There's still some room to invest & grow

The equity market is fluctuating wildly with no signs of any clear
picture emerging in the near-term. The debt market doesn't look
impressive with inflation at a seven-year high. Gold also looks
bearish and real estate looks stagnant with builders artificially
holding the prices high. Do you feel that you have just run out of
investment options? Does it make sense to just stay in cash? The
answer is no. If you leave cash idle in savings accounts it will fetch
you just 3.5% rate of interest per annum. So, it would be wise to park
your funds in a debt instrument like a liquid fund or fixed maturity
plan and earn a reasonable return.

Go short on debt

Debt instruments are popular among risk-averse investors. There are
many options in the debt spectrum like public provident fund (PPF),
fixed deposits (FD), fixed maturity plans (FMP), liquid funds etc.
PPFs offer assured returns, which are tax-free. But, it makes sense
only if you can part with the money for 15 years. You can make partial
withdrawals after the fifth year, but it takes away the sheen of this
investment. Banks are offering attractive rates on short-term FDs, but
again the real rate of return (after accounting for inflation) is very
low. Also FDs do not make any business sense for investors who fall in
the high-tax bracket, says at Kartik Jhaveri, certified financial
planner & director Transcend India. "If your FD fetches 9% at the end
of the one year and you fall in the 30% tax bracket, you virtually get
nothing in your hands. For such investors FMPs come in handy," Mr
Jhaveri says. Even if you are subjected to capital gains tax after you
exit your FMP at the end of first year, you still get better returns
than FDs, he adds.

Stay long in equities

The best time to enter the market is when the Sensex plunges, experts
say. This may be a good time to buy stocks as most scrips are trading
at very low prices. But the bigger question is whether you want to
enter the equity market directly or opt for the mutual funds' route.
"Investing directly in the stock market is good. You should look at
splitting your money among 5-6 blue chip companies. If you don't have
the expertise, then a diversified equity fund will be a safe bet," Mr
Jhaveri adds. It's better for new investors to enter the market in
tranches. "If you enter the market today and it falls by another 10%
tomorrow, it will pinch you. So it's better to spread your moves when
the stock market looks bearish," he says.

Gold glitters forever

Gold has been very stable. It is a natural hedge and tends to move in
line with inflation, experts say. Gold has never shown historic
returns like the equity market nor will it show inflated returns in
the future. It has been earning a consistent return of 9-10% and will
continue to offer the same in coming years. Today, you can invest in
gold in various forms such as coins, gold funds, gold ETFs or even
gold collectibles. Says B Srinivasan, a Bangalore-based certified
financial planner, "Parents tend to accumulate gold coins or even
physical jewellery for their daughters. Gold coins are more expensive
and everytime you buy jewellery using gold coins, the jeweller buys
these coins at a discounted value (usually 4%)." You can look at gold
collectibles like antiques, paintings or even ancient gold coins,
which have a dual value –– for the art as well as the gold. In India,
the wedding trousseau (especially the daughter's) is dominated by the
yellow metal. If you have set a target, then invest the equivalent
amount in either gold ETFs for a period of less than 5 years or gold
funds if you have five years in hand, Mr Srinivasan adds.

Is real estate the way to go?

Industry estimates show rentals have corrected by nearly 20%-30%.
Builders, however, have not lowered the prices of housing projects.
Says Anuj Puri, chairman & country head, Jones Lang LaSalle Meghraj,
"It is definitely not an investor's market right now, owing to the
generalised slowdown. Prices are stagnating and there may be a
correction in many areas over the next year. This, again, is not a
blanket evaluation, and factors like specific location, sector and
property typology will play a significant role." Experts recommend
following property trends carefully . It is possible that the area
they have chosen to buy in may see a drop in rates over the next six
months to a year. If the property is still on your wishlist, evaluate
the trends carefully and then take a decision on how much and where to
invest.

Real estate as an asset class continues to provide excellent risk-
adjusted returns along with low correlations with other asset classes.
It is, however, not the best of short-term investment routes as it
requires a sufficient incubation period to fructify.

The demand story for the Indian real estate has reached an
intermission and not an end, feels Mr Puri. The market will find its
footing again. Lack of growth does not equal a setback — only a period
of stagnancy.