Top 7 options for investing money
Why invest?
People want to put their hard earned money in some useful way and make profits in return (i.e.) simply making your money work for you to make some additional money.
Types of investment
There is a number of ways to invest your money, but the risk and return involved in them varies.
i) Bank Fixed Deposits:
This is the most common and preferred investment option with fixed income being paid as interest for the amount you deposit. In this type, you may deposit into the banks of choice based on the returns they provide.
Risk and Benefits
Safely assured returns with average interest (7.5-8.5%p.a) based on the term of deposit, low risk and highly secure
ii) Company Fixed Deposits:
In this type, you invest money in the companies, instead of banks and it provides returns better than the bank deposit. Financial and non-Banking Finance Companies accept such deposits.
Risk and Benefits
This option is unsecured and risky, since if the company malfunctions, the investor cannot sell the documents. High interest rate with average annual returns (10-11%p.a). Reduce your risk by investing in companies that have good reputation and credit rating.
iii) Insurance Policies ( Unit Linked, Money Back, Endowment)
The insurance policy is generally a contract, meaning that it includes all forms associated with the agreement between the insured and policy holder (investor). In exchange for the payments known as the premium, the insurer pays for damages to the policy holders, which are caused by covered perils under the policy language. There are different types of insurance policies such as Whole Life assurance, Endowment assurance, Assurances for children, Term assurance, Money-Back policy, Fire insurance and more.
Risk and Benefits
The risk is low and the actual benefit is acquired only in the case of incident occurs, for which the contract is made.
iv) Equities Shares
In this type, you buy a part of ownership in the company with the investment. The returns are capital appreciation and dividend. The below figure shows the returns from Tata Motors
| Tata Motors price history chart till 2010 |
Risks and Benefits
Risky when the stock’s value declines over the time. You need to study the company, before you invest and monitor the stock’s performance after investment on a periodic basis.
i) Equity Mutual funds
The mutual fund is a collection of funds from various investors and the fund managers invest the whole fund in to the stock markets and the returns are distributed to the investors after taking the management expenses.
Risk and Benefits
You have a variety of mutual funds to choose from and need to pay the fund managers whether you profit or lose.
ii) Gold and Silver
You may buy gold and silver in the bullion market at reasonable prices and sell when it gains. The price of gold and silver have seen rapid rise, as it is evident from the following graph
Risks and Benefits
Shown a growth above 300-350% (gold) and 220-250% (silver) in the last 15 years period.
i) Real Estate
You use the money to buy some real properties such as land, buildings and apartments and enjoy the return when the value of the property gets appreciated over the years with great demand of realties for the industrial growth and expansion of markets.
Caution:
“Never put all the eggs in a single basket”- diversify your investments to maximize returns and reduce the risk of losing and create a unique style of investment and follow it to achieve your goals.
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