While most people nowadays generally speak about the market in some form or the other (either stocks or MF etc.) one thought I would like to sow here. While speaking of secured investments we inevitably seem to veer off towards FDs as a prominent choice.
FD & Liquid Funds
While FD is a secured investment with predictable returns, I think, for those who are in the highest tax slab it makes more sense to look at liquid funds as an alternative. The best of them are about just as secured and liquid as an FD can be. Yet, they give you certain advantages. The returns always are a little more than what the bank interest rates are. And if you are the kind that likes to stay invested a bit longer (those who renew their FDs) you get the advantage of being taxed at a rate lower than your IT bracket and even get the benefits of indexation.
Yes, concur with your thoughts. For people wary of even liquid funds can go for overnight funds where credit risk is almost next to nil. As safe as a bank FD.
Personally, I prefer liquid funds over my savings bank account as it also gives me the flexibility to switch to equity MFs on the day of a market crash. Plus, it gives higher returns than the savings account and I have the funds the next business day in case I need them. Prefer it over FD because of the liquidity they provide. No FD breaking, penalties and all those stuff. Funds almost readily available with good returns.
NPS
Coming to NPS (as I got diverted from the other thread to here), in my opinion, this is a good option only for someone in 30% tax bracket, that too for tax savings. Otherwise I don't see NPS as a lucrative investment or even a retirement fund builder tool.
Changes happen quite fast, and I do see some possibility in the horizon, now that we have taken a path towards being a theocratic state. Afghanistan, Iran, Syria etc. are examples. Strife, internal and external, leads to erosion of value (and hence wealth), and I think gold can hold on to its value better than currency.
There has been several ups and downs in gold prices, but not as much to cause worry. It may stagnate or even go down in the future, but there would still be some residual value left unlike currency which could depreciate to stink in case there is a strife.
I will share my opinion, with 30 years of experience, on where to invest surplus funds in India. My primary criteria to invest is to keep the original investment safe and then gain some returns.
- 1Your own business - nothing like it as you know all the details of your business and you will always know everything about your investment.
- 2Prime Real estate is the safest option where your funds will be most secure and will also give you appreciation. This does not apply to real estate investments which promises huge returns which are very risky. For example invest in any authorized residential/commercial/industrial area of Delhi and even in very high priced areas where people tell you that there is no scope for appreciation. Do not invest in suburbs of Delhi or unauthorized areas of Delhi.
- 3Gold - It is always the safest option.
- 4Stocks - If you have any inside information on any stocks or if you have information related to companies which operate in your line of business then you can invest in that stock.
- 5Bank FD - Next best is bank FD whether Tax saving or otherwise.
No one will work for your money. you have to work yourself. our stock markets and corporate culture and its governance is not mature enough and honest enough and I will tell you that even the best companies barring a very rare few use shady practices to enrich their promoters.
Info Source: Discussions on Team-BHP