With markets crashing, here's what should one do : Invest in Fixed Deposit, Gold.

With markets crashing, here's what should one do : Invest in Fixed Deposit, Gold.

Nifty and Sensex went up the hill, they took along the NASDAQ and Hang-seng too, then Greece and Obama’s problems started and they all came tumbling down!

Ironical, but the Jack and Jill poem seems to hold true for what’s happening in the financial markets around the world. Every market seems to be tumbling downwards.

So, what does all this hold in store for the common man.

The common Indian is already under pressure from rising inflation, investments giving poor returns and lower salary hikes too!

So what does an amateur investor do in the current scenario?

Stock markets

If you have just entered the market recently and aren't holding any blue-chip stocks, it would be a good thing to exit the market and wait for prices to stabilize.

All the indications are that things are not going to be rosy in the very near future.

And if you are not a seasoned investor, the current scenario can make you jittery. If you are mulling entering the stock market now, please wait for things to stabilise.

Commodity markets

All the indicators are pointing to a direction where Industrial production is showing a negative trend.

Even the Finance Ministry has said that the earlier projected growth rates of around 9% might be a distant possibility.

In such an environment it is better to shy away from the commodities market as they are directly affected by Industrial Production/Growth.

Derivatives

For a person entering the financial markets for the first time, it is difficult to even predict how stocks will behave.

Derivatives are always a challenge as even experts exercise a lot of caution while dealing with these complex instruments.

Given the traumatic market conditions and the hazy outlook across the globe with regards to the future and what it holds for the Global markets (the American Market and what's happening with the US debt situation has shocked every single expert worth his salt), the best course for an amateur investor is to stay away from the derivatives market.

Sell your dollars

This does not seem to be a great time to hold on to the US Dollar.

If you have the currency with you, try to sell it off as the exchange rates are indicating a weaker dollar in the coming future. Sell it now when you can get a better exchange rate.

Go for Gold

In the current situation there are at least two great investment options before you.

The first, of course, has to be gold: Buy Gold in the form of Coins/Bars and stay put. Gold has been historically considered to be a safe investment haven when all other investment products are seen to be failing. All the governments across the world are trying to increase their gold reserves as they have become wary of a weakening US Dollar.

This would mean that gold prices will rise even further.

Fixed Deposits

The other option is a fixed deposit.

They are also a great option now as RBI's high rate policy has ensured that banks are offering higher returns on these deposits.

And considering the strength of the Indian banking system, deposits are always a safe bet.

src-sify