In India, interest rate cycle has peaked.Its time as the interest rates would slowly start coming down after RBI has increased the rates 13 times since 2009. What does it mean? The yields would go up and up like crazy.
Have you seen how Gilt Funds and bonds have performed in Jan,2012. Kotak Gilt (Investment plan) has given a mind boggling return of 3.93% in Jan,2012 ( annualized it is 48%) . Think about it, its just the start of the lowering down of interest cycle. This is the time to rush in. Gilt Funds are ultra safe and pickup a long term Gilt plan from Birla mutual / Kotak or IDFC. Chances are that you will make returns in excess of 20% in 2012.
Would equity mutual fund give you this return. No way. It would wobble up and down. 10-12% would be more probable. Gold is good and can give upwards of 15% but Gilt Funds would rule. For Gold investing, always and always use an SIP ( Systematic Investment Plan) as its too volatile.
This year, sell your stocks, equity mutual funds and invest in Gilt Funds. You will not regret it.
Go back into history, In 2008, Gilt Funds on an average gave a 25% return. That was in a year where it was mayhem and everything crashed.Then the rates starting hardening from mid 2009 and returns started dropping.
So buy Gilt Funds now and keep buying. The earlier you buy, the better it is. Don’t forget to sell your Gilt Funds by 2013 Q3. Hopefully by then, you would have made enough.