By SHUBHAJIT Chakraborty
New Delhi, Jan. 29 – Arun Tripathi, a quality analyst in a reputed BPO organization, is under a great quandary these days. He has Rs. 75000 with him to invest, but has no clue where to invest! He has consulted family, friends, colleague and even a consultancy, but the fuzzy answers muddle his already state of flux. Today most of the country’s novice investors face the same problem under the present economic and market condition.
The common men are failing to trust the conventional investment plans like stock market, bonds or similar debt instrument. Stock market, which is the best investment plan for long, has been now crashing under the current circumstances. Historically, whenever markets have crashed, investors have moved on to the debt markets, but the problem this time inflation. Thanks to inflation the real return from debt funds has gone into negative. For instance, if some debt fund offers 8% return, inflation being at 11.42% the real return stands at -3.42%. Now the same problem with bank deposit as well. Hence, it’s time for the investors to look for either alternative investment options or to adopt a different investment strategy.
Experts advice that under present market conditions, the primary target for investors should be ‘protection of capital’.
“Investors should forget about returns and concentrate on capital protection. Because at present all major asset classes are eroding capitals. Hence, investors must invest to protect their capital at the first place, because if they can manage to do so, they can emerge as winners down the line.” Said R.K Gupta, MD, Tauras Mutual Fund.
Unit-Linked Insurance Plans (ULIPs) are another option that can be trusted because of their ability to protect investors’ capital. In this case, apart from the guaranteed capital, such schemes also provide fixed interest, assured top ups and of course life insurance to allure customers. As per experts ULIPs are definitely a good bargain at present. Similar to ULIPs, many banks have launched various capital protection funds, which keep investors’ capital protected, apart from providing them a steady growth.
Be that as it may, at the end of the day investors must understand that the festive session is over. They can’t afford to park their hard earned money to anywhere and expect a cool return. It’s a time to test their risk appetite and the time period they want to stay invested.