Investing Money in India right now is a very confusing matter given the large number of choices and the lack of attractiveness of different assets due to different reasons.There are hundreds of voices seemingly intelligent but who are selling their own books.If you turn on the finance new channels they will keep saying buy stocks for the long term as if a normal investor can make money by buying stocks for the short term.Gold proponents will say that it has been a great investment over the last several years and with the US,European systemic shocks it will remain so.However the rapid uptrend in gold prices has made it a somewhat risky investment.Investing in Gold is also not easy given the wide array of choices like Gold ETFs,physical or futures.So lets see each asset class with its pros and cons

Stocks

Cons

Has not gone anywhere in the last 2-3 years and the macro headwinds of inflation,bad government ,sky high interest rates has not made the conditions great either.Lack of good quality management in India and corruption has made investing in mid cap and small caps extremely risky.

Pros

India’s GDP growth rate continues to be one of the best in the world and the company earnings should grow alongwith that .P/E multiples have moderated somewhat

Real Estate

Cons

India’s Real Estate is a bubble in my view given the total disconnect between rental yields and prices.Also black money and regulations keep prices artificially high.Even if the prices don’t come down ,it looks unlikely that real estate can outperform.

Pros

Demand which is huge but lack of buying power is the biggest problem here.Corruption is rampant which makes it a dampener with lack of liquidity.

Gold

Pros

Its a good investment in times when confidence in fiat currency and governments is so low.Monetary easing has kept its attractiveness high ,also negative and low interest rates from governments in the west keeps a floor

Cons

The sharp run up in prices in the last decade and volatility are the negative factors here.However Gold seems a good investment compared to stocks and real estate currently

Bonds

Pros

High interest rates make it attractive along with the fact that we are near the peak of the interest cycles.Fixed deposits are also giving very high returns.

Cons

Can’t think of many ,the only thing to be careful is of investing in low quality bonds given the fact that some companies renege on paying out and laws in India are not that great either.