It was cold outside on that December night, but hot air filled the foyer heaving with people. Sounds of laughter, clinking of glasses, stomping of heels were almost drowned in the loud voice of Emily Perry singing Boom! on the Bose SoundTouch Soundbars.
The aroma of mutton kebabs, smoky chicken and pickles curled up from the grill and blended with the cheese and pineapple steaks, and the fragrance of single malts and cabernets wafted through the nostrils.
More than 10 couples and seven stags were dancing on the floor and Jay and Anusha were among them. Many others were still coming in as the party gathered steam. There was another hour to go before the clock struck midnight, the moment which everyone awaited, the moment when the old turned new, the moment when one year ends and another starts. Yes, it was Jay and Anusha’s New Year’s Party, the party that everyone wanted to be in this year.
This year’s party was special for Jay and Anusha. They were celebrating Jay’s new role as the head of an e-commerce giant and their newly acquired villa. Friends had been coaxing them for a party and what better day to do it than celebrate New Year’s eve. Meticulous as they both were, Jay and Anusha took care of each detail to ensure that the party was an affair to remember. They called all their friends and rejoiced. Nemesis was there too that night and she danced her heart out with Jay and Anusha who did not realise that she was so close to them. When the celebrations ended, Nemesis quietly slipped out, promising to see the hosts again very soon. But, would Jay and Anusha be prepared the next time Nemesis visited?
A number of us have already started planning for the New Year’s extravaganza and investments and insurances are definitely not a part of the season’s greetings. But consider this, instead of massively squandering over a party this year, could Jay and Anusha have planned a one-time investment that would prepare them for any misfortune that may visit the couple later? The answer is yes.
A number of options are available to investors who wish to make a one-time investment of a large sum of money. Some of the traditional avenues where one can park their investments are gold, fixed deposits and national savings certificate. But over the years, mutual funds have also evolved as an enterprising and dynamic option. So if at all you make up your mind of investing just once, weigh the following options:
Mutual Funds - Apart from the popular systematic investment plan (SIP), mutual funds also provide the option of parking a lump sum. “The last one year has been a difficult one for people in India to decide which asset class to choose for parking their savings. The traditional avenues of savings, namely fixed deposits (FDs) and gold were no longer lucrative considering the lower post-tax yields on FDs and the under-performance of gold as an asset class.
In contrast, equities have given stellar returns over the past couple of years and attracted many first time investors into the equity market. However, equities have their own volatilities depending on both local and global events and eventualities. Most first time investors into equity get worried about a fall in the equity markets. Under such an uncertain scenario, an equity product, which has a portfolio hedging option that protects against any downside in the market is an ideal product. If investors are looking for one lucrative investment product then it would be a hedged equity product which has the best of both worlds - it gives investors exposure to participate on the upside in equity and also at the same time protects against any fall in the market through the hedging tool. Significant wealth making opportunities lie in Indian equities, but at the same time some sort of protection against the downside is a must,” said Aniruddha Sarkar, principal fund manager of listed equities at IIFL Asset Management Ltd.
Gold – No matter how low its performance may be as an asset class, gold will never lose its sheen in India. Currently priced at around Rs 29,700 per 10 grams, gold has moved from Rs 4,400 in the year 2000 to Rs 18,500 in 2010 and Rs 31,500 in 2012. Apart from adorning the investor, gold is also a hedge over inflation and a medium of exchange in testing times. Those keen on not investing in physical gold can opt for the government’s sovereign gold bonds. Investors can start from a minimum investment of 1 gram and go up to 500 grams in a financial year. Investors will get an assured interest of 2.5% per annum.
Fixed deposits – One of the most popular financial instruments provided by banks are fixed deposits, which currently attract a 6.5% interest per annum. Apart from private and nationalised banks, some non-banking financial companies also provide corporate fixed deposits with at least 25-basis point higher rate of interest than banks.
Non-convertible debentures (NCDs) – Companies issue debentures when they are looking to raise money from the public. Some of these debentures cannot be converted into equity. These are non-convertible debentures. Companies provide a fixed interest rate of around 9-9.5% per annum on NCDs. However, every investor should opt for highly rated funds under this category.
National Savings Certificate – One of the oldest yet most effective one-time investments is the post office savings scheme. The National Savings Certificate has no maximum limit of investment, is tax exempt and gives returns at 7.8% rate. Hence, a certificate valued at Rs 100 will be about Rs 147 at the time of maturity after 5 years. The one-time investment is blocked for a period of four years and can be fruitful to meet future needs. Backed by the Government of India, it is safest investment instrument with minimal risks.
The time to make new resolutions has come. So next year let us make a resolution to be conscious and wise in all the steps that we take, be it financial or otherwise. If you save enough, you enjoy a lifetime party. And, if you splurge? You know the answer.