MEDIUM-RISK IN­VEST­MENT OP­TIONS

Friday - - Beauty -

I’m a sin­gle par­ent and don’t have much fi­nan­cial ex­per­tise. So far I have saved all my sav­ings as fixed de­posits in a well-known bank in In­dia. The re­turns are low but at least it’s safe. Can you guide me as to how I can in­vest money in other medi­ums where the risk is medium and re­turns are good. Is there a smart way to save money in Dubai and earn on it and when in need have ac­cess to it eas­ily?

To an­swer your last ques­tion first, fo­cus­ing on sav­ing op­tions in the UAE, you could ideally com­bine the mul­ti­ple as­set class in your in­vest­ment pot to fetch a hand­some yield.

Start with Na­tional Bonds or Sukuk as they pro­vide flex­i­ble short-term in­vest­ment terms for a min­i­mum of four weeks to as long as you want to con­tinue. An in­vest­ment in Sukuk could draw a yield of two to six per cent an­nu­ally depend­ing on the term of the in­vest­ment. Cer­tifi­cates of De­posit (CD) and Money Mar­ket funds could also be op­tions, as they of­fer a su­pe­rior yield and you can select from as lit­tle as three months to as long as five years.

Ad­di­tion­ally, if you have a cash cush­ion for a down pay­ment, con­sider in­vest­ing in a rent-yield­ing prop­erty with the help of a mort­gage to pro­duce high re­turns on your in­vest­ment. In­vest­ment in global funds can also give a re­turn of four to six per cent.

To come to your other ques­tion about in­vest­ing in In­dia, if you are look­ing for some al­ter­na­tive op­tions to fixed de­posits in In­dia then I would en­dorse in­vest­ing in Debt Mu­tual Funds like gov­ern­ment se­cu­ri­ties, cor­po­rate bonds and money mar­ket in­stru­ments as they pro­vide a se­cured in­vest­ment in­stru­ment, which at cer­tain lev­els as­sures a fixed re­turn. They can also help to beat in­fla­tion by a mar­gin with a cal­cu­lated risk.

Debt funds usu­ally have a fixed growth pe­riod and since they are traded on the mar­kets, there could be an in­crease or de­val­u­a­tion in the cap­i­tal value but could en­joy some­what higher or equal re­turns.

Sec­ondly, the liq­uid­ity is high in debt funds as the money in­vested could be with­drawn at any point of time in case of a fi­nan­cial emer­gency.

Fur­ther­more, go­ing with SIP, a Sys­tem­atic In­vest­ment Plan in a mu­tual fund route can also en­sure rel­a­tively less risk com­pared to in­vest­ing money di­rectly in stocks.

Lastly, cal­cu­late pru­dently the risk ap­petite, study the in­vest­ment hori­zon and then put in your money.

DHIREN GUPTA man­ag­ing di­rec­tor of 4C Mort­gage Con­sul­tancy, is a fi­nan­cial ex­pert

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