I have 3 Laks to invest - Thu Sep 03, 2015 8:17 pm
Well if you are trying to enter now and investment time horizon is 4 months, my advise is to not to go for equity (stocks)! My reasons are:
- Currently the market is in a bit of a uncertain situation where the macro economic fundamentals are challenged very much. (e.g., CBSL is struggling with reserve levels coming down as a result of holding on to interest rates. If there wasn't a problem, they would not have gone for the Swap borrowing from RBI for very short term; There is considerable headwinds globally where there is USD outflow from the country, etc);
- Eventhough there is a new government, still there is uncertainty on their long term policy/plans going forward. (it is true there was a manifesto that UNP put forward, but given that they are going for an alliance with a UPFA faction it is difficult to gauge what type of policy action that will drive the economy for the supposedly 2 year alliance government). Further, the next budget is not too far off from today, I guess!
Especially, there is likelyhood that interest rates heading north, consequently there could be a market dip, potentially.
Hence, for the short tenure of 4 months I would advise you to go for a fixed income instrument which is very liquid. Below is an account of some options available:
- Fixed deposit (one drawback is currently they are paying nothing for FD!)
- Unit trust (this is ideal as UT income is totally tax free also. Further, there are some liquid funds which are yielding some good rates given the current market conditions)
My personal fixed income investments are in open-ended income funds, to be specific at this place. [http://www.arpicoataraxia.com/our_funds.php]
If you want to double check, log in to this. [http://utasl.lk/wp-content/uploads/2015/09/New-Performance-2015-07.pdf]. so you can decide.
But when you make a decision just make sure that the fund you invest in will provide immediate liquidity (because some funds will lock in your funds for at least a year) so that you can immediately pull out and go for equity when the market takes a positive turn. Also look at the fees they charge (go for the lowest). Some cmpanies charge front end fees and exit fees therby eating in to your investments. Also the level of service (obvious!) I met most of these with the guys at http://www.arpicoataraxia.com/our_funds.php
Hope this helps you in some way!