We all look for fast returns in today’s world. We want to accomplish our life goals as quickly as possible, although patience and discipline can lead to superior results. You must match the investment plans available with your investment horizon, financial goals, and risk tolerance level to increase your wealth successfully.
Things to Keep in Mind While Investing
It may be difficult for you to select from different investment options in India if you are new to investing your money. In such a situation, you are likely to benefit greatly from some financial guidance to help you choose the best investments for you.
The following investment advice will be helpful:
- Since there are several types of investors in India, it’s critical to choose your level of risk tolerance. Your level of risk tolerance will have a significant impact on the investments you select.
- Get a rough estimate of the returns on your planned investments using an investment calculator. You can find a lot of investment calculators online.
- Determine your immediate and long-term financial objectives; then choose investment types that will help you achieve them.
- Your investment portfolio needs to be diversified to include a balanced mix of high-risk and low-risk securities.
- Make sure you have a retirement investment strategy because you should put money aside for your later years.
- Check periodically to see if the different investment types in your portfolio are still in line with your objectives.
Different Types of Investment in India
Gold Exchange Traded Funds
Public Provident Fund
Unit Linked Insurance Plans
Lets discover all these types of investment plan one by one in detail.
Stock markets are ideal if you wish to invest in a high-risk, high-return environment. Investments in the stock market can be profitable, but they can prove to be extremely risky sometimes.
Investors unfamiliar with the stock market’s workings should stay away from it.
It can be challenging to forecast the direction of stock markets because demand and supply factors in the market determine price trajectories.
Equities can prove to be a gamble for investors who lack adequate market and risk expertise.
2. Gold Exchange Traded Funds
Investors can use Demat Accounts to purchase gold exchange traded funds (ETFs) and dematerialized assets. These financial instruments follow the market price of actual gold.
Consequently, buying a gold ETF is like buying digital gold.
It is an attractive solution for individuals who wish to invest in gold but are not keen on purchasing and storing gold.
The lack of diversification in this type of investment is its biggest flaw. As a result, your earnings and your investment range are restricted to only one commodity.
3. Mutual Funds
Aggregate funds of numerous investors and use them to buy debt and equity products is called Mutual funds. These are suitable for long-term investors.
They are divided into three groups: debt, equity, and hybrid mutual funds. You can use your demat account to purchase units of a mutual fund.
A mutual fund’s performance depends on the trajectories of securities it invests in. Also, in the case of a mutual fund, it’s a fund manager who invests on your behalf. Their subjective analysis of the market and prejudices can affect your returns. These factors contribute to the risk involved in mutual funds.
4. Fixed Deposits
Fixed deposits with banks are among the most well-liked investments in India. They offer a fixed interest income and have a fixed time period. You can even benefit from compounded returns with a reinvestment of cumulative fixed deposit. FDs involve a very low risk.
However, the main disadvantage of a fixed deposit is its lower returns, which barely outpace retail inflation rates.
5. Peer to Peer Lending
Peer to Peer lending, is a non-market linked product that offers an alternative investment choice for investors who don’t go well with market fluctuations. Peer to Peer lending contributes towards diversifying your overall portfolio. It helps you create a new stream of wealth creation opportunities.
Compared to other asset-classes, P2P lending investment products fares well in high-return generating opportunities. LenDenClub’s FMPP, a Fractional Matchmaking Peer-to-Peer Plan, FMPP investors have earned upto 12% p.a. since launch. This, when compared with major fixed-income generating investment products, can give you a sense that P2P tops the charts.
With FMPP®s, you don’t have to worry about doing your own research. It’s simple. Whether your purpose is to diversify, explore or invest, all you need to do is Create an account – Fund Your Account – Select a Time Frame – Invest! The four step process can do wonders. The higher the time-frame, the better are your yields! Other features of FMPP®s include AI-based investments, Hyper-Diversification of risk, compounded returns, and state-of-the-art infrastructure. If you wish to learn more, you can click here to get a better understanding of the product!
6. Public Provident Fund
PPF is a long-term investment opportunity that offers an interest of 7.1% compounded annually and is entirely tax-free.
Additionally, you can deduct up to ₹1.50 lakhs in PPF investments from your taxable income each year. However, PPFs must be held for a minimum of 15 years, and only limited withdrawals are permitted after five years. You can always borrow money using your PPF balance as collateral amid a financial emergency. But that results in you losing your money as borrowings carry a higher interest cost than what you currently earn!
7. Unit Linked Insurance Plans
This kind of investment offers a double benefit, with both financial and insurance benefits. A part of your investment is used as an insurance premium, while the remaining sum is invested. The lock-in time for ULIPs is at least three to five years. These ULIP investment returns are subject to changes in the market. A fund manager makes the investment choice.
8. Real Estate
Real estate can be purchased for personal use or as an investment. However, it has some negative aspects even though it can bring in rental income and capital appreciation.
Real estate’s value increases erratically. Consequently, you cannot foresee the market.
Huge capital investments are necessary for real estate investments, which you cannot voluntarily withdraw. It is not a liquid investment.
It’s important to distinguish between saving and investing as an investor. While saving is often considered a slow path to accumulate wealth, innovative investment strategies can help you increase your fortune quickly. The golden guideline for investing wisely is maintaining a thorough awareness of the many kinds of investment opportunities the market offers.