Wealth Special: What is the safest asset today?

MONEY ON MIND: Cash is surely one alternative but don't forget that there is a huge amount of risk.

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PV Subramanyam, a Chartered Accountant by qualification, is a trainer in the financial services sector. After a 20-year career in the financial services industry, from equity broking, mutual fund advising, corporate finance advising and personal financial planning, Subramanyam turned to training. He writes regularly for financial websites and magazines.

'Forget stocks. Invest your money in buying a bigger bed. You can tuck away all your cash here', read an sms that I got the other day.

Funny I thought, but it really gives away what the world is thinking today. Everyone and his uncle are scared to invest their money!

"Should I keep all my money in cash? Is it the best asset class at this time?", is the question most of you are asking. Here is my analysis.

Cash has risk too!

Cash is surely one alternative but don't forget that there is a huge amount of risk. What risk? You might have a thief as a visitor and he can make a clean sweep (And the bed idea might not be a great one here!).

Besides, fire is another threat if you have cash lying at home. And we cannot rule out the possibility of natural disasters destroying your cash either.

And if all this isn't enough, then remember that inflation erodes the value of your money. So, idle money is inflation's delight!

Now that cash has been ruled out, here are some other investment options. But at this stage, are they worth it?

Bank deposits:

This is an attractive avenue for many people because they want to 'preserve their capital'. Banks pay anything between 3 to 11 per cent per annum as interest on the fixed deposits (FD). However, post tax and post inflation returns on FDs are either negligible or even negative. Hence, this is not a great option either.