Everyone wants to save and invest for the future. It is an essential part of wealth creation, as it helps in financial security of an individual. If invested prudently it can help beat inflation as well. Instead of letting money lie idle in the bank accounts, one can invest in different avenues like stocks, equities, mutual funds, fixed deposit, property etc.
Broadly investments can be categorised into financial and non-financial investments. Financial investments can be stocks and mutual fund, Public Provident Fund, bank fixed deposits etc. Non-financial investments could be physical gold and real estate.
Let us briefly look at some investment
options where one can invest.
Equity Investments : Direct Equity & Mutual Funds This type of investment is suitable for those who want higher returns and take higher risks for the same. Over the long term equity has been able to deliver higher than inflation-adjusted returns compared to all other asset classes.
Low Risk Investments : Investors with lower risk tolerance, look for low-risk investment options. Often, retirees who’ve spent decades creating a nest egg, fall under this category. Fixed-income instruments like bonds, debentures, and Fixed-Deposit and Government savings schemes fall under these investment categories, and suit the needs of low-risk investors.
Non-Financial Investments : Physical Gold & Real Estate a.Physical Gold: Investing in gold is advised because it is an inflation-beating investment. Over time, the return on gold investment has been in line with the rate of inflation. Also gold has an inverse relation with equity investments. For example, if the equity markets start going down, gold would perform well. b.Real Estate: It is well known that real estate is one of the fastest-growing sectors in India. It holds huge prospects in the major sectors like housing, commercial, hospitality, manufacturing, retail etc. Purchasing a flat or plot is the best investment option available in India and it is the one of the most preferred for of investment. The risk is low because the rate of a property increases from time to time and it has the potential to generate rental income as well.
While selecting an investment avenue, one must match his or her own risk profile with the associated risks of the product before investing. There are some investments that carry high risk but have the potential to generating higher returns and vice versa. When it comes to choosing an investment, it is always a trade-off between its risk and the return associated with it.