We’ve seen the great year 2021 for the equity/mutual fund markets. As the equity market has reached new highs and with the growing cases of Covid, equity market activity is likely to falter this year. Individuals should consider all possibilities of investing their money for a relative return.
Investment Methods
Different alternative investment methods can be a certain percentage of a mix of mutual funds, stock market, IPO, gold ETF, VPF, PPF, NPS, buy house/land to achieve the desired goal of profit maximization for a low/medium risk individual. Investors can benefit from the wealth-building potential of mutual funds through both systematic investment plans (SIPs) and one-time contributions. SIP can start with an investment as low as Rs 500.
Investing in ETFs
Investing in exchange-traded funds (ETFs) can help diversify and create the optimal portfolio to generate maximum returns. ETFs provide a methodical and transparent approach to minimizing market exposure when they are guided by an underlying asset.
Investors can gain technology-based or industry-specific exposure through various ETF products, increasing investment flexibility under volatile conditions.
Gold, the yellow precious metal, is another popular asset among investors looking to hedge
risks such as inflation, market turmoil, and political uncertainty.
Besides buying gold bars directly, another way to gain exposure to gold is to invest in exchange-traded funds (ETFs) that hold gold as an underlying asset or invest in gold futures. ETFs are relatively liquid and cheaper options for investing in gold than alternatives like gold futures or shares of mining companies.
Contingency fund
The Voluntary Endowment Fund (VPF) is again a promising option. You can pay more than the required 12% of base salary and still receive 8.5% tax-free returns. Remember that according to the latest tax policy, any investment in VPF (employee contribution) greater than Rs 2.5 lakh is taxable.
Public Provident Fund (PPF) is a retirement savings scheme offered by the government of India. PPF offers the best tax benefits as it is in the Tax Exemption (EEE) category with a containment period of 15 years. You can invest up to Rs 1.5 lakh in PPF per year.
National Pension Scheme (NPS) is another investment option that can enjoy additional personal tax deductions and generate higher returns. The tax benefits offered by NPS beyond Section 80C can increase returns for investors. Real estate/land is also a lucrative investment opportunity.
However, overall property prices have not increased much over the past decade. Many builders offer construction-related returns on commercial and residential properties that can deliver good returns within a few years.
Last, but not least, we should also consider investing in the stock market. The market at the end of 2021 sees large-cap indexes up around 2022% year over year, while small- and mid-caps gain even more. We should consider investing in large-cap stocks with good dividend yields, low C/E ratios, and good prospects.
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