The World Economy is in doldrums. Europe is on the verge of a meltdown, and with a couple of Countries likely to be kicked out of the European Union, it is likely that the Common Market and Currency model will be buried for good. But the falling Euro has strengthened the US Dollar, which in reality should be in deep trouble. Regarding India, the current fall in inflation and currency appreciation looks to be manipulated in view of the UP and other State Elections. I get a bad feeling that double digit inflation will be back with a bang once the elections are over. The prognosis is not very good for the next 2-3 years.
So, where should you invest, assuming you have money to invest?
Equity - Stay away from Equity till 2014. The Government is in a comatose situation and is likely to be so in the near future. Wait for the next government to move in. But the flip side is that good scrips with long term potential are undervalued currently, and it might be a good time to invest in it, and sell after 3 years. Do not, do not get into short term trading, at any cost.
Debt Instruments - Interest rates are high and has reached its peak. Park your money in Debt instruments like FD for any duration of 6 to 18 months. The rates are only likely to go down.
Mutual Funds - As a rule No, but with a caveat. Good sector specific MFs can be looked into. Stay off realty/infrastructure funds. Stick to simple SIP on select sectors, like Gold.
Gold - With Dollar strengthening, Gold is not likely to appreciate much, and Gold prices are on the higher side. I hate to say this, but stay away from Gold, though you wont lose if you invest in it, but wont gain much either.
Land - Land is an asset backed investment. Buy in small quantity with an aim to sell off by 2014. As I adviced earlier, spread your land investment. Avoid big cities. Invest in semi urban / rural areas. Limit your exposure.
Buildings - Never.
Yourself - Got surplus cash? Invest in yourself. Spend some money on upgrading your skill sets, so that you are ready when the next boom cycle begins. And you never thought of investing in yourself as an option, did you? This is the best time. Programs are cheap, and people have spare time.
