People investment Avenues
People invest the savings to gain
financial security. They are investing their savings in a various investment avenues for various
purposes. They may invest in various securities and wait for a stipulated
period to get back their investments with higher value addition.
There are three aspects which need to be
considered before investing the money namely liquidity, profitability, and
safety. In other words some investments can be easily and readily encashed in
the market without any loss. Such investments are called liquid investments,
for example bank deposits, government bonds, mutual funds, precious metals like
gold, silver, platinum etc. while certain other investments cannot be
liquidated immediately but they may fetch higher returns at maturity. For
example shares, real assets, debentures, public deposits, fixed deposits, money
back insurance policies come under this category.
Certain other investments offer higher income earning prospects but they are totally unsafe as in the case of gambling, horse race, lottery, speculation and so on and so forth. Therefore an individual investor has to park the surplus funds judiciously so as to balance the liquidity, safety and profitability.
Following are some of the investment
options available to individual investor
It is the safest long-term investment
option for the investors in India. It is totally tax- free. PPF account can be
opened in bank or post office. The money deposited cannot be withdrawn before
15 years and an investor can earn compound interest from this account. However
the investor can extend the time frame for
the next five years if the
investor does not opt to withdraw the amount matured for payment at maturity
date. PPF investor can take loan against PPF account when he/she experiences
financial difficulties.
An individual investor who wants to
invest in equities and bond with a balance of risk and return generally can
invest in mutual funds. Nowadays people invest in stock markets through a
mutual fund. Systematic investment plan is one of the best investment options
in India.
An individual can opt for investment in
shares. But he has toanalyse the market price of various shares traded in stock
exchange, reputation of the company, consistency in the payment of dividend,
the nature of the project undertaken by the company, growth prospects of
industry in which a company is operating, before investing in shares. If the
investment is made for a long time, it may yield good return. However there is
equally risky to invest in shares as there is no guaranteed return therein.
Real estate is one of the fastest
growing sectors in India. Buying a flat or plot is supposed to be the best
decision amongst the investment options. The value of the real asset may
increase substantially depending upon the area of location and other support
facilities available therein. However an investor in real estate has to be
cautious and circumspect in verifying the genuineness of the title deeds before
investing in real estate assets and also the reputation of seller of real
assets.
Investment in metals like gold, silver
and platinum is one of the oldest and evergreen investment products. The values
of the metals rise slowly and steadily in line with the dynamic market
conditions. But investors can liquidate the metals immediately in the market
without any loss. Besides an investor can opt for investment format, like gold
deposit scheme, gold ETF (exchange- traded fund), Gold Bar, Gold mutual fund
etc., to get benefit in the short period of time.
There are different types of postal
small savings schemes namely Post Office Savings Account, Post Office Recurring
Deposit Account (RD), Post Office Fixed Deposit Account (FD/TD), Post Office
Monthly Income Account Scheme (MIS), Senior Citizens Saving Scheme (SCSS)
Public Provident Fund Account (PPF), National Savings Certificates (NSC), Kisan
Vikas Patra (KVP), Sukanya Samriddhi Account (SSA). Investors can choose the
appropriate postal schemes as per their needs.Postal investment schemes is the
safest investments
Public deposits are more beneficial than
the fixed deposit in the bank, in the matter of yielding good return. An
investor has to select the investment period very carefully. He/she is not
allowed to withdraw money before maturity. However the public deposits
collected by companies and institutions do not offer any insurance benefits.
It does not come under the control of
the Reserve Bank of India. The investors who are willing to invest for long
term can opt for public deposits.
Bonds are one of the ideal investment
options for those investors who would like to invest their hard earned money
safely. Bonds are issued both by government and public and private sector
companies and financial institutions. Mostly there are four types of bonds sold
in India namely Government bonds, Corporate bonds, Banks and other financial
institutions bond and Tax saving bonds. The term bond is used for the debt
collected by the government while the
term debenture is used when the
corporates collect debt capital from the public.Investment in bonds is totally
risk free.
ULIP is a life insurance linked product,
which provides risk cover for the policy holder along with investment options
to invest in any number of qualified investments such as stocks, bonds or
mutual funds.
Fixed deposits (FD) enable the investor to invest the money for a specific
period. The Fixed deposit can be opened from a minimum period of 7 days to a
maximum period of 10 years. The fixed deposit holder can take loan against the
fixed deposit receipt. The depositor cannot withdraw the fixed deposits before
the maturity date.
Recurring deposit (RD) account is another investment option for those people who earn regular income. This deposit can be opened for a minimum period of 1 year to a maximum period of 10 years. The Recurring deposit holder can take loan against the instalments paid.
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