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Best 8 Investment Assets In India

Top eight investment avenues in India

Investment: You are just one step ahead of the poverty line if you have only one source of income,” says Robert Kiyosaki. After this pandemic, we all are aware of the importance of savings and investments, how important it is for one to make investments for a safe future. In India, there are multiple sources of investment.

Investment assets are broadly classified into two categories financial assets and non-financial assets. However, a financial asset is subject to market risk. Here the risk and return are interrelated higher the risk, the higher the return, and vice versa.

Types of financial assets includes stocks and mutual fund which provides flexible rate of interest. Fixed income financial asset includes public Provident fund (PPF) and fixed deposits(FD). Non-financial assets include gold and real estate investment these types of assets need huge investments most of the population in India invest in non-financial assets.

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Top 8 investment avenues in India

(1) Direct equity:- Direct equity is the most rewarding and risky form of asset. The risk and reward are correlated the return is completely dependent on the market condition according to last year’s report direct equity returns are approx 14 – 15% compounded annual growth rate (CAGR).

In order to make a maximum return with low risk one should Know to pick the right stock. It is important to know before you invest because “risk comes from not knowing what you are doing” says Warren Buffett.

(2) Equity mutual funds:- In this mutual funds are directly invested in equity stocks. According to the guidelines of the Security Exchange Board of India SEBI mutual fund 65% of the investments should be made in equity and equity-related stocks. Mutual fund equity stocks can be managed actively or passively. When managed actively the return depends upon the ability of the manager of genetaing profits. A mutual fund is subject to market risk hence, investment in equity mutual funds involves risk. Know more about Mutual funds:-https://en.wikipedia.org/wiki/Mutual_fund

(3) Debt mutual funds:- Debt mutual funds are it’s less volatile as compared to equity stocks as this gives a steady return on investment. A debt mutual fund is a fixed interest generating security like corporate bonds, government security, treasury bills, commercial paper, and money market. However, this asset is not completely risk-free but includes credit risk and interest rate risk.

(4) National pension scheme:- This asset is generally focused on a long-term retirement plan this department is managed by the pension fund regulatory development and authority this year the minimum annual contribution is reduced from 6000 to 1000 one should decide their investment according to their risk appetite. Know more about National pension scheme:- https://www.indiapost.gov.in/Financial/Pages/Content/NPS.aspx

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(5) Public Provident fund:- Taking risk is not everyone’s cup of tea, this is the most suitable form of investment for them. This is a long tenure investment which is generally calculated for 15 years it comes with safe investment and a guaranteed return with the principal and interest amount. Know more about Public Provident Fund:- http://www.nsiindia.gov.in/InternalPage.aspx?Id_Pk=55

(6) Gold:- in India this asset is highly demanded by the population in India though gold is one of the high-cost assets. Do making a charge of gold is nearly 6 to 14% can be 25% in the case of designer jewellery many banks sell gold coins and an alternative option for gold is buying paper gold it is cost-effective and can be bought through ETFs. There are various banks providing sovereign gold bond scheme which is one of the best ways to invest in gold bonds.The return is expected around 7%-8% per year. Know more about Sorveign Gold Bond Scheme:-https://sbi.co.in/web/personal-banking/investments-deposits/govt-schemes/gold-banking/sovereign-gold-bond-scheme-sgb

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(7) Real estate:- The revenue from this asset comes from a huge investment. It is not an investment unless you stay in that house if, you buy a property other than the place you live then it would be called an investment and this type of asset totally depends upon the geographical location of the property and the rental income you receive from it.

(8) Fixed deposit:- Fixed deposit is said to be one of the safest assets in India. A bank generally accepts a principal amount and after a few years once the FD gets mature they return you the principal amount along with the interest. Earlier the maximum amount was 1 Lac for both principal and interest but in February 2020 the maximum amount is ₹5,00,000 for both principal and interest. The return expected from FD is approximately 6%-10% per year. Know more about Fixed deposit:-https://sbi.co.in/web/personal-banking/investments-deposits/deposits/fixed-deposit

In order to make your returns high, you need to have a diverse portfolio Warren Buffett says “you should not put all the eggs in the same basket”. Your investments depends upon savings and the risk appetite you’re willing to take.

It is important for you to calculate your income after expenditure and accordingly invest according to the amount you are left with. It is important to invest wisely and have proper knowledge of what you are investing in because “an investment in knowledge pays the best interest”.

Edited by Sanjana Simlai.

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