Undoubtedly, life is filled with choices, and each choice which an investor tends to make has strong potential to shape one’s future. Thus, just like we carefully focus on options before going ahead with making important life decisions, it is of utmost importance to make stable investment choices related to financial investments. Right now, retail investors have one question in mind, “Where should I invest INR 10000 right now amidst global uncertainties?”
While there are a range of options, we believe that in an uncertain economic environment an investment portfolio should be a mix of corporate fixed deposits (FDs), stocks, bonds, and mutual funds (debt and equity).
Therefore, the question, “Where should I invest INR 10000 right now” will best be answered if an investor considers his/her financial position, goals, risk appetite, near-term obligations, etc.
Where should I invest INR 10000 right now?
While investments in equities tend to reward investors, there have been instances where a balanced investment portfolio has actually paid off! A blue-chip stock, HDFC Bank, has seen a decline of ~11% over the past one year. This compares to the performance of Nifty Bank, which has increased by ~17.3% over the similar time frame. Frontline indexes, Sensex and Nifty, increased ~23% and ~27%, respectively. Now, an investor who would have gone for passive investing, such as investing in index mutual funds, could have ended the year in profits. Therefore, diversification and proper allocation has always been critical.
Where should I invest INR 10000 right now is the question which almost every investor has in mind when macro uncertainties prevail and when there are tensions in the global ecosystem.
With S&P 500 surpassing the ~5,000 level for first time in February 2024, worries continue to increase about whether momentum can continue or not.
It goes without saying that some investors choose to invest their money on soaring tech stocks. However, others are still wondering “where should I invest INR 10,000 right now amidst global uncertainties?” After all, every investor loves to have a bargain. Isn’t it?
A recent Bloomberg newsletter mentions that there are investment professionals who are showcasing preference for value-oriented market opportunities.
Following are some of the options where you invest INR 10000 right now!
1. Building an emergency fund
First and foremost focus of a beginner should always be on building an emergency fund. Emergency fund is critical for the financial well-being. In case an investors faces unexpected expenses, like job loss or medical expenses, emergency fund should be able to keep an investor straining the budget or going into debt.
Experts believe that having between 3- and 6-months’ worth of living expenses should always be available in emergency fund.
Therefore, some portion of INR 10,000 should go in building an emergency fund. Investors should park emergency fund in a high-yield savings account or high-yielding liquid funds or debt funds. If an investor invests in liquid funds or debt funds, there is high probability that they will earn interest which will be higher than savings’ interest.
2. Paying down debt
In the current economic environment, where interest rates are their respective highs, investors need to consider to pay down their debts. Coming to the order, they should pay down the debt fetching higher interest rates because of obvious reasons. If an investor has a credit card debt, paying it off needs to be the priority.
Thus, a certain portion of INR 10,000 should be focused on paying down the debt obligations.
3. Investing in corporate FDs or bank FDs
You might have come across several articles discouraging the investments in FDs or fixed-income instruments. The main reason is that these instruments do not offer higher yields. Well, to a certain extent, this holds true. However, that being said, it is always advisable to make investments in fixed-income instruments specially in current economic environment which is quite uncertain due to interest rates fluctuations and other macro-economic data points.
However, on the basis of risk appetite, investors are required to choose from bank FDs and corporate FDs. While bank FDs are more secure and reliable, they tend to have lower rates as compared to corporate FDs.
Investing in corporate FDs rather than bank FDs guarantees higher interest rate over time. Why FDs are better in the current economic environment? This is because equity markets continue to trade at all-time highs and global experts believe that fresh investors should wait for a minor correction.
4. Investing in money market funds
Experts believe that money market funds are primarily for those investors who are not comfortable in taking investment risk, but at the same time, they want to earn interest on money. This interest is generally higher than interest offered by savings account.
Money market funds make investments in lower-risk debt securities, which includes the US Treasury bills and commercial paper. These instruments are the safest investments and they pay monthly dividends. Therefore, if an investor is seeking for regular and lesser-risk income, money market funds can be the good option.
This investment option offers liquidity benefits too as investors can withdraw money without any lock-in.
5. Investments in equity markets
It goes without saying that equity investment is one of the best hedges against inflation. While some believe that property is also a hedge against inflation, but property investment carries some sort of liquidity risk.
Direct equity investments can sometimes prove to be risky. Therefore, beginners are advised to participate in equities through other routes such as index funds, equity mutual funds, etc.
Index funds can offer returns higher than liquid funds, but lower than active funds. Index funds are less risky, which explains the reason for lower returns.
Thus, some portion of INR 10,000 should be invested in equity markets too so that the lower returns from other investments are compensated.
Conclusion
Above are some of the options about investing INR 10000 across different investment platforms and in different avenues. By now, it would have been clear that either of the above methods, if applied properly, is more likely than not to deliver healthy returns.
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