Where to Invest Money during the coronavirus pandemic in India.

Financing strategy during coronavirus pandemic

With the coronavirus pandemic, many of us are looking where to invest money right now. Instead of keeping your idle money in your banks, you can invest in stocks, mutual funds, fixed deposits, and PPF, and rental property.

We are experiencing a financial crisis throughout the world. The virus is spreading throughout the world and has a very big impact on the economic growth of our country. 

At this time, everyone would be worrying about financial security and safety. Where to invest for better returns, Should you keep investing in this market at current times or keep your money at saving bank account or cash at your home. 

How to invest in such uncertainty times

As there is the uncertainty of the stability of the corona case until a vaccine is found it might take some time to recover the share market. The Indian share market has fallen since the last 3 months due to coronavirus lockdown. The COVID 19 outbreak has resulted in the stock market falling to record low levels. Interest rates are falling in a few months. 

You need to have patience for the growth of your investment. You need to have a diversified portfolio with a mix of equity and debt allocation. Equity funds are more volatile and have greater risk associated. Debt funds have stable growth. Have optimal investment in both funds.

Warren Buffett's famous quote - Be fearful when others are greedy, and be greedy when others are fearful.

Protecting and saving money is the first thing to be considered for new investors. Conservative investors can invest 30 percent in safety and risk-free such as FD, bonds, and 30 percent in debt funds and the remaining 40 percent in equity funds for wealth creation. 

Many are looking for the best investment with higher returns. Based on risk considering one can invest in equity to debt ratio in mutual funds. Higher return with low-risk investment does not exist. The higher the risk, the higher the returns, and vice versa lower. 

Maintain allocation discipline across your investment. Investors should not sell your investment in panic times. Think calmly and then make your decision. Depending upon your goal objectives you need to reshuffle your portfolio according to current situations.

Depending upon the new investment, one can redeem from their old investment and make fresh investments in various schemes according to various factors discussed below. 

Factors to select Before Investing your Money.

• Risk appetite- you need to check the risk associated with the investment products. It will be low, medium, and high risk. You need to check according to your risk appetite. 
• Tenure – the next thing is the duration of time in investment products. While there are investment products that are locked for a fixed duration. You can select the different investment schemes based on your goals (Short- term and Long-term goals) and needs.
• Returns – There are fixed returns for various investment products while returns are not fixed in mutual funds and stocks. For generating guaranteed returns, you can invest in fixed deposits and bonds as they are locked in for the duration of deposit tenure.
• Taxation- you need to check the investment product tax benefits as it helps to increase your monthly income.

Here are a few investment options that you can invest in current times. 

Fixed Deposit 

A fixed deposit is a type of deposit that is offered by banks and financial institutions.it will be fetching a fixed interest rate over a duration. It is a safe and secure investment. Fixed Deposit can be used to create income and protect the capital amount.

The Interest rates of FD are at around 5 to 7 % depending upon the tenure. There are higher Interest rates for senior citizens than the regular FD (0.2-0.5 %) for different banks. The interest earned is automatically credited to the savings account.

The TDS of 10 % will be deducted if the interest is more than Rs 40,000 per financial year. Also, the interest earned from fixed deposit is taxable according to the tax slab. The interest rates of FDs are different based on tenure so plan according to the duration. Once the FD is created the interest rates will be fixed for the whole duration it will not change due to the market conditions.

Deposit insurance and credit guarantee corporation (DICGC) - each depositor in a bank is insured up to a maximum of Rs 5 lakhs.

RBI Taxable Bonds

The Government of India has announced in June 2020 about new 7.15 Floating Rate Savings bonds, 2020 taxable scheme Instead of 7.75 percent savings taxable bonds which were stopped issuing from May 28, 2020.

The Interest rate is 7.15 percent per annum. The interest rates will be revised every 6 months. Interest will be paid every six months in these savings bonds. 

For more details Visit- Advantage and Disadvantage of investment in Bonds.

Public Provident Fund (PPF)

It is for 15 Years duration tenure. The maximum one can invest is Rs 1.5 lakhs in a financial year. There are tax benefits in PPF. The interest earned plus the principal investment is safe as it is sovereign guaranteed. 

Recurring Deposit 

Recurring Deposit (RD) is an investment scheme of deposit offered by various banks to make regular deposits offer a fixed duration. It provides an opportunity to save money by investing regular monthly deposits throughout the duration. The interest rates are usually around 5.00% - 7.00% per annum. 

The main advantage of RD is that it is a safe and Risk-free investment as the returns are fixed and you will be receiving the applicable amount at the time of maturity. RD offers more flexibility than FD (Fixed Deposit) as there are various payment options available. The recurring deposit is useful when there is no lump sum amount to invest. The process of investing in RD is very simple and easy to use. 

If you are new to investing and looking for a safe investment with monthly investment then you can start with RD. It is similar to SIP (Systematic investment plan). 

Gold 

Gold performs well during financial crises. There are various means of buying gold such as physical gold, ETF, digital gold, and gold bonds. There are also gold mutual funds that you can invest in. 

The CAGR returns are 11.55 % and Absolute returns are 72.30 % for the price of the gold for the past 5 years. It’s important to note that the gold prices would fluctuate during the year. You can invest 10 percent of your portfolio in gold. 

You can also invest in the Sovereign Gold Bond Scheme where you will be receiving 2.5% interest per annum on investment. There is a lock-in period of 8 years.

Mutual Funds

Mutual funds are more popular investment products for wealth creation but it also has its limitations as they are dependent on market conditions. The interest rates are subject to market conditions. There is no assurance of fixed returns in mutual funds as they are associated with the market conditions.

SIP is the best way to invest to reduce volatility. you can start with as low as Rs 500 investing in mutual funds

Equity mutual funds - invest in equity stocks. they are a good investment with a long term view and growth of your money. as they may provide high returns so the risk associated is high. 

Debt mutual funds are suitable for an investor for stable returns. they are less volatile, less risky than equity funds.

You can buy mutual funds now as they are at low value means more NAV units thus reducing the average investment cost. One can redeem some of their fixed-income investments to make fresh lumpsum investments in equity funds or debt funds. 

Stocks 

It is popular in India due to higher return potential. There is a high risk and high return on investing in the stock market. The average returns are around 12 to 15 percent for the best stocks. There are no guarantee returns in stocks. It is difficult to select the stock.  

Investors must be cautious in the current situations. You should take proper analysis and then invest. Better to focus on quality large-cap and mid-cap stocks. You need to look at the earnings, management strength

You need to research and analysis before investing in any stocks. there are high risk associated with investing in stock market without proper knowledge.

 

Related - Difference between Dividend Stock and Dividend Mutual Fund

Rental Properties 

As the market conditions are not stable it may be a great time to purchase the rental property for rental income and capital appreciation. The other one can invest money in rental properties such as shops, offices, and residential houses. 

The main factors to be considered are location, rental value, and nearby location area. It is difficult to sell property in emergency circumstances as it is highly illiquid 

Liquid Funds 

Liquid Mutual funds are a type of open-ended debt mutual funds that invest in debt and money market securities such as treasury bills, certificates of deposit, commercial papers, and government securities. 

These securities have a maximum maturity period of 91

days so, liquid funds are considered as low-risk investment products

There is no guaranteed investment as there will be low risk associated with liquid funds such as Credit Risk and risk of default. 

It will help put money in case of any emergency and the redemption of funds is also given back within one day. The risk is also low.

Savings Bank Account 

The last option will be keeping the funds in your savings bank account as there will be generating 4 percent returns approx. It will be a safe return and risk-free but not beating the inflation. 

Other investment schemes can be used to invest money in current situations depending upon the objective, duration, and eligibility.

National Savings Certificate(NSC)  

It is also a low risk fixed income investment scheme. It has two fixed maturity plans of 5 and 10 years. The interest rates for NSC is 6.8 % per annum. You can claim tax benefits. 

Senior Citizens Saving Scheme (SCSS)

The Senior Citizen saving scheme is for the individuals of 60 years and above especially for senior citizens. It offers greater returns and is a risk-free investment. The minimum investment is Rs 1,000 and the maximum limit is Rs 15 lakhs.

The Post office senior citizens saving scheme interest rates are 7.4 % per annum. The maturity period is 5 years and can be extended for another three years. There is a penalty for premature closure for SCSS. TDS is deducted on the interest earned if the amount is more than Rs 50,000 per annum.

Pradhan Mantri Vaya Vandana Yojana(PMVVY) 

PM Vaya Vandana Yojana Pension Plan (PMVVY) is a type of pension plan for senior citizens and retired individuals in India. The revised interest rate is 7.4 percent per annum. The policy term is 10 years. There are various pension plans and would receive pension monthly, quarterly, half-yearly, or yearly.

For more details visit  Pradhan Mantri Vaya Vandana Yojana Pension Plan. 

Conclusion

I have explained different types of investment plans available in India depending upon your investment duration, risk management, and goals duration you can select any investment scheme. 

The first thing to do is to reduce the non-essential expenses and save money for your emergency funds and expenses. Also start working on creating a passive income during free time. 

The market may be down today but it will not be the same for a long time. Slowly the market will improve day by day. Some investments are fixed-income where others are market-linked, both have their roles important for preservation and wealth creation. Investing is extremely beneficial in the long run for wealth creation.

Happy Investing 

I hope you have got the information regarding various investment schemes. If any doubt please comment on the below comment box

Disclaimer: We do not offer any financial advice or suggestion here. The information provided here is for informational and educational purposes only. Don’t use this information as final, consult a financial advisor or planner before making any decision regarding the investment.