If you are looking to invest for a period of three years, there are plenty of options. Ideally, your investment plans must have a mix of debt and equity and if possible, there should also be gold, which is a safe haven asset.
We have selected 5 top investment plans for a period of three years investment horizon, which you could consider this year in 2020. However, there are some equity mutual funds in these as well, which means these are not exactly risk averse investments.
1. Axis Long-Term Equity Fund
In the last three years, Axis Long Term Equity Fund has given an annualized returns of 17.7 per cent. Will the fund again given an annualized return similarly, in the next three years is hard to say. What we can say is that this is a fund that is well rated by both Crisil and Value Research, which have rated the same as 5-star.
The fund has a very huge asset size in excess of Rs 21,000 crores. At the moment the fund has almost 98 per cent invested in stocks.
The portfolio of the fund has high quality names including the likes of Bajaj Finance, Kotak Mahindra, HDFC Bank, Tata Consultancy, HDFC, Avenue Supermarkets etc. We expect the fund to do well in the coming years, as the portfolio is geared for the same. Equity mutual funds are subject to market risk and investors are hence advised caution as returns are not assured.
2. Stock of ONGC
This is a shares that is trading almost at its 52-week low. ONGC is a good bet on account of a number of reasons. The first is that the company is most likely to declare a dividend in Feb or March 2020. It has been consistently giving solid dividends and this years dividends may take the total dividend yields very close to that 6 per cent mark.
ONGC recently won an award for 7 oil and gas blocks. Most analysts tracking the stock and the sector believe that ONGC would improve its gas margin business this year and output could also be far higher. The company has also been reducing its debt, while quarterly profits are set to rise.
Apart from this, the stock is trading at just 5-6 times, one year forward price to earnings multiples, which is almost half the p/e when compared to global peers from Brazil to China.
This is clearly an undervalued stock with a potential to offer very good gains in the next three years.
3. Mahindra Finance Fixed Deposits
This deposit is AAA rated and is a good and safe investment for the next three years. A 33-month deposit of Mahindra Finance fetches an interest rate of 8.35 per cent, with an annualized yield of 9 per cent. A 40-month deposit too fetches an interest rate of 8.35 per cent, but, the yield here translates to around the 9.22 per cent level on an annualized basis, largely on account of the longer tenure. You can also opt for the non cumulative scheme, where the monthly interest payout is at the rate of 7.85 per cent annually a 4-month tenure.
Considering where interest rates currently are, this is not a bad investment bet at all.
4. Canara Robeco Equity Diversified - Direct Plan – Growth
This is an excellent fund among the multicap funds and has been rated 5-star by Crisil. The fund has generated an annualized returns of 16.37 over the last three years. This beats returns of most asset classes, which is why the fund is a good bet.
We wish to state that equity mutual funds have an element of risk and hence investors should be careful before investing. In case you have an appetite for risk, you can go for equity mutual funds or else move money to fixed deposits, as we have recommended above.
Canara Robeco has a very strong portfolio including the likes of HDFC Bank, ICICI Bank, Reliance Industries, Infosys and HDFC. The fund is geared towards delivering good returns, making it a good investment for the next three years.
Investors with a long-term perspective can buy into the fund, whose NAV is currently Rs 151.31.
5. Fixed Deposits of Bajaj Finance
This is another investment that could be a good bet for three years. A 3-year deposit at Bajaj Finance fetches you an interest rate of 8.10 per cent under the cumulative scheme. This is AAA rated deposit, which means the deposits are safe.
It's important to note that if your interest income crosses the Rs 5,000, you would be subject to a TDS. We are recommending a slightly increased tenure for these investments, given that interest rates in the economy are slated to fall. Both Bajaj Finance and Mahindra Finance mentioned above are good investment bets for those looking to make decent returns.
About the author
Sunil Fernandes has spent 25-years covering business and finance, including personal finance. He has worked with leading newspapers including Hindustan Times, Deccan Herald, Dalal Street Investment Journal, Oman Economic Review and Gulf Times.