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Start the Year Right – Invest Smartly This Gudi Padwa

It was on Jan 1, 2019, that the party began and ended just as quickly. The New Year’s Day celebration left us a little lighter in the wallet, but with no visible gains. Three months later, with Gudi Padwa, we have another New Year to welcome. We already know from tradition that it is the more responsible one.

To truly enjoy the beauty of this festival, a shubh aarambh (auspicious start) is necessary. Apart from the festivities, following in the steps of ancestors, investments in gold and property are almost an automatic for us Indians. These days, people even invest in shares or FDs. This is in spite of traditional investments being unprofitable.

The Internet, the newspapers, the hoardings in your city are full of advertisements asking you to put money on these traditional investments on the occasion of Gudi Padwa. They tell you that it’s the perfect way to “start the year right”. But are they really the right path for you?

Status of Gold in Investment Markets

Growth recorded: The price of 10 grams of gold in 2015 was INR 26,454. The price has risen very slowly to INR 32,645 today. This is a snail’s pace of close to 5%.

Our take: Gold has lost its shine, while the rate of silver has seen a drop in the last 5 years, which is even worse. It is becoming evident that metals are not standing the test of time in an age of share markets and investment options, which are offering far greater growth prospects. In conclusion, not advised.

Slow Growth Rate of Real Estate

Growth recorded: Real estate, which has gone into the correction phase, is failing as an investment too, with regard to appreciation. A report by National Housing Bank data had recorded an annual increase of property rates in Mumbai and Bangalore at about 5.5% between June 2013 and Sept 2017. During the same time, Delhi saw a decline in appreciation rates.

Our take: The real estate boom has died. The returns the previous generation got 20 – 30 years ago is never going to come back. Moreover, liquidating a huge investment like a home comes with additional costs of brokerage and risks of not landing the best deal. For urban India, the risks involved are tiresome to even think of. Hence, any real estate purchase is now largely made by people who want to make it a home, rather than horde it as an investment. In conclusion, not advised.

New-age Investment Plans

Knowing about investment options that give returns as high as 9%* (remember, Gold and Real Estate only give 5.5% returns or lower) and not using them will block the flow of possible profits. At the same time, sticking to old investment strategies can ruin your investment portfolio. A good investment portfolio consists of balanced investments.

We know that life insurance offers financial protection to our family in case of our death. But, new age plans like Unit-linked Insurance Plans (ULIPs) invest in the share market as well as offer financial protection to our family in case of our death. It offers flexibility in investing in high-risk funds for high profits, but with the additional promise of a fixed sum on maturity.

In addition to this, new-age investment plans like child plans and retirement plans silently work for you through compounding and bloom into a large corpus when you need it; for example, during important milestones of your child like education or marriage and when you retire, respectively.

Make the best out of Gudi Padwa 2019 with smart profitable investments. Happy New Year!

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