With the start of a new decade, it’s time to take your investment game a notch higher. Instead of relying on safe investment choices like FDs or CDs, you too can participate in the growth by investing and diversifying smartly. Here are the 5 best investment options you can explore in 2020 to enjoy better yield on your investments:
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Real estate seems to be a lucrative investment option for investors who are looking for long-term investments. This type of investment can prove beneficial in the long term as you will get capital appreciation, tax advantages and rental income if you are able to select the right property, finance it and buy it.
Real estate investments are a little tricky and you can gain from it if you make investments smartly. You can get tax benefit on your loan repayment, and benefit from affordable home subsidies announced by the government like CLSS subsidy under PMAY yojana. Make sure you don’t overpay for acquiring property and invest only if you have a long-term perspective in mind.
Gold is the most traditional form of investment in India. Though stock market investments have been an absolute favorite among investors, it is the correct time to make some gold investments. Towards the end of 2019, the Indian economy has faced some turmoil and its retail inflation rate has increased to 5.54%.
Experts opine that 10% investment in gold not only helps you to diversify your investment portfolio but also hedge inflation or stock market losses. If you hold it for a long tenure, it will also give you significant returns.
As per reports, gold is expected to hit Rs. 41500 per gram by Diwali 2020. Moreover, you can invest in sovereign gold bonds or gold ETFs to store gold in electronic format and cut losses in the form of making changes.
A debt mutual fund works in a similar manner like mutual fund investments where the money is pooled from investors to make an investment. The main difference is that its core investments consist of fixed income securities. In this year this can be an ideal investment avenue for investors as the total AUM for mutual funds in India reached 27 lakhs by November 2019. The growth in the month of November was mainly propelled by inflows in debt funds.
Investors can benefit from debt mutual fund investments in two ways. Firstly, the expense ratio of debt funds is much lower than that of equity funds because the overall fund management cost is low. On the other hand, it exposes investors to risk equivalent to conventional FDs thus making them a great option to park surplus funds for short-term or mid-term. Also, the SIP route to mutual fund investment helps you make regular and disciplined contributions.
The interest rate on the small saving schemes and PPF has remained unchanged for the fourth quarter FY 2019-20. Thus PPF will continue to fetch the interest rate at 7.9% making it an attractive option for investors seeking long-term investment avenue. With multiple rate cuts announced by RBI, investors are looking for investment avenues to get better returns than bank deposits. PPF investments come with multiple benefits like EEE tax benefits, compounding of principle and interest resulting in higher yield over the investment tenure.
See Also: Types Of Investment Plans
Investors who are looking to make significant returns within the short-term can go for mid-cap equity funds. In 2020 mid-cap funds are ideal investments option keeping in mind the price point and the corrections it went through in 2019. The price-to-earnings ratio of mid-cap funds stands at 7 years high.
When you invest in Mid-cap funds you are mainly investing in shares of companies that ranges from 101st to 250th largest companies in terms of market capitalization. These companies have the potential to beat their benchmarks when the markets are bullish thus giving good returns over a small horizon. These are ideal investment opportunities for moderate investors who are interested in equity investments.
Investing is one of the best ways to grow your wealth over time. With a large array of investment options, you must focus on understanding the pros of cons of each of them and make an informed decision. You must decide based on the type of investor you are. While it may seem overwhelming at first, it will prepare you for a better tomorrow as you will be able to make a better financial decision for your growth.
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