- Direct equity
- Equity mutual funds
- Debt mutual funds
- National Pension System (NPS)
- Public Provident Fund (PPF)...
hen it comes to investing money, we all have our doubts and fears of losing our money or not getting enough profit. While looking at investment options
, you will have to first analyse your risk profile completely and find all the risks associated with a particular product before you make the investment.
Some investments may carry a higher risk factor but will give potentially higher returns than other assets in the long term. While other investments with lower risk factor may generate lower returns. Investment products
can be grouped into two types namely, Financial assets and the Non-financial assets.
The financial assets are divided into two:
- Market-linked Investment products (Stocks, Mutual Funds
- Fixed Income Products (Public Provident Fund, Fixed Deposits
in Banks etc.)
The Non-financial assets may include investments in Gold and other precious items or Real Estate etc. Most Indians prefer to invest in the non-financial assets according to research.
We have a list of the top investment options to look at when you decide to invest your money somewhere and have figured out your risk profile. Some of these include the following:
1. Direct equity
Investing in stocks may have a higher risk as it is a volatile asset and there is no guarantee of getting a good return on your investment. You will need to put a lot of time and effort into picking the right stock, making the investment and deciding when to leave it. The only good thing that may happen in such an investment is that over a long period, equity may deliver higher returns. But, there is always a high risk of losing capital in such an investment, unless you decide to choose the stop-loss method to prevent any losses. In this, an order is placed in advance to sell the stock at a specific price.
2. Equity mutual funds
Equity mutual funds are an investment in the equity stocks. As per the Mutual Fund regulations in India, one must invest a minimum of 65 per cent of its assets in the equity instruments. Equity funds can either be managed actively or passively. In an actively managed Equity Fund, returns will be dependent on the Fund Manager's capability to generate the returns. The passively managed funds may include Index Funds and the ETFs (exchange-traded fund). The categorisation of the Equity schemes is made as per the market-capitalisation and the sectors in which the investment is made. Some of the Equity Mutual Funds include:A) SBI Small-Cap Fund
3-year returns: 11.20 %
5-year returns: 18.30 %B) Mirae Asset Emerging Bluechip Fund
3-year returns: 11.33 %
5-year returns: 17.07 %C) Axis Long-term Equity Fund
3-year returns: 13.14 %
5-year returns: 14.10 %
3. Debt mutual funds
Investors looking for steady returns, Debt funds are the best. Debt Funds are less volatile and have a lesser risk compared with equity funds. The Debt mutual funds include corporate bonds, government securities, treasury bills, commercial paper and many other money market instruments. Some of the Debt Mutual Funds include:A) Aditya Birla Sun Life Liquid Fund
3-year returns: 7.03 %
5-year returns: 7.52 %B) Reliance Liquid Fund
3-year returns: 7.13 %
5-year returns: 7.60 %C) Kotak Savings Fund
3-year returns: 7.73 %
5-year returns: 8.25 %
4. National Pension System (NPS)
The National Pension System (NPS) is a Government-backed scheme. It is a retirement-focused investment plan for the long term. It is managed by the Pension Fund Regulatory and Development Authority (PFRDA). The investor can invest in equity, fixed deposits, corporate bonds, liquid funds and government funds, and others and the pension earned will be the returns from these investments. According to your risk profile, you can decide on how much money you are willing to invest in equities through this scheme. After three years of opening the account, the investor can withdraw a portion of the amount from it.
5. Public Provident Fund (PPF)
The Public Provident Fund (PPF) is a popular investment option with a tenure of 15 years and is considered a safe investment as the compounding of the tax-free interest will have a huge impact in the later years. The interest that will be earned as well as the principal amount will be backed by the sovereign guarantee. Here is a list of the interest rates that have been offered on PPF in the previous quarters:
- July-September 2019 - 7.9% (The PPF will be earning the same interest rate for the quarter of October-December 2019)
- January-March 2019 - 8.0%
- October-December 2018 - 8.0%
- July-September 2018 - 7.60%