Basics on various Investment Avenues

Today's marketplace is filled with innumerable investment instruments with different objectives aimed at different types of investors. As a result, investors are left perplexed and find it difficult to identify suitable investment method which best fits him.

Herewith, I try to explain the different types of investments available in the market along with prominent advantages and disadvantages in each of them,

Fixed Deposit
The most popular and widely known type of investment. They are offered by banks / Corporate / Financial Institutions. Returns on such instruments are assured and the risk is very low. FDs invested for more than 5 years can be claimed for tax deduction.

Public Provident Fund (PPF)
These are more prominent and attract a lot of investors. The interest rate offered if higher than that of fixed deposits. Risk is low and returns are assured. The amount invested in PPF can be claimed for tax deduction. The main drawback is that there is a 15-year lock-in period associated with such investments.

Bonds are debt instruments offered by companies when they are in need of funds. They offer competitive interest rates and pay interest in the form of coupons.

A very traditional way of investment methodology. Investments in gold are made in the form of bullion, jewelers, coins, gold ETF. Gold has the unique property of retaining its value even during times of recession. Returns are consistent over a long period of time.

Gold ETF
It’s a type of mutual fund where investment is made in gold. By choosing gold ETF, investors can invest in gold without actually buying gold.

Mutual Funds
Mutual funds are becoming one of the preferred modes of investment by many investors. They collect money and invest in share market. They are professionally managed by well qualified Fund Managers. There are wide varieties of mutual funds like balanced funds, ELSS or tax funds, sectoral funds, etc. Choosing an appropriate mutual fund is a good challenge being faced by investors. The risk is high and the returns are also high. Investments in ELSS can be claimed for tax benefits and have a lock-in period of 3 years.

The highly risky mode of investment is by way of investing in shares. A carefully analyzed and well chosen company would give you very high returns in the long period.

Real Estate
This is the most preferred mode of investment even during times of recession. Held for long term, the returns from this mode of investment exceed the returns from all other modes of investment.

You can refer for more details at my blog:

These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • Sphinn
  • Facebook
  • Mixx
  • Google
  • Furl
  • Reddit
  • Spurl
  • StumbleUpon
  • Technorati