Invest in stocks with a horizon of over 5 years

When it comes to investments, there is lot of confusion and anxiety in the minds of retail investors which leads to procrastination. In India, top picks for investments would be real estate and gold. But would investments in these alone would be beneficial in fulfilling all our financial goals like buying a car, children's education, medical expenses, contingency expenses for short, medium and long term time horizon? To meet all day-to-day requirements and for comfortable or even luxurious future, it requires more of investment and expense planning.

With bullishness seen in stock markets, first time investors can invest in large-cap mutual funds and diversify their portfolio in mid and small-cap funds too. Investing in Nifty-based stocks would also be one of a good option for long-term investment. Infrastructure, technology and healthcare based stocks could be chosen for a term of 5 to 10 years of investment as government has allocated funds for projects in these sectors which are a boost to these industries. Arbitrage funds is also a good investment product for those entering into the markets and has missed out on the bull run. Fund managers of these funds take hedged positions which makes it less risky even in falling markets.

For short term, one can invest in liquid funds which would earn 8 to 9% of annualised returns instead of parking their funds in savings account which would earn about 4% p.a. Investments made in liquid funds can also be utilised for emergency purposes. Since these funds invest in money market instruments, have minimum risk and these would help in capital appreciation. Liquid funds are also therefore a good expense planning product. Debt fund is a good product for a time horizon of 3 years. These funds invest in government securities, bonds, money market instruments which makes it less risky as compared to equity funds or shares. Though it is difficult to time investments, it is good to invest in these funds at a time when interest rate cut by RBI is keenly awaited. This will increase the bond prices and in turn the value of the fund.

Systematic investment plan would be the right mode of investment in mutual funds, as this helps in cost averaging and also result in achieving best returns.

Huge funds are generally blocked in real estate for long term. Investors can choose Real estate investment trust (REIT) instead which is more liquid. With 100 smart cities projected by the government, real estate sector has lot of scope of advancement in the near future. Though gold looks weak in the current market scenario, it is good to have certain percentage of exposure in this asset class. Gold ETF's is the right product for this asset class as it is a very liquid instrument and can be bought and sold on stock exchanges.

Investments in stocks and mutual funds should not be done for overnight gains. These investments will achieve best results if invested for a time horizon for over 5 years. Keep a track of your investments quarterly and book profits if your investments have achieved your expectation. Do not exit from these investments if it is at a loss for a quarter or a year but be patient and park your funds for a longer period of time to achieve optimum results.

Mrs. Rashmi Roddam, founder and managing director WealthRays Securities