As we usher in 2020, it's time to change the investment strategy that one adopted in 2019. In fact, in 2019, gold was the best asset class, while equities gave good returns (select index stocks), while debt saw interest rates falling. Here are 7 investments where salaried investors can consider investing in 2020 that are suggested from across investment categories.
1. Public Provident Fund
This is one of the best investments for four reasons. The first is that the interest is exempt from income tax. The second is that the investment qualifies for tax exemption under Sec80C of the Income Tax.
The third reason to invest in the PPF is because the interest rate if at least one per centage point higher than the interest rate on Fds offered by government owned banks in India.
The last reason to invest in the PPF is because they are backed by the government of India and hence are very safe. In fact, the PPF should be a part of every portfolio as it also helps to build a long-term corpus. You can invest a small sum of Rs 500 every year.
2. National Saving Certificates
The National Saving Certificate offers an interest rate of 7.9 per cent. Now, when you compare it with the bank deposit of SBI, you realize that it is a good 1.4 per cent over and above the SBI deposit. The best interest rate that the SBI deposit offers is 6.5 per cent.
This instrument qualifies for tax benefit under Sec80C. Since it is the hard-earned money of a salaried individual, we have to consider safety. Again, since it is backed by the government of India it is very safe. These are 5-year instruments, which makes it a good long-term target to build a corpus.
3. IDFC First Savings Account
If you are constantly in the habit of keeping balance in your savings account of more than Rs 1 lakh, it maybe time to invest in the savings account of IDFC First Savings Account. The bank offers you an interest rate of 7 per cent on its savings account, if you have balances above Rs 1 lakh.
It is also important to note that savings bank interest income is exempt from tax upto Rs 10,000. This makes the opening of the account at IDFC First Bank very good. The savings bank account also comes with some very interesting features, which one can talk to bank officials about.
4. Fixed Deposits of Bajaj Finance
The fixed deposits of Bajaj Finance also offer very attractive interest rates. A 36-month to 60 month deposit offers you an interest rate of 8.10 per cent, which is extremely good, given that interest rates have fallen significantly over the last few years. The deposits are rated AAA by Crisil and hence are very safe.
It is important to remember that there would be a TDS if your interest income crosses Rs 5,000 every year. There is no tax benefits here, unlike the Public Provident Fund.
5. Shares of ONGC
If you are a salaried individual and looking at a stock recommendation from us, then we suggest that you invest in the shares of ONGC. India's leading oil and gas exploration major has seen its stock price dip very close to 52-week lows and is now available at a price of just Rs 125.
If the company maintains the same dividend as the previous years, the dividend yield itself translates into 5 to 6 per cent. It is unlikely that crude oil prices would drop anytime soon and this makes the stock of ONGC an interesting pick. In fact, the shares are trading at a p/e of just 6 times one year forward earnings, which is much lower than its long-term averages.
6. PNB Housing Finance Fds
The Fds of PNB Housing also offer very attractive interest rate. The interest on a 44-month deposit is 8.35 per cent, which is rather good. The tentative yield to maturity almost translates to 9.33 per cent. Against the backdrop of falling interest rates the yields here are very attractive.
Crisil has accorded a FAAA ratings that indicates that the degree of safety regarding timely payment of interest and principal is very strong.
7. Equity mutual funds
The last recommendation from us is equity mutual funds. We have suggested 9 best equity mutual funds for 2020, which investors might click and read.