how to start Investment. 3 Major types of Investments. best investment options

Investments/savings -Nowadays every person has good income sources, but due to lack of proper knowledge about saving, 90% of the people do not have money with them, today we will discuss about the types of investing money so that your savings can also happen. You can also get good return from the savings/investment made.

TIps :-“”Senator Elizabeth Warren popularized the so-called “50/20/30 budget rule” (sometimes labeled “50-30-20”) in her book, All Your Worth: The Ultimate Lifetime Money Plan. The basic rule is to divide up after-tax income and allocate it to spend: 50% on needs, 30% on wants, and socking away 20% to savings.””

Before starting investment/saving, it is important to have proper knowledge about various investment schemes. your investment should  be wholly depends on your risk ability so invest according to your risk level(low, medium and high risk).

“The easiest way to calculate the time taken to double the investment whenever we make a fixed deposit or any other investment is to find the interest earned on that investment and divide 72 by that interest rate, the answer is this Approximate number of year to double your investment”

Types of Investment Options

here are we are telling you about types of investment(according to your rist ability) in detail.

1. Low-risk investments

Low risk investment also known as traditional investments means, that does not depends on the economy or business and pays a fixed income. An investment falling in this category would have a predefined guaranteed return. These schemes are generally run by government/banks, such as Bonds and Fixed Deposits, EPF, PPF, Sukanya Samriddhi Yojana, Senior Citizen Savings Schemes and National Savings Certificate.

The returns offered by the above investment schemes are periodic and predetermined. This type of investment is very good for those individuals who do not want any risk in their investments and because these investment options provide safe and guaranteed returns to the investors. here are some of low risk investments

• Recurring Deposits

This recurring deposit is best suited for investors who want to invest a small fixed amount regularly along with making a safe investment. In a recurring deposit, one receives a lump sum amount along with interest at the end of a specified period. It is a good option for short term (1 to 3 years) investment.

• Fixed Deposits

Fixed deposit is one of the safest investment options. FDs offer a variety of tenors (Min – 7 days, Maximum – 10 years) and investors can choose the investment as per their requirement. Investment in it can be done in lump sum only. If a lump sum amount lying in the savings account of a person, then they can get it converted into a fixed deposit. Because savings on fixed deposits earn more interest than the interest rate

Benefits of Fixed Deposits:-

• Fixed Deposits A safe instrument with financial stability that gives you high returns on surplus funds.
• Auto renewal of bank fixed deposit keeps happening and you can also get it renewed yourself and loan can also be taken against fixed deposit.
• Fixed deposits are not affected by market volatility and the returns are also fixed.

2. Medium-risk investments

• There is little risk involved in this type of investment scheme, but the investment made in it also gives higher returns than low risk investment. These investment options are good for investors who have a low risk appetite and want to get higher returns and income than fixed income securities. In medium risk investment schemes, although the volatility is very less, but due to market-link, sometimes it also makes a difference due to heavy fall in the market and sometimes the principal amount is also reduced.

          Gold ETF, NPS, some mutual funds (balanced, debt and index) fall in this category.

• Gold ETF

Gold Exchange Traded Fund is one such investment scheme which is a combination of both gold investment and stocks. Gold ETFs can be bought and sold easily. Gold ETFs are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Limited (BSE). Therefore, gold ETFs can be bought and sold only on foot or by foot. You can buy and sell gold ETFs electronically, just like you would trading in stocks. Gold is not physically available when sold in it. Trading gold ETFs requires a demat account (demat) in which gold purchased electronically can be held.

Benefits  of Gold ETF’s:

• Gold Purity is guaranteed because trading is done in pure gold
• Gold price are real time.
• Listed and traded on stock exchange.
• Safest way to invest in gold as the profit earned from it is treated as long term capital gain.

 

•  Unit Linked Insurance Plan (ULIP)

Unit-linked insurance is considered a medium risk investment. ULIP plan offers the benefits of both insurance and investment. The benefit of tax exemption is also available for the investment made in the ULIP plan. One part of the investment made in ULIP plan is used for the insurance premium and the other part is put in the market. ULIP plans come with a lock-in period of 3 years – 5 years.

• INDEX Mutual Funds

Index mutual fund invests in stocks that mimic stock market indices like NSE / NIFTY, BSE / SENSEX etc. They are passively managed funds which means that the fund manager invests in the securities present in the underlying index  in the same proportion and does not change the portfolio structure. Theses funds try to deliver returns comparable to the index they track. for more detail click here mutual fund

• Balanced / Hybrid Funds

Balanced funds, also known as hybrid funds, are one of its classes that contain a bond (debt) component and a stock (equity) component in a specific ratio in a single portfolio. These mutual funds help investors to diversify their portfolio by investing in asset classes such as equity and debt. Generally, hybrid mutual funds stick to a relatively fixed mix of bonds and stocks. for more detail click here mutual fund

 

3. High-risk investments

This type of investment would have high returns but the risk is also very high. Because all the money invested in it is invested in direct market jaise share market, equity mutual funds, stocks of companies, derivatives. Because of this, there is a high risk in them. Only investors who have good knowledge of the market should invest in this. here are some example of high risk investments:-

• Shares

Share market is considered to be high risk and high growth investment. Because if you own shares of a company, then you can also get income from dividend (the profit of company that paid to the shareholders of the company) and even if the market value of the share remains high, you can get income. But the value of the shares may be less than what you pay because the share price changes daily and remains volatile. Therefore, investing in the stock market is generally best suited for long-term investors, who are comfortable with these ups and downs.

• Equity Mutual Fund

These are funds that invest in equity shares/ shares of companies related to the share market . They are considered High Risk Funds. High Risk means those funds also returns high returns and these funds also carry risk.

They are categorized by their market cap.

• Large Cap:  Large cap companies have market caps of Rs.20000 crores or more
• Small Cap: small cap companies are those that have a market cap of less than Rs.5000 crores.
• Mid Cap: Whose market cap is above Rs.5000 crores and less than Rs.20000 crore

For more detail click here mutual fund 

•  Stock market/ Derivatives

Commodities, shares and derivatives are a profitable option for investors who have good market knowledge and have a high risk appetite. Investing in the stock market can be done for short term or long term depending on the financial objectives of the investors.