Skip to main content

Some tips to deal with high inflation

 

INFLATION is a much-feared monster today. It has busted budgets of many households and has pushed people to cut corners ­ to trade down on what they buy or even stop some of the things they used to indulge in. This was even more of a problem for those who depend on interest income ­ like senior citizens, who actually saw their money de-growing. That was a double whammy for them.

Inflation has moderated a bit and interest rates have started climbing up. This will come as a bit of relief to them. Banks have been raising rates, following the RBI, which seem to be raising rates these days with metronomic regularity. For sometime now, senior citizens have been able to get over 10 per cent on FDs. Yields are expected to climb further as rates are being increased. The expectation is that rates will continue to rise. What should one do or not do during this period?


Things to do:

Continue the systematic investment plans (SIPs) you have: The dumbest thing to do now would be to stop the SIPs that are going on. Apart from impacting future goals, you will also lose chance to invest at lower levels of market. Over time, these investments done at lower levels would contribute to better returns.

Put more in equity/equity assets: Since markets are at a lower level, as per asset allocation principle, you could allocate more to equities or equity-oriented assets to maintain the same allocation levels.


Again, investments at this point would give better returns when the markets go up.

Invest in debt instruments: If you would like to invest in debt instruments, there could not have been a better time. FDs, non-convertible debentures (NCDs) and fixed maturity plans (FMPs) are offering excellent returns. Especially, FMPs are offering returns in the region of 8.5-9 per cent after tax. It's time to lock in on good interest rates.

Property investments: Property prices have run up quite high. Though sales have slowed down, there are no let-up in prices.
Unless one finds a good property at attractive prices, one should wait and take a decision when property prices fall to more realistic levels.

Commodities: If you do not have exposure to precious metals like gold and silver, you could take an exposure to it to the extent of 5-10 per cent through exchange traded funds (ETFs). Similarly, one can take exposure to commodities through schemes investing in equities dealing in commodities. It is a roundabout way of participating in commodities but safer.

Things to avoid:

Going headlong into gold and silver is one of the things to avoid: These are going up primarily on the basis of speculation across the world. Huge amount of money is going into ETFs, which is driving demand. Due to uncertainty across the globe, there is support for gold at other levels. But that does not mean you need to invest more than 5-10 per cent of your portfolio in precious metals.

Not investing and keeping surplus in bank: Looking for the right time or opportunity to invest and keeping money in a bank are not great ideas at all. Savings accounts give low interest rates and low returns. Evaluate options and commit to proper investments.

Churning the portfolio: This may not be the time to churn the portfolio because of low or negative returns. You might have made some investments in some high-risk instruments as well. It might have been done with a particular outlook for the portfolio in line with the time horizon and goals. Suddenly exiting them, after the first whiff of underperformance, is not the best thing to do. Portfolios should be re done only if some assets are not performing as intended (and is not an aberration) and do not hold chance in future too. Following fads: We had talked about investing in gold, which is a fad at this point.
There were fads like investing in teak plantations and goat farming at various points in time. Following fads do not help in achieving goals.

Chasing returns: Getting into schemes or out of schemes primarily because returns have gone up or down is not a strategy. This does not make sense as the schemes that are not performing well today may fire up later. We need to look at overall performance over the tenure of the investment rather than short-term performances.

So, it's simple after all, isn't it? Most times, common sense is what is required to do well with one's finances.

-----------------------------------------------------------------

 

Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

Popular posts from this blog

Post Office Deposits Interest Rates

Best SIP Funds to Invest Online   SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich For further information on Top SIP Mutual Funds contact  Save Tax Get Rich on 94 8300 8300 OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com

LIC Leave Encashment Plan

LIC Leave Encashment Plan       Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds Invest in Tax Saver Mutual Funds Online - Invest Online Download Application Forms For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a missed Call on 94 8300 8300 --------------------------------------------- Invest Mutual Funds Online Invest Any Mutual Fund Online Download Mutual Fund Application Forms fro

What is price deflator?

What is price deflator? A defaltor is used to restate data measured over time to prices prevailing at a particular period or time to make it comparable. Essentially, a deflator removes the effect of inflation from the data. What is the role of price deflator in GDP calculations? Prices are continuously in a state of flux, but generally trend upwards over time. Therefore, even without an increase in the quantity of goods and services produced by an economy, price increase can give the impression of an increase in the gross domestic product, or GDP, the benchmark indicator of economic activity. Therefore, the impact of prices has to be removed at arrive at a true measure of the value of goods and services produced, or real economic growth. A deflator is used to reduce output estimates at current prices to what they would be if calculated with reference to prices in a particular year. Why is GDP deflator considered a good measure of inflation? The ratio between the GDP at current p

Tax Slabs 2012

Slab 1 Upto Rs 1.6 Lacs Tax Rate NIL for Men; Upto Rs 1.9 Lacs Tax Rate NIL for Women; Upto Rs 2.4 Lacs Tax Rate NIL for Senior Citizen; Slab 2 Rs 1.6 Lacs to Rs 5 Lacs Tax Rate 10% Slab 3 Rs 5 Lacs to Rs 8 Lacs Tax Rate 20% Slab 4 Rs 8 Lacs onwards Tax Rate 30%   --------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.   Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)   Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications   These Application Forms can be used for buying regular mutual funds also   Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds ) HDFC TaxSaver ICICI Prudential Tax Plan DSP BlackRock Tax Saver Fund Birla Sun Life Tax Relief '96 R

How Tax Deducted at Source (TDS) works?

    THE tax season is here. And if you are an employee you can't blame your employer for deducting large chunks of money from your salary towards tax deducted at source ( TDS ), which he is legally obliged to do. Your bank will also deduct some percentage from your FD interest of Rs 10,000 or more towards TDS! So what is this TDS all about? How is it computed? Are there any changes this year? Read on... What is TDS? TDS reduces your taxable income and could even provide tax relief! The TDS collections account for 40 percent of the total taxes collected in the country. As the name suggests TDS is the amount of tax that is deducted at source in certain types of income . The TDS thus collected is deposited in the Government treasury within a specified time. How is it computed? Some of the types of income where TDS is applicable include salary, interest, rental fee, interest on securities, insurance commission, dividends from shares and UTI/Mutual Funds, commission and brokerage
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now