If there is one buzzword that any investment advisor can swear by, "diversification" has to be it. Traditional wisdom suggests that we never put all our eggs in one basket. And this is true of financial planning too. A diversified portfolio that allows for investment in various options like debt funds, low-risk government schemes, gold, stock, or real estate maximises the potential for returns and reduces the risk of overall losses. While all this is true, timing the markets is also a factor to consider when it comes to making the best of your financial investments.
So let us consider different investment options and see which is best for 2023.
Investment Options To Consider
When it comes to financial planning and investment, risk and potential returns are often directly proportional. Let us take the example of the share market and government bonds. While investment in shares is high in risk, the potential for returns or gains is also just as high. One wise investment can grow your wealth in days, but the risk of losses is just as high. Government bonds and debt funds, on the other hand, are low-risk and low-return investments. Ideally, a well-balanced portfolio should have the following investment options –
- Equity, shares, stock options
- Debt funds
- Fixed deposits
- Government schemes like PPF or NRS
- Real estate
- Gold – physical or ETF
Volatile Equity Markets
Typically, financial experts recommend investing in all the above options to hedge the risks. The wise investor, however, understands that timing the market can maximise the potential for gains. The equity market, for example, has been a preferred option due to the high liquidity and returns it offers. 2023, however, is not a great year to consider this the mainstay of your investment.
Through the last quarter of 2023, the Indian equity markets experienced high levels of volatility, driven by global cues and the expectation of a looming global recession. The NIFTY 50 index, for example, closed at 18,197 on 2 January 2023. As of 22 February 2023, the index has not shown much positive movement, closing at 17,554. If anything, the markets have taken to draining investor wealth with the publication of the Hindenburg Report. Another reason 2023 does not seem to favour equity investors is the fear that the Russia-Ukraine war may progress into a global conflict or at least continue to adversely affect oil prices.
Other Investment Options
Moving on from the equity markets, other investment options, too, do not seem very lucrative in 2023. Bond yields are both low and unpredictable, and government schemes like PPF have reduced interest rates compared to previous years. Gold prices are at an all-time high, making it an unattractive investment option. Bank FD rates are high, and this is one option worth considering, but it is not a great option as an investment mainstay.
Real Estate Shines
In the midst of much unpredictability and volatility, real estate shines bright as the investor's best friend. The Indian real estate market is booming, and according to a report by IBEF, the market size is all set to reach USD 1 trillion by 2030. The average 10-year ROI on real estate pan-India has been a steady 10%, and in cities like Delhi and Mumbai, this has increased many times. In fact, key residential areas in metropolitan cities have seen real estate prices double and triple over the past decade. Home loans have become more affordable, and the tax benefits of taking these loans make for great financial planning as well.
Stocks Or Real Estate?
Over the long term, investing in equity or stock options and real estate is a wise decision. Keeping up with a SIP or small case investment that routinely allows you to add to your equity portfolio is just as important as paying off the home loan EMIs on time and building your real estate asset. In 2023, however, the risk of losses in the stock markets far outweighs the potential for gain. So this is a good year to hold back on large investments in shares and invest in the downpayment of your dream home. You can further maximise your cash flow by buying into a rental property.
High-tech Homebuying
One of the most common reasons first-time home buyers are intimidated when it comes to real estate investing is the lack of guidance and support. Blox is a revolutionary online homebuying platform that uses high-tech tools to help match home buyers with RERA-registered projects from verified developers. The complete homebuying journey can be taken online with the expert guidance of our relationship managers. Real estate is indeed the hero of your 2023 investment journey, and we help make it easy and stress-free.
