Whether you are just starting out or simply looking for options to invest your hard-earned money, you have stopped at the right place!
For most people, investment is a tough decision. With so many options available today, one is bound to find the experience overwhelming.
Before delving further, you must know that investment avenues can be categorized into;
Financial Avenues
These include mutual funds, fixed income products, money market instruments, etc.
Non-financial Avenues
These include non-financial instruments such as commodities, gold, real estate, etc.
You can consider investing in both the avenues to achieve the appropriate and optimum level of portfolio diversification.
Here, we have compiled a list of top 10 investment avenues that you may consider to invest in.
1. Equity Mutual Funds
This is one of the best ways of investing in direct equities. The biggest advantage of investing in equity mutual funds is that it helps generate great returns with a hedge against risk.
In equity mutual funds, the funds are predominantly invested in equities of companies with a minimum of 65% contribution to equity. Equity mutual funds are diversified and are professionally managed by a fund manager.
When you invest in mutual funds, you must do comprehensive research about the past few years of performance, dividend payment style, the market presence of the fund house and investment strategy. The research will help you have an understanding if you will actually have some value while you invest in that fund.
Another factor to consider when investing is your risk appetite. You will have to select a fund depending on whether you are a low-risk appetite investor or a high-risk appetite investor. If you have a low-risk appetite, you can select instruments that are moderately rewarding and less risky.
2. Debt Mutual Funds
Debt mutual fund is a great investment option for investors looking for less risky instruments. These funds are mostly fixed-interest instruments and generate steady returns. A major part of the fund is invested in certificates of deposits, treasury bills, commercial papers, corporate bonds, and other money market instruments.
Debt mutual funds are best suited for investors looking forward to investing in less risky investment instruments. These generate steady returns over the course of investment and are mostly fixed-interest instruments. Major investments are made in treasury bills, certificates of deposit, corporate bonds, commercial papers, and other money market instruments.
3. Direct Equity
This refers to investing in direct stocks of a company. The process is not simple as it requires a lot of experience and skill to understand which stocks to invest in. Direct equity funds are quite risky in nature as there is no cushioning against a wave of downfall that may occur to the profits of the company.
Additionally, you need to be very careful about choosing the right stocks at the right time, with the right amount and so on. You will also have to enter and exit the market at the most appropriate time.
To invest in direct equity, you will have to open a Demat account that will allow you to trade in the market. The biggest advantage of investing in direct equities is that it offers you high returns if you stay invested in it for a long time (10-15 years) and can even deal at par with increasing inflation.
4. Public Provident Fund (PPF)
Public Provident Fund is a popular fixed interest investment options in India. It offers a lock-in period of 15 years but accounts for tax-free interest that is compounded over the years.
Considering the volatile market and current market trends, PPF is one of the safest investment options available.
5. Fixed deposits
Bank fixed deposits are yet another fixed interest rate instruments that has a minimum lock-in period. Fixed deposits and post office recurring deposits guarantee the safety of money and a fixed return over the principal amount.
6. National Pension Scheme (NPS)
This is one of the highest offerings of fixed returns schemes by the government. It is regulated by Pension Fund Regulatory and Development Authority(PFRDA) and focuses on retirement planning and funding. It offers two tiers under which you can maintain an account according to your fund requirements. In the tier-1 account, you will have to keep a minimum balance of Rs.1000 (earlier it was Rs. 6000).
7. RBI Taxable bonds
This has a lock-in period of 7 years with a rate of interest of 7.75%(current rate). You will have to create a Demat account to avail of these bonds and will be issued in the form of Demat forms. The holdings can then be issued and credited to your Bond Ledger Account for further processing. A certificate of holdings will be issued in your name against the money you have invested.
8. Senior Citizen Savings Scheme (SCSC)
This scheme is popular among retirees or people who are nearing retirement. SCSC scheme is applicable only for people who are 60 years of age or more. You can simply visit the nearest post office or bank branch to avail of the scheme.
The Senior Citizen Savings has a lock-in period of 5 years that can be extended to 8 years upon maturity. Currently, SCSC is offering an interest rate of 8.3% and is a completely taxable scheme. However, you can invest a maximum of Rs. 15 lakhs in this scheme.
9. Gold
This is a trending investing option. Gold shares an inverse relation with the stock market and performs well during a market slowdown. It is also an excellent way to diversify your portfolio that hedges against risk and volatility. The gold investment will also safeguard you against rapidly increasing inflation.
10. Real estate
It refers to the physical property you can buy to avail of the benefits from it.
Do note that the house you are living in (own house) is not considered as your real estate investment as it is not generating any returns. You should possess a property other than the property you are living in to be invested in real estate. You can consider investing in commercial property, floor, house, open ground, flat, etc.
For a better understanding of the above-mentioned options, you can contact a reliable financial advisor and get all your queries answered.