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| Safest investment options in 2009 |
 
Most people who invested their money in 2006 and 2007 and saw their valuations going down in 2008 are wondering what to do in 2009.
There is speculation that the Sens*x may hit further low, say around 7,000 to 8,000 and the worst is expected to come mid 2009, after which the consolidation may occur.
Further the continuing recessionary trend and in increasing threat of job cuts has further sensitized the risk perception of the average investor.
But what is the safest investment option today and where to park money? This is the question in the mind of each and most investors today. The following avenues can be considered:
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| Income Funds |
Considering the current interest rates scenario - the rates are falling and falling interest rates make a good opportunity of investment in income funds.
Income funds invest in bonds, debentures, government securities and short-term instruments like commercial papers and repos.
In case we believe that the rates have reached their peak and will only further come down, then it will be a good idea to be parking the funds with income funds.
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| Bank deposits/corporate deposits |
Bank deposits currently the most attractive investment avenue as fixed deposits are offering higher interest and steady returns on their deposits without having to track their performance.
However in case of taking a corporate deposit the credit rating of the company should be properly scrutinized .
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| Investing in equity instruments |
Equity investment has always been a preferred option for active investors.
People investing in equities no doubt have to take the risk to get good rewards.
But it should be noted that time is the biggest risk factor in equities.
If we are looking at the half glass full, then it would be a great opportunity to buy stocks and mutual funds that are available at highly discounted prices, but with a fairly long-term investment horizon.
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But like cash, bank deposits also don’t provide protection against inflation and taxes.
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| Real Estate |
Investment in the real estate has always been an attractive option for the investors as it is an appreciating asset.
Buying flats/apartments may not be a good option right now as the industry is expected to have a further correction in the coming months and also selling flats/apartments can be a painful exercise in case of liquidity requirement.
There may be various other avenues available for investment and we can very well have a steady return on investment we are moving in the right direction like having well strategized financial plan or having a good asset allocation model with constant monitoring.
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| For short term objectives |
Currently for short term objectives (1-2 years), bank fixed deposit may be the best option.
If you are looking to be invested for the medium term (3-5 years), mutual funds can be a good option for.
For long term goals (10-20 years) equities/real estate can be chosen.
(The writer is a partner in Nile Financial Planners)
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