Where should you invest?

When it regarding investment the first thing that comes to our mind is, we should get more by investing less and of course it has to be sure shot return.

This blog talks purely from the investment perspective and doesn’t consider the utility of the money that is being invested.

Confused?

Well let’s say you are planning to buy a house. What should you consider? Firstly of course the utility of the house i.e how may years you can stay in that home. Second stage of consideration would be the valuation of that property after few years from now. This you should be knowing not because you want to sell the house but because you should be knowing the net worth of your asset.

Since we cannot quantify the utility part, we won’t be discussing that. Also, the utility perspective will vary from person to person depending on their priority and life stage.

Let’s get started answering the question – Where should you invest?

You should have diversified portfolio. Which means you should be investing in each of the below mentioned spaces in your lifetime:

1.      Home – Do not buy your first home with savings, take loan. Though the return might not be huge but there are two benefits to this:

a.      Tax saving benefits specially for the 30% tax payers

b.      You will get sure shot return

Location of home matters a lot. Purely from investment purpose, you should be buying home in a developing area and not a developed area. The benefits of buying house in a developing area is by the time you start thinking of selling the home, the area is already developed and the home prices have reached their peaks.

How to identify developing areas?

1.      Look for places where metro is being constructed, as connectivity is a huge boon

2.      If any upcoming office area/industrial area/employment generation area is being build

3.      Places where airport is being constructed

Places like Pune, Gurgaon, Hyderabad are the ones where real estate price rise has taken up it’s own speed. Cities like Mumbai, Bangalore might sound good but since they have almost reached the saturation stage, it is not advisable to buy flat there. However, there are few pockets in these cities where the price hike is really good.

2.      Gold – There are two schools of thoughts for this:

For men – Buying gold block or coin is beneficial as you would not have to spend excess money on making charge. If you are buying a jewelry you would have to spend money on the making charge which is a double loss for you as while exchanging the jewelry you  would not only end up spending again on the making charge but also the previous making charge amount wont be considered.

No wonder why big brand names go gaga over 100% resale value on the exchange of old gold in their ad campaigns.

For women- This double loss gets neutralized as they utilize the gold by wearing the jewelry. Hence for women buying jewelry is worthier. We can curb the loss by not exchanging the gold and by buying new jewelry each time. Yes, it is a huge cost no doubt!!!

Buying diamond – is it investment?

Well, women have an inbuilt eagle eye for diamond I believe. We check out diamond jewelry exactly like men ogling hot girls.

Jokes apart. Let’s say you have bought a diamond ring from shop A and you want to exchange it in shop B. For shop B the diamond value is zero, hence you have to exchange it in shop A in order to get 100% diamond value. So, it is always advisable to buy diamond from branded store. (My personal favourite is Tanishq, because of their designs!)

3.      Mutual fund/Stock – If stock market excites you then study the market well and do your own trading, else take help of others and invest in mutual fund.

Please remember, any thing whose value depreciate with time is never an asset - be it car or any electronics goods. Hence it is advisable to buy these with your savings and if possible, go for no cost emi option.

In my next block I will be talking about trading & stock market. Happy reading!