As we usher in 2020, it is to time to maximize investment returns, so your real rate of returns are high. You can choose from a whole lot of schemes from shares to fixed deposits and gold. Here we are highlighting investments that are not only safe, but, have the potential to generate good returns.
Shares of GAIL
If you are a long-term investor, it makes sense to buy into the shares of GAIL at the current market price. The shares traded at Rs 117, and are almost at their 52-week lows. This is one of the leading players in the natural gas, liquid hydrocarbons, LPG, petrochemicals, city gas distribution space and exploration and production.
The results for the quarter ending Sept 30, 2019 were disappointing to say the least, which is what triggered a sharp erosion in the share value of GAIL. The shares quickly fell from levels of Rs 140 to Rs 117.
Now, we do not expect the quarterly numbers to continue to be bad. As expansion fructifies we would see numbers improve.
GAIL: Cheap on valuations
The shares are worth buying for their dividends as well, which provide a yield of nearly 5 to 6 per cent. If you are a long-term holder, this share could generate good value.
The price to earnings ratio for the stock is around 10 times, which is rather cheap. GAIL also has holdings in Mahanagar Gas, Indraprastha Gas etc., where the holdings runs into crores. Apart from this it has many solid subsidiaries including GAIL Gas.
Buy the stock at around the Rs 117 levels for a solid dividend.
Fixed Deposits of Bajaj Finance
If you are looking to move away from shares and looking at maximizing your returns from fixed deposits, one of the best bets would be the Fds of Bajaj Finance.
This is a good investment bet for 2020, because of its superior returns when compared to bank deposits.
The 36 months to 60 month deposit offers an interest rate of 8.10 per cent, which is not bad at all. The minimum deposit is for an amount of Rs 25,000. Bajaj Finance Fds are also safe, as they are AAA rated by the leading agencies in the country.
Shares of ONGC
Oil and Gas exploration major ONGC, is a good pick for its dividend. In fact, at the current market price of Rs 125, the dividend yield on the stock is close to 5.6 per cent. Dividend of course is tax free in the hands of investors.
This is one of India's top oil and gas exploration companies, which is currently trading at price to earnings averages, which is way below the historic average. In fact, the stock is trading at levels of just 6 times one year forward earnings, which leaves significant potential for further upside. The frequent dividend distribution nearly 2-3 times a year, is another plus to buy into the shares of the company.
Fds of Mahindra Finance
The fixed deposits of Mahindra Finance are also a good bet for those looking to invest in safe fixed yielding instruments. A 33-month deposit fetches you an interest of 8.35 per cent for a 40-month deposit, with a yield as high as 9.22 per cent.
This is not bad at all considering that interest rates from bank deposits, are a good two per centtage points below the same. The deposits are AAA rated by some of the rating agencies, which means they are relatively secure.
Go for investment in these deposits for the long-term, as interest rates in the economy could fall.
Gold can be a good investment. In fact, Gold ETFs have generated a return of almost 21 per cent in one year, making it the best asset class and beating returns even from shares.
One reason why gold can remain the best investment bet for 2020, is also because it is a hedge against risk. So far, the global economy is chugging along, however, if there is any adverse news, we might see gold prices skyrocketing again.
It is a good idea to stay invested in gold for at least 2-3 years, so as to benefit from price movement.
One can also look at the listed NCDs of companies like Shriram Transport Finance and Muthoot Finance. These can offer you good returns, if you buy the same at the right price.
The NCDs are listed on the NSE and the BSE. NCDs offer you a fixed interest rate and the same are redeemed by the company on maturity.
It is important to remember the taxation aspect on your investments before you invest. All of the above instruments mentioned would attract tax, be in interest income or profit on sale of shares. So, one needs to keep in mind the same before investing. Ideally, one should invest for the long-term if one is looking at reaping good returns.