So many ways to multiply the greens / Dec 15, 2005 / Times of India
From Indiapensions
So many ways to multiply the greens!
Pallavi Chakravorty
The slash in EPF rates doesn't mean the end of low risk investment, as these money wise men will tell you.
The stars certainly aren't favouring moolah multiplication what with the government deciding to cut Employees Provident Fund (EPF) interest rates to 8.5 pc from 9.5 pc.
With low risk investment options being limited, it is the salaried class which is worst affected by the current rate slash in the EPF.
We tried to find out a way out of 'where to invest' dilemma by exploring investment options with the money wise. Avichal Kapoor, a chartered accountant says, "Insurance deposit is what I will recommend as the most safe and tax saving form of indirect investment.
Post office deposits that offer anything between 8-9 per cent returns also fall into the risk-free category. However, the choice made by an investor depends a lot on the amount of liquid money he has."
With the sensex soaring, small investors are fearing investing in shares which has further compounded the problem.
"Mutual funds and National Saving Certificates are options for those who are ready to take risk, but in both cases the risk involved is far less than investing in shares.
For those willing to multiply their moolah, debt based investments are always a good option." The service class, especially from the private sector, is keen on alternative investment schemes following the EPF rate slash.
Arvind Kumar, executive with a private firm says, "I feel I've blocked my money by contributing more than the mandatory rate of 12 per cent in EPF.
Several of my colleagues too have been contributing far more than the mandatory rate and are now thinking of revising it next year. Though I have other investments, now I need to take some calculated risk."
Increasing consumerism is forcing people to look for more investment options, but security is still their prime concern. "It's a very piquant situation as people are left with fewer investment options.
Investment in shares is most lucrative as the returns are very high. But the risk involved and lack of knowledge has made the situation difficult for small investors.
If the EPF rates are cut further, those playing it safe so far will also have no option but to invest in shares," cautions Sushil Kanodia, president, Uttar Pradesh Stock Brokers' Association.
Still some like chartered accountant Hari Om Rastogi believe that planning and research can make things easy for investors.
"There is no point cribbing about the lowering of interest rates because the government won't roll back its decision. People should look for indirect investment options like insurance deposits.
They should know about the schemes offered by various insurance companies. I personally feel that mutual funds are also a good option as the return is generally high and the risk is comparatively low."
So the word of caution is to look before you invest.
