In today’s world, we all are moving towards the process of making money. Those innumerable efforts and that constant struggle seem worth it when we get that salary check. May be it’s not the money we work for, but nothing works without money. While earning money is a need, putting that money into use is a priority. We all have certain goals, responsibilities, future plans, things we don’t see coming. One may be financially stable and can fulfil one purpose but what about other goals and dreams. One such method that takes care of our present as well as ensures a better future is an investment.
What is an investment?
Well, an investment is nothing but a way to increase your financial growth. When we put the money into something to get more money, it becomes an investment. If one just earns money and doesn’t think about managing it, it’s futile. Investment means managing money and is associated with different sources of money.
Factors to consider before investing:
With a number of investment schemes in India, it is important to understand the factors one should consider before choosing an investment option. Here are some of them:
- The right time to invest:When should you start investing?
- Why do you want to invest:What are you expecting from the investment?
- Risk:How much are you comfortable with the risk associated with your investment?
- Investment capital: How much are you planning to invest?
While these were things one should consider before investing, some of the most common investment instruments (investment options) are:
Types of investment:
Owning to the importance of investment and its diverse nature, there are a number of investment options offered by financial companies:
- Bonds: Bonds are fixed-income instruments. A bond is a certificate issued by the company which promises to pay a certified amount of money and holds a fixed interest rate. The term of a bond can vary from few months to years. Being under a debt category, it is a safe investment. However, it is associated with low returns due to low risk.
- Stocks: Stocks are shares issued by companies and can be purchased by the general public. Buying a stock means owning a part of the company’s asset. It is also referred as equities or shares. These offer a higher rate of returns than other investments but carry a high risk as well.
- Mutual funds: A mutual fund is nothing but a pool of money governed by a group of investors. By investing in mutual funds, you ultimately invest in a combination of investment schemes including bonds, shares, etc. Such type of investment offers diversification, but one has no control regarding the investment decisions. It is comparatively a high-risk investment.
- Fixed Deposit (FD): A fixed deposit investment is a form of investment where the investor deposits some amount of money for certain period. It is a way by which companies borrow money from the investor at fixed interest rates FD is one of the safest ways to invest, and it is associated with low-risk levels and guaranteed returns.
- Investment schemes: A number of investment schemes in India are provided as investment options for investors. Some of these include – Sukanya Samriddhi Scheme, Employees Provident Fund, National Pension Schemes etc.
- Real Estate: Investing in property is a good tool for investment attributed to the rising rates of properties.
- Commodities: This type of investment includes investing in gold, silver or other commodities. Such a type of investment proves to be beneficial especially when markets are unstable.
These were some of the major investment options available in the Indian market for the investors. Before investing get clarity about your plans and goals and the risk you can tolerate. Remember that the whole purpose of the investment is to reduce your financial burden while catering to your present and future needs. So make a Safe, Secure and Smart investment.