As we usher in 2019, it is time to to reflect on returns for 2018 and best investment options for 2019. Shares have ended the year with modest gains on the benchmark indices, but, have given sharply negative returns in the midcap and small cap space.
Overall, it has been a year of negative returns for stock holders, if you are looking at a significant portion of the listed space.
Debt has given decent returns of 7 to 8 per cent, pre-tax, while gold is also up modestly this year. Looking ahead here are some smart investment strategies for debt, equity and gold investors in 2019.
Mahindra Finance Fixed deposits
If you are looking at debt, this is the best place to park your money. The Mahindra Bank FDs offer you an interest rate of as high as 9 per cent. Under the Mahindra Finance Dhanvruddhi Scheme, you get an interest rate of 9 per cent for 33 per cent and 40 months. These Fixed Deposit interest rates are for online investors through the Mahindra Finance website. What is interesting is that you can lock your money for more than 3 years and not be worried about falling interest rates.
The yield on the 33 month deposit is as high as 10.01 per cent. The deposits are safe and are rated 'FAAA' by Crisil. Probably this is one of the best interest rates around, when compared to FDs of other NBFCs and banks. You can also opt for the 27-month deposit, which offers you an interest rate of around 8.60 per cent. Mahindra group employees are entitled to an extra 0.35 per cent.
Shares of Jammu and Kashmir Bank
If you are an investor, who likes stocks, then J&K Bank could be a good long-term bet. The shares of J&K Bank has dived from 52-week high levels of Rs 82, to the current levels of Rs 37. In fact, the shares are very close to their 52-week low of Rs 35. There are a number of reasons to be buying the shares.
First is the gradually improving profitability levels. J&K Bank, reported a 44% increase in its net profit to Rs 146.34 crores for the half year ended September 30, 2018. The Bank had posted a net profit of Rs 101 crores during the first half of previous fiscal.
What is most interesting is that we are also seeing a gradual decline in non performing assets.
Gross and Net NPA's as percentages to Gross and Net Advances as on
Sep, 2018 stood at 9.00% and 3.91% respectively compared to 10.87% and 4.76% as on Sep, 2017.
The shares of the bank are available at a p/e of just 8-9 times one year forward earnings, which makes it an interesting pick for the long term.
Shares of Yes Bank
Yes Bank shares have dived due to numerous issues in the last few months. The biggest has been the worry over who would replace Rana Kapoor as the Managing Director of the company with effect from Jan 31, 2019. The other reason is worries over disclosure of non performing assets of the bank.
However, there are not too many reasons to worry. The bank remains the fourth largest private sector bank in the country. Its non performing assets are pretty decent and compares well with peers. What's most interesting is that the stock price has halved, which has made valuations very interesting.
In fact, the stock is now trading at 1.6 times, one year book, which is way below its historical average. Apart from this, the shares are also trading at a p/e of just under 9 times, one year forward earnings, which makes the shares a good pick.
The shares have remained volatile in the past and hence, investors with an appetite for risk, can bet on this stock.
Gold: A good bet for diversification
In the last few years, gold has either ended the year with negative returns or given modest returns. However, one needs to add gold to the portfolio, simply because of diversification. Just imagine there is a sudden meltdown in stocks, there is a high possibility that we would see gold rallying. As an investment, it is unlikely that we would see a superlative gains in gold.