A 2019 survey showed that around 72% of the population was unaware of how much to invest to achieve financial security.

Understanding factors such as market risk, rate of returns, and more becomes essential for profitable investments. Furthermore, one must also learn about the various avenues of investment that they can pursue, along with the benefits and drawbacks of each option.

The different types of investments are primarily categorized into financial and non-financial assets. Financial assets include both fixed income products (e.g. fixed deposit) and market-linked products (e.g. mutual fund.)

Different types of profitable investments

  • Gold

Investment in gold may be of both physical and paper form. Gold bars, coins, and jewelry are bought in the form of physical gold. On the other hand, sovereign gold bonds (SGBs) and gold exchange-traded funds (ETFs) comprise of paper gold.

Even though it may act as a good hedge against inflation, investment in gold would make sense for such investors who are unlikely to have an immediate need for liquidity or have a surplus of liquid funds at disposal.

  • Real estate

Real estate includes any physical property comprising of buildings, land and underground rights connected to the land, among others. It usually proves to be a good long-term investment appreciation over time. However, the investor needs to put down a substantial amount of corpus upfront.

The returns from the investment are generated by way of either rentals or capital appreciation. It must be noted that the house that one resides in is for self-consumption, and cannot be considered as an investment. 

  • Stocks

Stocks or equity are market-linked financial assets which are highly volatile. It does not guarantee any returns, and it usually requires some expertise and experience in not only purchasing the right stocks but also determining the entry and exit timing.

However, among all other different types of investment, stocks have the potential of delivering higher than inflation-adjusted returns.

  • Mutual funds

A mutual fund is another market-linked financial asset which aggregates money from investors to create a fund. This fund is subsequently invested in bonds, stocks or other kinds of investment by a fund manager.

It may be difficult for many investors to manage their own money. A professional fund manager takes care of the investment in lieu of a small fee. Mutual funds also enable the investor to diversify investment, reducing chances of a bigger loss, but it does not guarantee returns as it is linked to market performance as well.

  • Fixed deposit

A fixed deposit is a fixed income financial asset and acts as a safe choice for investment. If you are currently pondering which is better between fixed deposit vs equities, know that FDs offer assured returns.

Before investing in fixed deposits, an individual should focus on a few parameters – safety, minimum deposit, tenor, interest rate, and nomination, among others.

Fixed deposits are secured investments offering assured returns. The tenor of fixed deposits may range from 1 year to 10 years. The minimum deposit stipulations are relatively less in most cases, but they tend to vary between the different NBFCs.

Interest rates offered are substantially higher than the savings account, although FDs provide a similar degree of safety for parked funds. An investor can look for the highest FD interest rates in India and deposit funds accordingly. Earning a substantial interest rate helps in achieving true financial independence.

Fixed deposits are the perfect avenue for individuals who have a low-risk appetite. Such investors value security more than they value the return quantum. Guaranteed returns allow these individuals to plan their finances meticulously since they know exactly how much interest their FDs will provide on maturity. As such, you can consider Fixed Deposits offered by reputed financers Bajaj Finance to benefit from interest rates as high as 8.35%.

Irrespective of the investment an individual is planning, it is important to be clear on the objective of investing, easy access to the liquid fund, and risk tolerance. Plan your long-term financial goals in accordance with investment schemes to benefit the most.

Author Bio:

Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story

Categories: Business


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