As it is rightly said, investment is not a one-time decision but a meticulous and well-thought-out journey that one has to build. Here, the sooner one starts, the chances of reaching your destination of enjoying complete financial freedom can come sooner than expected. So, let’s answer the most important question that every investor has, i.e., what are the imperative factors that will actually determine where to invest, the duration of the investment, expected returns, and most importantly, your risk appetite.
In today’s dynamic market, there are multiple investment avenues that one is open to. Having said that, understanding and choosing the lucrative investment options out of the varied options can be a daunting task. This is where a financial advisor comes into play who can devise a tailored and more personalized investment strategy as every individual has their own set of goals, risk tolerance, and income level.
Considering this, let’s delve into some of the investment avenues that best fit you as per your current financial health.
Fixed Income
If you are an investor who want an uninterrupted addition to their corpus but wants to play it safe and has a low-risk appetite, investor should definitely consider making investments in fixed deposit, PPF, SUKANYA Samriddhi Yojana (SSY), National Saving Certificate (NSC), Post Office Savings Scheme (POSB), Senior Citizen Savings Scheme (SCSS), Kisan Vikas Patra (KVP), Pradhan Mantri Matru Vandana Yojana (PMVVY) and Mahila Samman Savings Certificate, among others.
Gold
One of the most ancient ways that humans have been investing for ages and will certainly never go out of value is the investment in gold; it enjoys the highest asset allocation in the market and will never see a downgrade in its demand. To go by the numbers, gold has shown a significant upsurge in terms of value, showcasing an annualized return of 25.3% last year. While, if we look at the past 5 years data, it has witnessed a steady annualized return of 11.8 percent; adding a total return of 75%.
Hence, investment in Gold should always be taken as a lucrative option when diversifying your investment portfolio to ensure balanced returns.
Real Estate
Another asset class that will never go out of the investment playfield is Real Estate, especially for Indians. Although investing in properties has delivered amazing returns, it also comes with its own set of risks and limitations.
As one can directly invest by buying commercial and residential properties, it is more advisable to play it safe and make it more budget-friendly. Hence, creating an investment pathway through REIT can bring more flexibility in terms of maturity and budget. Additionally, one can avail tax benefits by reaping interest on mortgage loans, property taxes, etc. So to say, having a risk level that stands from medium to high, can be a good addition to diversify your investment portfolio. Note that a return could differ depending on property location and market trends.
Equity Market
The equity market has shown significant growth since its inception. So, investors who are looking for long-term goals with sizable corpus investment in equity can actually be the right decision. To participate in the growth story of any nation, the equity market has always been the best available option. Even though the risk level is quite high in the equity market, the right stock selection, staying abreast of market volatility, and making the right selection of companies with a long-term investment plan will definitely be a recipe that will fetch amazing returns from the market.
So to play safely, investment through mutual funds can be a balanced way to enter the equity market. As these funds are handled by experts in the field, it will make your investment journey easier while giving good returns over a period of time. Hence, if you’re planning to invest, you can select funds considering your risk tolerance while also analyzing the past performance of the funds.
National Pension Scheme (NPS)
The National Pension Scheme is a long-term retirement-focused product that invests in equities and government bonds.
Here, one can invest two accounts, i.e., TIER-1 and TIER-2:
TIER-1
- TIER-1 accounts are retirement savings for government officials, private sector employees, and other Indian citizens who are willing to invest in this retirement plan. However, one should be aware that the money can only be withdrawn after retirement in a phase with a demarcated limit.
- TIER-2 account is meant for general investment and is similar to a savings account, allowing investors flexibility with respect to deposits and withdrawals.
NOTE: This investment model comes with a risk level is medium and offers market-linked returns.
Unit Linked Insurance Plan (ULIP)
The Unit Linked Insurance Plan is a combination of investment with a guarantee of life insurance, wherein one part of the premium is used for life insurance coverage and the other part is utilized as an asset class such as equity and bonds to generate income.
NOTE: This investment model comes with a medium to high risk level and can offer market linked returns.
Bonds & Debentures
Bonds are considered safe investment avenues since they are backed by collateral, while debentures are riskier, since they lack the backing of physical assets. Furthermore. it can also be used as collateral to get loans from financial institutions.
So to conclude, an individual’s financial state, market knowledge, and risk tolerance always define their investment roadmap. Hence, choosing the right investment avenue or diversifying your investment portfolio completely depends on the knowledge and information you uphold in your financial journey.
