Sound Investment Strategies for 2022 | Motilal Oswal

Sound Investment Strategies for 2022

The investors of today seek immediate gratification. In spite of the knowledge that discipline and patience yields great rewards, investors want goals met as soon as possible. As life becomes gradually fast-paced, investors are always shopping for investments that can not just double their wealth, but triple it. While you may likely find particular investment options that can aid in multiplying your wealth, the task is quite tricky. Consequently, to grow your money, you have to correlate investments with your needs, horizon time, and your tolerance to deal with risk. 

A “sound” investment for one investor may be found in the share market today, whereas another investor may look to fixed deposits as solid investment instruments. A way that you can select the plan for investment that is best suited to you is to categorise your financial goals into short-term, medium-term, and long-term objectives. Then, you may consider your appetite for risk, and move ahead. Sound investment ideas for 2022 can be classified into these three timeframes, and you may consider a mix of instruments for portfolio diversification. 

Investment for the Short Term 

Some people in India still approach investment from a traditional point of view, not willing to be daring. You may consider the “safe-rather-than-sorry” view if you want sound investment for a short duration. Such investments minimise risk and are easily liquefiable. They are the following: 

  • Fixed Deposits in Banks - One of India’s most-wanted investment choices, FDs or fixed deposits offer investors assured returns. All investors need to do is deposit a principal amount and the bank assures a particular return at the end of the deposit term. Interest may be paid out periodically also. There is no doubt that bank FDs are safer than the share market today or any upcoming IPO investment, but the returns may be low. Moreover, you do not have to open a Demat account, only a regular savings account in a bank. 
  • Short-Term Debt -  Money Market Funds, Liquid Funds, and Ultra-Short Duration Funds are the three classes of debt funds that have short-run advantages. They are great for risk-averse investors and offer better liquidity than FDs. 

Investment for the Mid-Term

If you wish to fulfil your financial goals in a period of 4-5 years, medium-term investments are a good bet. They can help you achieve your goals that are not too long away, but which you have planned for in advance, like financing a wedding, a child’s education, etc. Investments that can combat inflation by a good enough margin are right for achieving such financial aims. Simultaneously, they should not be very volatile. Here are medium-term investments that strike a balance for your not-so-far-away goals: 

  • Post Office Deposit - Similar to banks, post offices provide fixed deposit products such as the Post Office Time Deposit. You can place your money in one of these, and get better returns than banks. 
  • Hybrid Funds - These are a sort of mutual fund investment that allow you to invest in more than a single class of assets. The ideal combination of investments you may consider is a fund with debt and equity. There are a few hybrid funds that invest in the asset classes of real estate and gold too. In these funds, investors mitigate the risk of equities while being sure of the debt part of their portfolio.
  • NSC - The National Savings Certificate is a safe option for investment because it is backed by the Indian government. It operates like a bank FD, but has a fixed tenure of five years. Specifically for investors with a five-year plan ahead, this NSC scheme offers an interest rate of 6.8% which is higher than banks give. 

Investment for the Long Term

If long-term goals are what you are planning to achieve, then you are viewing a 7-year to 10-year term for achievement. You can look at investment instruments that are volatile, but have the ability to give you very high gains in the long run. What you should consider here is the degree of volatility you want. Here are your ideas for long-term investment: 

  • Direct Equity Investment - The share market today is the most likely place for investors who have investment plans to achieve in the long run. Equities have the ability to make your wealth grow over time. Rock solid companies whose stock you may invest in may return yields that are upto 40% more over time, even though they go through periods of lows. 
  • Mutual Funds of Equity - Mutual funds that invest in equities, invest in stocks. However, your wealth isn’t simply allocated to a single stock, but multiple stocks. Furthermore, fund managers handle your investments, picking company stocks that are strong for the fund to give you high returns. 
  • Gold - You can invest in gold in digital form or physical form. Physical gold is the conventional way that most Indians invest in gold, but digital gold is a more secure way to invest. You can invest in gold through mutual funds, exchange traded funds, etc. Rather than an upcoming IPO investment or stocks, this form of investment is likely the most preferred among traditional investors. It is easily liquefiable and represents a hedge to fight inflation. 
  • Real Estate - One of the commonest investments among the majority of Indians, like gold, is real estate. Property is bound to appreciate, especially if located in prime areas. 
  • ULIPs - Unit-Linked Insurance Plans are another go-to investment option for the long run. This is a blend of an investment and an insurance product and hence, has tremendous appeal. One part of the premium is paid for life insurance cover, and the other is used to invest in classes of assets such as bonds and equity. 

What is the Ideal Investment?

If you wish to find a sound investment plan, the first thing to do is think of your individual requirements. There is no one, single best way to invest, and any instrument can prove to be a sound investment based on what you are looking for. If you are looking for a long-term plan, then any equity-based plan is good, and you may have to open a Demat account for the same. Characteristic of the term of investment and your goals, along with your own risk tolerance, you are likely to have sound investment judgement. 

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account

 

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