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Mkts fall, investors shifting options

Mkts fall, investors shifting options

Falling mkts have scared off equity completely and perhaps investors are thinking over alternatives for secured investments.

New Delhi: Falling markets could have scared off equity completely and perhaps investors are thinking over alternatives like debt, bank deposits, government securities, and gold.

However, one may rethink over the returns on financial instruments that depend on the investor’s risk appetite. Higher the risk, even higher would be the returns.

Fifty-seven-year old Ashok Kulkarni has been a bank employee for the past 30 years. Over the years, he invested money in the stock market. But the drastic fall of the stock market has left him shaken and stirred. He plans to shift back to bank deposits, which are now giving a higher rate of interest.

"Stock markets are full of risk. Nationalised banks are the best bet as they promise decent returns while at the same time they protects our principal amount as well," said investor, Ashok Kulkarni.

But experts say that avoiding equity is no solution to combat the market risks.

Since all other financial instruments like debt funds, bank deposits or gold can only give limited returns; they say that the best option is to look at fund based instruments like the systematic investment plan.

A systematic investment plan can average your returns over a bull and bear phase.

"We can’t time the markets and that is why I say that systematic investment plans are the best option for investors where your returns are protected," Director, Anand Rathi Securities, Tarun Sisodia said.

"I think for those with low appetite, instruments like Personal Provident Fund, National Saving Certificate are the best since it gives you sovereign government eight per cent returns," Financial planner, Gaurav Mashruwala said.

The message is quite loud and clear. The stock market is not an avenue for making easy money nor is it a place for the faint hearted.

If you want to make higher returns in a short time, be prepared with a risk appetite that can face losses during the bear phase.

first published:June 13, 2006, 19:12 IST