5 Effective Investment Options

 

Investment-Risks

1: Real Estate:

By Real estate we refer to various fixed assets or immovable property, it is broadly classified into 3 classes:

Residential: It includes flat, apartments, bungalow, and raw houses

Commercial: It includes offices, shops and godowns.

Land: It includes industrial plots, farmhouse plot, agricultural land and non-agricultural land.

Investment into a real estate require a huge amount of money with bunch of legal formalities, price discovery etc however the returns are fantastic and non-comparable with any other investment options available in an Indian market.

Usually a real estate investment in Residential and commercial assets are made with an objective of having a rental income out it along with capital appreciation while people hold their investment in land for a long tenure to get an advantage of capital appreciation on it.

 

2: Mutual Fund:

Mutual fund is an investment vehicle that helps an investor to invest in various asset classes such as equity, debt and gold. Mutual Fund pools the money of many investors, work as a mediator and invests their money in variety of different securities like stock, bonds and other securities in a best possible manner with the financial objective of generating good return for their investor.

Mutual Fund, because of its features like professionally managed, diversification is considered as good investment option for investors who are little aware about the financial market and for those investor who does not have a more time to invest and to look after their investment periodically.

To suit the need of every investor, various types of mutual funds are available in an Indian market such as Equity fund, Index fund, ELSS and Sector funds etc with the various ways of investment such as in Lump sum or in the form of SIP, STP, SWP etc.

 

3:  Bonds:

Bonds are debt instruments that are issued by companies, municipalities and governments to raise funds for financing their capital expenditure. By purchasing a bond, an investor loans money to the borrower for a fixed period of time at a predetermined interest rate. While the interest is paid to the bond holder at regular intervals, the principal amount is repaid at a later date, known as the maturity date. While both bonds and stocks are securities, the principle difference between the two is that bond holders are lenders, while stockholders are the owners of the organization.

For a Bond holder, it is an investment, when an investor buys a bond; he becomes the creditor of the issuer, therefore the creditworthiness of the borrower needs to be checked before lending money to them, usually a higher risk entity required to pay a higher yield to the bond holder while an issuer with low default risk pays a lower yield to the bond holder.

For Example:

Once you buy it, the issuer promises to pay you back the face value on “maturity date” at a predetermined rate of interest the “coupon.” Say, for instance, you buy a bond of Rs 10,000 face value, a 10% coupon and a 10-year maturity. Now every year you will be receiving Rs 1000 as an interest and on maturity you will be receiving Rs 10,000 as its face value.

 

4: Equity Investment:

Equity is an ownership in business, when you park your money in share or stock of companies then it is called as an Equity investment.

For Example: If you have 100 shares of ABC company out of total 10000 shares floated by the company, then you are 1% owner in ABC`s business.

As an owner, you get certain rights like voting at company resolutions. More importantly, as an investor, when the company achieves growth, you benefit from the capital appreciation but if the company makes losses your capital will go down.

So while making the investment in equity, we need to do a proper research by look into the technical aspects & fundamental of the company and need to have a longer time horizon to get the maximum out of it.

 

5: Gold:

The most precious yellow metal which has an emotional and the financial value attached to it in a country like India is Gold. It can either be use as an ornament or as an investment product. Generally, the people over here are emotionally attached to physical gold in the form of jewellery, coins etc which serve both the above purpose.

Occasions like Diwali, Dhanteras and Makar-sakranti believes to be an auspicious day for buying the gold, there is heavy rush for gold during these festivals where people are buying it mostly in a physical form.

But now for an Investment purpose the trend is changing from physical gold to an electronic form like in commodity trading and Gold ETF etc. Investment companies are coming up with the lots of convenient option like Gold SIP which lure the investor to park their funds in an electronic form; moreover it is sold in a dematerialised form and can also be liquidated easily.

Happy Investing!!!

 

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