Post demonetisation: Where to invest to get reasonable rate of returns
Well the whole country seems to be standing in a queue, either in the bank or queing up to confront
unprecedented time which they were not prepared for, also queing up are the business decisions in
Overnight the conversation between everybody turned about and around currency, money, banking
system and politics. If not much, this system has educated young generation much about economy,
banking mechanism and consequences for not valuing your own currency.
Much worse would follow if not this. With 98% transactions happening in black, and everybody
seeming to rule with their sense and idea about power, we were certainly destined to crash as an
economy. The whole government would fail if this dire and much needed bold step would not be
Number of predictions and economists has suddenly ascended in past week, with everybody trying
to decode the truth and picture their sense of positive future economic growth.
But soon from here, once this dust is settled, everyone has to learn to invest their money effectively
to generate reasonable returns. In financial theory, earning money and making wealth are two
different things. Every individual must know how to convert their earnings into wealth.
To make your readings more convenient and simple, we will discuss effects of demonetisation and
investment planning separately, point by point:
Some effects of demonetisation:
Banks will have surplus money in savings account reducing their cost of money borrowings
Interest rates may be reduced on loans
At the same time, FD rates will also get reduced to compensate low income from loans
Purchasing power in luxury goods and services will go down, making them cheaper
Cost of Gold (for some period) will go down because of low demand
This move will not stop black money generation but those who are generating it now will be
cautious and alert to convert it into white before every financial year end.
Property market will get affected and land deals will be on hold for sometime
Stock prices will go down on Panic
Now question is where to invest to earn good amount of return with safety of investment:
Every individual has different investment requirements, and in one article we cannot cover all
profile. We are discussing here an ideal form of investment plan. (for further details and queries you
can register on thecompletewoman.in and email your query)
Investible amount = Surplus on hand after meeting all expenses, Medical Insurance, Life
Insurance, and instalments of Home/Vehicle Loans (all these are must for your safety and
tax planning, remember : tax planning is not tax evasion)
Investment in Fixed deposits will not generate any earnings for you, it can not cover inflation
on year to year basis, still we advice that you keep 10% of your investment portfolio in FDs
as emergency fund.
Out of balance fund, every month plan SIP of Gold (upto 20-30% of your investment fund)
This SIP you can plan as buying physical gold or Gold ETF (on stock exchanges). Gold is an
instrument which always covers inflation and over and above generates reasonable returns
along with security of fund.
From remaining 60% fund Plan investment in Blue chip (NIFTY 50/top 100) companies. Do
not try to master all industries. Do not over diversify. Select 3-4 sector and invest in max 10
companies. Divide equal amount to all stock you select. Keep investment horizon of 1 year
minimum. Do not speculate or do intra day tradings. Never have naked Future and options
positions (in my opinion, unless you understand derivatives, do not try Future & Options).
Over a longer term a with proper planning Equities give best returns compared to all,
provided you are ready to learn to minimize your risk, as equity market is volatile, risk and
If you keep investing on above guide lines year by year then cumulative return will be much
higher than what you expect.
For compounding effect on investment read http://thecompletewoman.in/yesyou-could- be-
a-millionaire/ in my money section of thecompletewoman.in