Your money report card for 2006

Then follows the equity story. It's been a bull's year all the way. The market climbed more than a couple of thousand points this year. While the sensex returned 42%, equity mutual funds outperformed the sensex. Best performing equity fund, Sundaram Select Midcap, gave a return of 57% last year. Investing in equities is a must if you want to beat inflation in the long term. Ask any financial planner and he will tell you that equity must be a part of any healthy portfolio.

 

Real estate has also been an attractive market since 2005. But since no systematic data is available to measure growth of the sector, Moneycontrol spoke to experts from the field to get estimation. Chetan Narain, Director, Narains Corp says, "The returns in premium real estate projects within Tier I and Tier II cities throughout the country are estimated to be around 4 to 6% in residential market prior to tax deductions and in commercial and premium retail properties of about 8 to 12%. Annually, one can expect a growth (capital appreciation) of 12 to 15% in the current scenario on a national view across all sectors."

 

That means, the cumulative returns from rentals as well as capital appreciation can be pegged at 15-20%. However, Narain adds that the rates differ highly from area zones and also based on quality of the project. With a lot of infrastructure changes taking place, especially in Mumbai, the best investment returns are guaranteed from properties that are located in areas which are on the thrust of an infrastructural makeover.

 

Sandeep Sadh, CEO, Mumbai Property Exchange.com, gives some numbers for Mumbai, "While the premium segment has grown anywhere between 40-70%, the mid-segment by 30-60% and the lower segment by 20-45%, these are the mean average growth rates. Rate increases will vary significantly from area to area and property to property."

 

Debt has been the poorest performer in the year gone by. Although the safest, the returns are seldom enough to beat inflation.

 

By Deepa Venkatraghvan