Whether you are a small investor or a large one, Banks are no longer the primary source of earning a return on your savings. Today there are lot safer and higher returns to be had from alternate sources of investment, if only one spends a little more time watching over ones investments.
I often hear people complaining these days that there is no where to invest money, equity is too risk and the markets are all down, FD’s barely give you an 8% return, Mutual Funds are no good with US 64 creating such a spectacle.
Yet if you were to do your homework well, you would have found plenty on investment opportunities in equities as well as in mutual funds.
A low risk, high return and high liquidity option would be Gilt funds which only invest in government securities which are almost completely risk free in an environment of falling interest rates and excess liquidity in the money markets. Gilt funds have give a return of over 30% in the last one year alone and over 11% in the last 3 months itself. With interest rates expected to soften further, any hint of a rate cut would be an excellent time to enter into a Gilt Fund.
Equity markets: The bear run might seem like its over, but it still has a while to go before we get any real recovery in the equity markets, yet this is the best time to invest for someone who has an outlook of more than 2yrs in mind, instead of locking your money away in an FD which guarantees an 8-8.% return, you would do well to invest in shares which are now quoting at fantastically low prices and rest assured that with a diversified portfolio the returns would be well over 50% in 2yrs even though there might be a few ups and downs in the period.
Now is also an excellent time to buy into shares having high dividend yields, since these shares have very stable prices and excellent returns during times of little capital appreciation.
Just keep a few tips in mind while investing:
Buy when the markets are going down and sell when they are going up, most of us do the reverse.
Once you reach the return you had planned on, sell, greed always hurts in the long run.
Keep a stop loss on your shares, if they fall below 5-10% get out and look to get back in at a lower level.
A good share at a slightly higher price is always better that a bad share at a low price.