13 Apr , 2021 By : Kanchan Joshi
Debt vs Equity Fund: While investing for long-term investment goals, it has been found that people look at the return they will be getting at the time of maturity. According to tax and investment experts, an investor must look at the rate of inflation taking place during the investment period while calculating one's investment goal. They said that one should look at the net maturity amount instead of maturity amount while investing to meet one's long-term investment goals. Experts were of the opinion that inflation rises to the tune of 6-7 per cent per annum. Hence, return on investment should be more than 6-7 per cent if they want to beat inflation during the investment period.
Speaking on how inflation hits an investor's investment goal Pankaj Mathpal, Managing Director at Optima Money Managers said, "While investing for long-term investment goals, one needs to keep average rate of inflation at 6-7 per cent in mind. While calculating one's long-term investment goal, if the return on investment is less than this inflation rate assumed, then it won't be able to beat the inflation at the time of maturity. So, one must choose one's investment tool wisely while investing for long-term."
Mathpal said that while investing for long-term, one is well aware about one's investment goal. If the investment is to meet educational or health goal, then the inflation would be around 10 per cent. He went on to add that one needs to keep food inflation to the tune of around 9-10 per cent while investing for long-term.
On the prospective investment tools that may help an investor to beat the inflation while investing for long-term Manikaran Singhal, Founder at goodmoneying.com said, "While investing for long-term, one needs to do proper asset allocation and then decide the investment tool. In current market scenario, neither bank Fixed deposit nor government-backed small saving schemes are able to yield more than 7 per cent return. In that case, investors have limited choice like equity, gold and real estate."
However, Singhal said that one should look at the process of liquidity too, while deciding the long-term investment tool.
Standing in sync with Manikaran Singhal's views; Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Equity investment gives you easiest process of liquidation. However, in real estate, it won't be as easy to liquidate one's investment. In gold, one can invest online these days and it also offers easiest format of buy and sell."
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