The best investment bet in 2018, was fixed deposits, which managed to yield a decent 7-8 per cent, while equities barely managed to fetch 5 per cent. The broader markets of course collapsed and had you to invest at the start of 2018, you would have lost significant amounts in equities. Gold has ended the year almost flat. That leaves us with a question: Where to invest in 2019? Let us take a look.
Debt
Your best bet in 2019 could be high quality fixed deposits. Interest rates have moved up significantly. Today, NCDs of Mahindra and Mahindra Financial Services and Shriram Transport are offering you yields as high as 9.5 per cent.
It is possible to get a decent 8.5 per cent to 9 per cent on company FDs and this is certainly not bad in comparison to a few years ago. Bajaj Finance offers you an interest rate of up to 8.75 per cent, while Mahindra Finance offers you an interest rate of 9 per cent. Investors can also bet on bank deposits, where you can get as much as 8 per cent. These are all highly secure deposits.
You can also get interest rate upto 8.5 per cent on the government of Kerala backed KTDFC deposits.
Remember that interest on FDs is taxable.
Equity
One will have to be very selective when it comes to buying equities, given that the Sensex is near 36,000 points. Having said that the Sensex is not really the actual indicator for the broader markets. There continue to be many stocks that still offer tremendous value to investors. Among these one could look at investing in stocks that have limited downside risk like Coal India. Remember with general elections round the corner in May 2019, the stock markets could be immensely volatile.
Hence, it makes sense to invest with a degree of caution. At the moment, there are many stocks that offer value, but, the risk element remains high.
We have recommended some stocks where investors could invest. Click on the link to read them.
Gold
Gold can be a good bet for those looking at diversifying their holding. If there is a sudden crash in equities, gold could rally, which makes them a good attractive proposition. To be honest, gold has not given any returns in the last few years. However, as a diversification tool it remains a very important part of the investor portfolio. At the moment at around Rs 29,800 per 10 grams in the city of Bengaluru, the price is not too attractive for 22 grams.
Conclusion:
Equities this year are to remain very volatile and unless you time the markets reasonably well, you are unlikely to make money. Debt is at the moment offering good returns and that could be the best bet for investors. If interest rates fall lower, which could be possible by the end of the year, you would have locked money in high quality debt at higher interest rates.
All in all, go for a significant portion of debt, followed by equities and gold.