invest in yourself is by reading books. Experts suggest, reading four to five books on financial strategies, leadership skills, etc. can make a significant impact on you within a few months. Some statistics suggest that the CEOs of major organizations read over 60 books per annum. If busy personalities can invest that much time in books, we definitely can aim reading a book per month. Apart from reading, another way to invest in yourself is by learning. You could invest in personal coaching from coaches on career, business, fitness or life.
So if you want to make the best of your investments in FY18-19 and beyond, betting on yourself will probably be the best decision to make.
Vivek Ranjan Misra
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