These investments made us richer in 2007

Your investment result is out and it’s time to see the outcome of your hard work. So, let’s quickly find out if you have passed, failed or just managed to get decent marks in your respective subjects (read investments).

Your Report Card for 2007

Rank one: Equity stocks
Overall result: (Returns for the period between 27, November 2006 and 26 November, 2007.)

Sensex: 39.47%

Nifty: 44.41%

Individual marks

Top 10 performance among BSE-500 stocks
(Returns for the period between 20, November 2006 and 30 November, 2007.)

Name	% returns
Jai Corporation	2554.26
MMTC Ltd	1226.48
Walchandnagar Industries	928.37
Industrial Finance Corporation of India	670.99
Reliance Natural Resources	642.60
Gujarat Mineral Development Corporation	595.86
Jindal Steel & Power	578.33
Nagarjuna Fertilisers and Chemicals	499.33
Educomp Solutions	463.74
Adhunik Metaliks	442.43

Remarks: Have you ever bought a lottery ticket? If yes, you would understand the excitement of hitting the jackpot. But if you are not the lucky one to win, your ticket money goes down the drain. Your stock market is somewhat on the same lines. If the stock that you have invested in performs well, you could hit the jackpot but if it doesn’t, then you could lose your money.

Hence, a stock market is a wise choice only if you understand that the market is not a money-making machine and there are enough risks involved in it.

Tip for 2008: Financial domain trainer, PV Subramanyam says, “Though equity has given maximum returns in the last one year, you need to diversify your portfolio proportionately. Anyone with a two to three-year time horizon should look at debt instruments for wealth creation while equity is ideal for longer time frame. This thumb rule remains standard no matter what returns each asset class is giving.”

First runner up: equity mutual funds

Overall result:

Equity diversified: 37.3%

Equity tax saver: 42.3%

Balanced: 32%

Individual marks

Top 3 funds in each category
(Returns for the period between November 27, 2006 and November 26, 2007)

Category	Scheme Name	% returns
Equity diversified	Sundaram Capex Oppor. (G)	78.1
	ICICI Pru Infrastructure (G)	74.9
	UTI Infrastructure Fund (G)	62.8
ELSS	Birla Tax Relief 96	62.8
	Sundaram Tax Saver (G)	55
	Principal Tax Savings	58.9
Balanced	Tata Balanced Fund (G)	47
	SBI Magnum Balanced Fund (G)	35
	Kotak Balance	40.1

Remarks: So, you admit you don’t understand the stock market too well. But you still want to benefit from the market boom like many others. Mutual funds are the option for you.

You could invest in the market through safe hands and also make profits. What we mean by safe hands is the fund manager who would take care of your hard-earned moolah and invest it in the right place. But yes, you would have to pay the charges in the form of entry or exit load.

Tip for 2008: Equity mutual funds are for the long-term. Don’t invest to make quick money. Remember that entry and exit loads need to be recovered too. Debt mutual funds give you tax benefits like tax-free dividends unlike bank deposits where the interest is taxed. Choose debt mutual funds over bank deposits if you are a high tax payer.

Second runner up: debt

Overall result:

Postal deposits: 8%

Bank fixed deposits: 8-9%

Debt mutual funds (floating rate): 7.5%

Remarks:

The play-it-safe investors’ choice, debt investment has been quite rewarding this year, especially bank deposits. This all-time favourite investment gave interest rate as high as 9% for tenures of one or two years. Public Provident Fund and National Savings Certificate have retained the old fixed interest rate of 8%.

Tip for 2008: Though bank fixed deposits have given decent returns off late, it may not be the best debt instrument to park your money, in. The reason being the interest on bank deposits is taxable so your post tax returns will be low.

Also, dividends from Fixed Maturity Plans (FMP)are tax-free. “Compared to bank deposits, FMPs are a better bet in terms of post tax returns,' says Sanjay Matai, investment advisor.

Consolation prize: gold

Result:

Gold price growth: 13.40%.

Remarks: For ages, gold has been used for both ornaments and investment purposes. It is also a good hedge against inflation but there are many more lucrative choices that you as an investor can avail of.

Tip for 2008: Subramanyam cautions us, “Gold has the assured factor of liquidity but it may not be the best investment choice for it may underperform in the long run and can give you a return of 6 to 8%. But as an investment in the short-run, it can prove to be very volatile. So gold should only be a small part of your entire portfolio.”

Popular choice: property

Performance:

If you have bought a home, your performance will depend wholly on which city you have invested in. Knight Frank India Research provides us with statistics on some of the hot properties in India.

(Returns for the period between November, 2006 and September, 2007)

Cities	Area	% Return
Mumbai	South Mumbai and Bandra	10-15%
	Powai	50%
Pune	Hadapsar	66.67%
	Deccan, Boat Club Road and Koregaon Park	23-25%.
NCR	Noida, Greater Noida, Gurgaon	Fall in prices in certain pockets
Bangalore	Basavangudi,	33%
	MG Road	41%
	Sadashiv Nagar	-7%
Hyderabad	Madhapur	70%
	Banjara hills	64%.

Remarks: Owning a home in India is more a social need than an investment one. Attractive interest rates on home mortgages and tax benefits on the same make property purchase within the reach of millions of Indians.

But property is one of the most illiquid assets.

Tip for 2008: Experts say that if you are planning to buy a home to live in, there is no point in trying to time the market. If you are buying property as an investment, opt for peripheral areas in cities that still have an upside left.