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Different Types of Investment in India

Types of Investment

As the old saying goes, make the hay while the sun shines. This saying captures the essence of why investment is essential. Earning money is great, but unless you invest the money and let it grow, you won’t be in a position to save for a rainy day. Investment is also important to help you realise your financial goals and secure your future. So you have to let the money do the work for you and not allow the funds to sit idly in your bank account. Importance of investment lies in the fact that it can help you to stay afloat during inflation, save for retirement, and be your additional corpus of funds in case of an emergency.

Pros and cons of Investment

The most crucial factor to be considered before you decide to invest is to understand your investment objective. If you intend to grow your money but insulate it from risks, then you can consider investing in options like mutual funds or fixed deposits. On the other hand, if you wish to gain higher profits but don’t mind the risks involved in achieving that, then share markets could be another option.

The age at which you begin investing is also essential. If you start investing at a young age, you gain an advantage. You have a long horizon and end up with a large corpus if you are financially disciplined with your investment plans.

You should also be able to assess your risk appetite. This factor is significant as it influences the type of financial product that you would consider for investment.

Types of investments for different people

Several investment options are available at your disposal. Different types of investment suit different people – there is no one size fits all approach here.

Selecting the investment option which is suited to your needs is the challenge, and that requires thorough diligence. In India, there are various types of investment that you can consider. The kind of investment will depend on your needs and your long term investment objective. Given the change in the economic scenario over the last few years, the types of investment available at your disposal are numerous.

Stock Markets:

One of the standard investment options you can consider is investing in the stock market. You can trade in stocks daily or hold them for a long-term. However, you do need to understand that the stock market tends to be volatile. You should expect significant fluctuations inindividual stock prices and your returns of investment.

Fixed Deposits:

A safe bet for investment is through fixed deposits. In a fixed deposit, you invest a lump sum amount of money for a specified tenure. There is a pre-determined interest rate. Once the tenure ends, you can receive the invested amount along with the compounded interest.

Public Provident Fund (PPF):

Public provident fund, commonly known as PPF, is a retirement-oriented investment option. PPF was introduced by the government to incentivise small saving. PPF is popular as it offers attractive returns and tax benefits. It is a safe investment option as it has the backing of the government.

Mutual Funds:

Another increasingly popular investment option is mutual funds. Mutual funds pool the money you invest and in turn, invest it in different securities. The investment can be in both equity and debt instruments.

Real Estate:

Real estate investment is a popular option if your initial investment money is large enough. You can always buy a house as an investment vehicle and sell it off when there is a demand in the market.

Precious Metals – Gold:

Investment in gold is one of the traditional methods of investment which has been around for several years. It is possible to invest in physical gold or gold exchange-traded funds. It is one of the safest options of investment though you must be cautious about the purity of physical gold purchased.

Conclusion

As seen above, various types of financial investment are available for you to choose from. However, you must decide to invest after due diligence and consideration. The option you want must be safe and assure you a substantial amount of returns. Stay wary of Ponzi schemes which promise you unrealistic returns. It is a wiser decision to go for traditional and safer options for investment.Ultimately, not all shiny objects are gold.

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