If you have Rs 5 lakh to invest what are your best options? We spoke to experts to get a sense of what should be the best approach in the current environment. Here are the top investment strategies:
Consider equity as one of the most rewarding asset class to bet on. Though, it's vital to note that if someone actually has some savings to invest and don't need that money for at least 5 years, it's always ok to buy stocks.
When someone is invested for the long term and markets are low, he/she has time to recover losses.
Investors should be cognizant of the fact that equity has higher risks versus asset classes like debt. So, those with moderate/high-risk appetite should have a higher allocation to equities.
Investors can consider investing in mutual funds as these can help in diversifying unsystematic risks. But before deciding which funds to pick, it's important to determine the investment time horizon.
Someone who would need the money in less than a year should invest in ultra short-term debt products. Those who can invest for more than 5 years should go for equity mutual fund schemes.
Index funds are also good investments for long-term investors. They are low-cost options for obtaining a well-diversified portfolio that passively tracks an index.
Further, those who are young can have a portfolio biased towards equity because they are in a position to take risk.
Gold as a tried-and-tested investment instrument is well understood by households across India. Hence, this can also serve as a valuable diversification tool within an investment portfolio.
Furthermore, gold's tangible nature makes it a reliable hedge against geopolitical tensions, economic uncertainties and potential inflationary pressures.
However, gold should be better invested as an asset class other than jewellery. Gold in the form of ETFs, funds and sovereign gold bonds (SGBs) are options available in the market.
Investment in gold through SGB is a decent option as it provides liquidity, doesn't require any storage cost and is easier to redeem.