Where to invest this Diwali to light up your finances | The Financial Express

Where to invest this Diwali to light up your finances

This Diwali, you can light up your finances by choosing the right financial products. Here are some attractive instruments which can help you earn good returns going ahead.

Where to invest this Diwali to light up your finances
Sovereign Gold Bonds (SGB) can be one the best options to invest in the yellow metal as they offer a consistent interest of 2.5% per year (on the face value) along with capital appreciation.

Diwali is the festival of lights that also signifies growth, happiness, and prosperity. Most investors prefer to buy gold, real estate or invest in financial products on this auspicious occasion.

Here are some attractive instruments which can help you earn good returns going ahead.

Precious metals

During Diwali, many people like to invest in precious metals, i.e., gold and silver. This year, inflation has been on the higher side and crude oil prices are trading at a higher level. Gold thrives in such situations when there are uncertainties and chaos in the global market. So, investing in gold for the long term can be a good option during this Diwali. However, it’s important to choose the right instrument to invest in gold. Sovereign Gold Bonds (SGB) can be one the best options to invest in gold as they offer a consistent interest of around 2.5% p.a. (on the face value) along with capital appreciation. SGB can be held in the DMAT account like shares, and they are listed in the secondary market where you can sell them before maturity, if required.

Silver is another metal where people like to invest money during Diwali. However, it can be difficult to carry physical silver for the long term and they may not provide you with as stable a return as gold.

Adhil Shetty, CEO, Bank-bazaar.com, says, “If you are considering investing in gold ahead of Diwali and Dhanteras, digital gold is a sensible decision. You may choose from SGBs, gold ETFs and mutual funds for market-linked returns. Apart from appreciation in value, SGBs provide annual interest to investors. You can earn a fixed rate of 2.5% per annum, semi-annually, on the nominal value. Another interesting feature is that you can take loans using these bonds as collateral.”

“Without owning physical gold, you can benefit from the gold investment as you get the papers with the value in sync with the physical gold. Whenever you want to sell this gold, an equal amount of money is credited to your bank account. It also ensures purity and safety against all other risks in keeping physical gold,” adds Shetty.

Also Read: 5 tips to invest in a rising stock market for good returns

Equity

The equity market has witnessed corrections and stress in the last few months amid monetary tightening and global uncertainties. However, according to IMF, India is a bright light of the economy and is expected to grow at 6.8% despite all challenges. Despite the correction, the Indian stock market has performed fairly well compared to other emerging economies. Therefore, from a long-term investment perspective, the equity market can deliver a phenomenal return. For instance, it has given an annualised return of around 12% during the last 10 years as against the yellow metal’s average annualised return of around 5%. During the last one year, however, gold has delivered around 8.7%.

If you are an investor with a good understanding of the stock market, you may invest money in direct shares, else you may invest through equity mutual funds. Allocate funds in the equity fund in sync with your risk appetite and financial goal. If you are close to retirement, avoid high exposure to equities assets.

Debt mutual funds

Debt funds can provide your portfolio with the right balance between risk and return. Debt funds can be a good option if you are planning to invest for a stable return for a definite period. Also, if you are close to retirement, you may choose a debt fund for a low-risk option.

If you have received lump sum income such as a bonus during Diwali and are not sure where to invest the money, a debt fund can offer you a great option to park your fund for a short period. You may invest in a liquid fund to earn a good return till you make up your mind.

FDs for risk-averse investors

If you are a risk-averse investor, you may invest in bank FDs to earn a decent return at lower risks. During the festive period, several banks have come up with FDs that offer higher than their regular interest rates. You may also explore FDs by small finance banks for earning a little extra interest rate than the bigger ones. FDs can offer you a high level of safety along with adequate liquidity that can also prove handy in a financial emergency.

Investment strategy this Diwali

It’s important not to get biased while choosing your investment instrument during this Diwali. Avoid investing your entire Diwali corpus in a single asset class like gold, FD or equities. You must choose the right investment strategy. Ideally, you should diversify investments in sync with your risk appetite and your original investment plan that you have made for achieving your short and long-term financial goals.

FESTIVE BETS

  • If you are considering investing in gold ahead of Diwali and Dhanteras, you can look at Sovereign Gold Bonds & gold ETFs
  • If you have received lump sum income such as a bonus during Diwali and are not sure where to invest the money, a debt fund can offer you a great option to park your fund for a short period

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 21-10-2022 at 00:30 IST