Different Types of Investments

Investment is the act of purchasing an asset with the intention of making money from it. Regular income or asset growth are two ways that investments can generate income. 

The value of an asset increases over time whether it is a stock, mutual fund, or real estate. An investment is bought by the investor with the motive to sell at a higher price in the future. There are various types of investment in the market let’s explore them. 


  1. Fixed Deposits (FD)- Fixed deposits are the most popular investments in India. FDs are risk-free investments that offers 3% to 7% returns per annum. The tenure ranges between 7 days to 10 years. The majority of the Indian population invests in FDs only to be on the safer side.
  1. Bonds- Bonds are fixed-income investments that pay investors a fixed rate of interest against their initial investment. Investors who lend money to the government and businesses get interest payments on a regular basis. Bondholders are paid in full when the bond matures (upon maturity). 
  1. Public Provident Fund (PPF)-  The National Savings Institute introduced the Public Provident Fund as one of the post office savings schemes. Some private and nationalized banks are permitted to accept PPF investments. PPF is one of the safest investments as it is backed by the Indian Government. The lock-in period is of 15 years and currently, PPF investment is offering a 7.1 % interest rate.
  1. Stocks- Investing in stocks gives investors part of the ownership of the company. Stock yields very lucrative returns in comparison with other investment instruments. People invest in the stock market with aim of earning regular income in the form of dividends. If you have a risk appetite then only you should invest in stocks.
  1. Mutual Fund (MF)- Mutual funds are financial instruments that pool investor money to invest in equities and debt-based assets. A mutual fund makes strategic investments in stocks, corporate and government bonds, as well as other assets. A portfolio manager or fund manager is chosen by the fund company to oversee the mutual fund. 
  1. National Pension Scheme (NPS)- The National Pension Scheme (NPS) is a retirement-friendly scheme. Investors can invest in NPS if they want a steady income after retirement and looking for saving taxes. This is a as low-risk investment since it is backed by the government.
  1. Gold- For Indians, gold has always been a go-to asset or investment. Moreover, it is an asset with high emotional and social worth. In India, purchasing gold coins, bars, cookies, and jewelry on auspicious days has traditionally been a custom. If you looking for steady returns on yearly basis then gold is the way to go. 
  1. Real estate- Investing in real estate involves the acquisition and ownership of the property. In other words, any investment in a piece of land, a structure, a piece of property, etc., is a real estate investment. Real estate investing is mostly done with the intention of either renting out the property to generate regular income or selling the asset for a greater price in the future.

In the end, I would like to say that go for the investment which suits your income level and your financial goals. Research every type of investment in detail and invest after analyzing all pros and cons of the investment to make sure your hard-earned money is invested at the right place.

 

  

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