Best Investment Plans in India post demonetization
After the abolition of ₹ 500 and ₹ 1,000 currency notes, India is moving towards cashless economy. Real estate segment is going to crash soon. Bank started reducing FD rates. Indian companies are expected to post lower revenues and reduced profits. Banks are expecting FD’s to increase, however NPA’s too are expected to increase. Investors need to look back various Best Investment Plans post demonetization which can provide higher returns. Which are the Best Investment Options and Plans available now? What are the top investment plans in coming quarter where an investor can invest to get superior returns? In this article, I would touch up a few investment plans where you can invest to get superior returns.
Best Investment Plans post demonetization
1) Investment in Stocks
Many investors keep asking me whether it is right time to invest money in stocks now. Currently stock markets (Sensex) has corrected from 28K to 26.5K. Many blue chip stocks have fallen more than 20%. We expect some more correction to happen as Indian companies are expected to post lower profits in Q3 (Oct to Dec) & Q4 (Jan to Mar) quarters due to demonetization effect. It is the best time to invest money during every stock market correction. Investing in blue chip companies would be a best idea. Looking at investing in stocks that match Warrant buffet principles can create excellent wealth in the long term. Investment in stocks are one of the best investment options in India.
2) Investment in Mutual Funds
Stock markets are taking corrections. Investment in mutual funds through SIP would be best option. Midcap and small cap mutual funds have fallen for more than 20%. Invest in top midcap and small cap mutual funds now and during every stock market correction to get good returns in medium to long term. Investment in top midcap mutual funds would be one of the top investment plans in India.
3) Invest in Tax Free Bonds from stock market
Many tax free bonds which are offered till last year have interest rates of more than 7.5%. However, these are being traded at some premiums now. As we expect bank FD interests to fall in coming quarters to below 5%, one can invest in tax free bonds which are trading in stock market now. In future, banks offer 5% interest rates, but you would still get 7.5% tax free returns. Tax free bonds are one of the safest investment plans to get high tax free returns.
4) Lock your money in Bank FD’s offering higher returns
Currently, bank FD interest rates are ranging 5% to 7.5%. SBI has slashed bank FD rates last week to 4.5%. Other banks are in the process of reducing the FD rates. Investors can invest in bank FD’s offering highest interest rates now. Lock your money for next 8-10 years unless you need it. If you need money on emergency, you anyway can break the FD.
5) Real Estate Crash expected soon – Be ready for investment
Be ready for real estate crash. High value currency notes ban is going to reduce black money from markets. In coming quarters, I am expecting that real estate prices are going to crash from 25% to 40%. This would bring affordable housing to everyone. If you are accumulating funds through some investments, you can be ready to invest in commercial or residential properties in coming quarters. However, don’t invest immediately as correction has just started. You need to wait for some time for real estate prices to get stabilized before you invest. I feel real estate is one of the best investment plans in India in the coming quarters.
6) Invest in Gold – Safer than any other investment
Everyone knows that investment in gold lasts long time. There are very less chances of gold prices falling in long term. It is one of the best investments across the world in long term. After demonetization, black money holders started pumping money into physical gold. Couple of days back, Ministry of finance has put restrictions on physical gold that a women or men can hold in India now. You can invest upto this limit. Alternatively, investors can invest in some of the best gold mutual funds. In last 1 year, gold mutual funds gave as high as 80% returns. While in short term, gold prices would fall, in medium to long term, gold prices are expected to rise, hence investment in gold is a safest bet. We need to wait for any more govt. announcements about gold restrictions beyond that were indicated last week.
Readers, do you see any other good investment plans in India other than the ones indicated above. What is your opinion about these investment plans in this article?
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Suresh
Best Investment Plans in India post demonetization
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Hi Suresh,
I am an NRI, I have invested most 80% of my savings in NRE Bank FD's maturing in Jan 2017,
Please suggest where should i re-invest this as FD's interest rates will drop, I want to re-invest this funds for atleast another 2 years.
Hi Suresh,
How are dynamic bond funds to invest after demonetisation and if you can advise one to invest ? Also any other mutual fund that you feel to invest after this government move of demonetisation
Will Real estate rates really come down? The Builders have very high holding capacity. Since last year or so there is slag in this industry but still the builders are selling at very high rates. I don't think they would come down even though the rates are out of the capacity of more than 80% people.
Hi Nikhi, Don’t expect something like 80% ot 90% prices crashing. Definitely you would see that 10% to 30% correction would definitely happen
Hi Suresh
You did not mention about Debt fund category? Will this not be a good time to invest in this category?
Thanks
Mohit, when interest rates fall, even debt funds returns would get returned. Hence these are anyhow better options compared to bank FD’s.