Diwali is considered to be an auspicious time to make new beginnings and Dhanteras marks the beginning of this 5-day festival. In keeping with tradition, people usually buy gold on Dhanteras. While investing in the yellow metal is a good way to protect yourself to a certain extent from inflation, it doesn’t yield returns that are as high as other asset classes such as equities and mutual funds.
A study by a prominent personal finance newspaper also revealed that gold purchased every year on Dhanteras for the past 13 years has yielded an average annualised return of 7%. Nifty, on the other hand, has risen by 12% and a diversified equity fund would have yielded nearly 13% annualised returns. So, this Dhanteras consider investing in these lucrative options to earn higher returns.
Invest in Real Estate
Real estate, be it land or property, can yield significantly high returns over time. Depending on your property requirements, you can either consider building a house of your own this Diwali or invest in a commercial property for higher rental income. You can earn rental income from residential property as well and even reverse mortgage it post retirement to receive a regular payout! The important thing to note is that real estate prices will depend on the type of property you want to buy, its location, and the current real estate market conditions. That said, remember that if you’re looking for a liquid alternative, real estate isn’t the best option for you.
Invest in Mutual Funds via SIPs
With mutual funds you can multiply your savings more efficiently. This is because your mutual fund investments are market-linked and fetch high returns of up to 12% (or more) from the stock market. In case you are apprehensive of the risk that market fluctuations carry and don’t want to invest a lumpsum, you can invest in mutual funds via SIPs. An SIP allows you to invest a fixed amount in mutual funds regularly and flexibly. You can start SIPs for each of your financial goals with an amount as low as Rs.500 and stay invested for as long as you want. Also, SIPs average out the investment costs and market fluctuations, thereby minimising stock market risks.
Invest in Bank Fixed Deposits
If you are seeking safety and reasonable returns through your investment then choose a fixed deposit. Bank FDs are probably the safest investment option in India. With the Deposit Insurance And Credit Guarantee Corporation (DICGC) rules governing them, you need not worry about the safety of your investment as your FD is insured up to Rs.1 lakh. Apart from this second layer of security, bank fixed deposits yield interest up to 7-8% on the invested sum and give you the freedom to choose an interest payout as per your needs. So, you can weigh your requirements and choose between a cumulative and a non-cumulative FD.
Invest in Unit Linked Insurance Plans (ULIPs)
ULIPs are insurance products that give you dual benefits. By investing in this instrument, you get insurance coverage as well as returns. Your ULIP amount is invested both in debt and equities, so you can expect good returns without taking on a significant amount of risk. Also, ULIPs come with a lock-in period of 5 years but the maturity amount is completely tax-exempt. Unfortunately this isn’t the case with buying gold.
This Dhanteras, why not try a different approach when it comes to making an auspicious beginning? By opting for one of these instruments you can earn better returns, enjoy tax benefits and provide for your future too.