Especially if you are employed and in the fixed income category, high inflation has eroded your purchase power parity and it would be thus prudent to take calculated risks with lesser chances of losing your money by either investing in shares, mutual funds or taking the steadier route of investing your surplus money in fixed term bank deposits which yield a higher interest rate.
If you are stock market savvy, you could invest in Sensex and Nifty blue chips which are some of the best 30 and 50 performing companies in India. The Sensex and Nifty group of shares are monitored from time to time and thus their performance are in constant scrutiny. The chances that you will pick an under performer is slim. Look out for those companies that do not borrow as they have sufficient surplus funds and thus do not have to take loans at high interest rates thus protecting their profit margins to a great extent. Also seek for those fundamentally strong mid-caps which are at times having a higher earnings per share and thus can be safer in the short, mid and long terms.
The second avenue that should benefit lesser risk takers is the mutual fund route. It would be prudent to check the portfolios of the mutual funds that you are going to invest in, because the blue chips and select mid-caps have at this point of time attractive valuations and are also fundamentally strong and thus above average. There are many companies that can survive these adverse economic scenario simply because their performance every quarter is steadily increasing or maintaining high profitability that thus does not warrant a fall in its share prices even if the market declines due to external factors. The Indian stock market seems to be fairly priced and thus these top companies should definitely survive adversity thus not impacting the NAVs of the top funds substantially. Mutual funds are also less risky and provide better yields if you can actually invest during declines in the market so that you get the best deals. At least 100-200 Indian companies at this point in time could be fairly safe as they can cushion adverse economic impacts.
The third and least risky at the moment is to invest in fixed term deposits in banks which are offered now since these banks have calculated that these adverse times will last for say one and a half years to two and a half years. At the moment, 7.5 to 7.75% interest is being offered. Do not ignore fixed deposits in certain very fundamentally strong companies that are giving as much as 8% interest because as mentioned earlier at least 100-200 Indian companies are free from risks and your money can be expected to gain steady and less risky income.
Under normal circumstances, investing in shares, mutual funds and fixed deposits mean in that order accruing higher income. Not taking at least calculated risks is also depriving yourself of better returns since some Indian companies are professionally managed and thus a good bet. Do not be left behind, but cash in on these adverse times by sharing in the best performing Indian companies.
