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Friday, April 26, 2024
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| Article / Finance / Financial Planning | Post Comments |
Get High Returns with These 7 Best Options for Investment in India |
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| By : Seema Gurnani , Hyderabad, Andhra Pradesh, India 6.10.2018 Mail Now | |
| Warren Buffet has one popular advice for the world.
Through his experience in the investment world, he has often implied that
investments should actually be a source of second income for everybody. While we
agree with him completely on the second income bit, there are plenty of other
reasons to invest as well. Financial security being the most popularly cited
one, investing is like digging a mine for emergency and taking the money out
whenever you are in need. Another great thing about investment options is that
you do not actually need to be an Investment Banker to simple get great returns.
All you need is some principal amount, readiness to wait and most importantly
the risk taking factor. Following are seven investment options in India that you can consider: Public Provident Fund Public Provident Fund is for people who do not like to tread into unsafe waters. It is not only backed by the Government of India but also offers you long term investment plans. The interest rates at the moment is slated at 7.6% which has been reduced recently. However, while it might not be as high as some mutual funds or some well performing equity shares, it is great for people who want to invest amounts as low as 500 or even up to as high as 1,50,000 in one fiscal year. At the moment, whichever bank you have an account with can help you open a PPF account almost instantly. The process is hassle free completely. If 7.5% does not sound very lucrative to you, you can always think of a principal amount that you can keep aside and think of the returns increasing every year. You can keep it for your child’s education or your retirement, basically any future purpose that you will need money for. You can also apply for loans against the PPF and withdraw the money when in need. The minimum duration of investment is 15 years but you can also get an extension on the account if you wish to continue. Another advantage of this investment option is that it provides you complete tax exemption and you do not need to pay for the income you earn with it. It is a good investment option for a duration of up to 15 years and even after that you can opt for an extension. Real Estate When it comes to India, a land of your own has a lot of value. Real Estate as an investment hardly ever depreciates. Like all the investment options, even Real Estate comes is prone to market risks but in most cases, it gives you the best returns. It also depends on the way you treat your purchase. For instance, you might choose to buy residential properties, keep them for a while and sell it off when the price increases. You can also choose to rent out your properties and get monthly income from your investment. When it comes to commercial properties, rent and resale is an option too but the licensing can require a lot of money to be spent as well. The only issue with Real Estate is that there is no approximate rate of interest that you can gauge when it comes to returns. There are various different factors that affect the growth of returns. It can depend upon the market condition in which the purchase has happened or even in the location that your property is in. Even factors like brokerage fee, licensing fee play an important role in the investment you are making. Another option is to invest in Real Estate stocks. However, with the recent market trends, real estate stocks have not been performing as well as before. The main challenge when it comes to investment with Real Estate is that you would need to have quite a sum of money. It is very difficult to procure any type of land with less amount. But, all you need is some research and then you can look for a great deal as well to invest in Real Estate. Equity Shares Equity share in a nutshell basically entitles you to associate yourself with a business venture wherein you become a stakeholder and undertake an entrepreneurial risk. It is one of the most popular forms of investment options wherein the risk is high but the returns are great. The world of investment banking and stock broking runs majorly on trading of equity shares. There are various different portals through which you can open a trading account or a demat account and make an entire portfolio for yourself. One of the best things about stock market is that if you have invested in good stocks and keep it for a long term, then it will give you great returns. However, if you are consider great returns through intraday trading, then you require high end expertise and a knack for recognizing stocks that will grow well. You also need to have the patience for researching and analyzing trends of companies that offer shares to the public. If you have interest in investing through your equity shares and then keeping an eye on it, then it is okay to manage your portfolio by yourself. However, it is always advisable to find a financial expert whom you trust and let them manage your portfolio. You also need to be prepared for market crashes and high risks, so that you do not end up losing all the money that you have invested. Best ones to invest in right now- - SBI - Reliance Initial Public Offerings Initial Public Offerings(IPOs) are one of the best investment options out there. You can be sure that the company has recently expanded enough and opened its doors to different stakeholders. An Initial Public Offering is actually the first range of stocks that a private company offers to the public to buy. Initial Public Offerings have gained a lot of momentum in the recent times. In the digital age, it has become very easy to understand which company is offering the initial stocks and to do research on them as well. Basically, the information that was a part of an intimate circle has become abundantly available to laymen. However, there are some pointers that you need to remember before investing in IPOs. Firstly, it is very difficult for analysts to break down important research for the consumer. With publicly traded companies, you can see various different sources reporting the potential that the stocks hold. But, with a private company, you will only get the prospectus that has not been available for research for the experts. You would need to do intensive objective research if you are investing a lot of money. It is always better to procure information about the bank or the investment firm that is behind the underwriting of the IPO procedure. A trusted name like Goldman Sachs would generally not be associated with a company that does not show any promise. It is also advisable to wait for the lock up period between the company and the underwriters to end in order to get a better idea about the returns you can get with the shares. Gold Gold is considered to be an expensive commodity and is used by almost all financial classes of India as one of the most popular investment options. Previously, gold used to be brought by jewellers but with ETF, you can easily find various different options online. Gold ETF is basically exchange traded funds and another option for investing in Gold is Sovereign Gold Bond Scheme. The best way to gauge which form is the best to invest in, it is good to finalize the purpose first. For example, if you are buying gold for personal consumption- then it makes a lot more sense to buy it in the physical form whereas if you are planning to invest in gold for future returns such as your child’s marriage- then Gold EYT is the best option for you. Although it is difficult to gauge the exact interest rate that you would get in returns, but it can easily rise up to a 20 to 30% if you invest at the right time. The trick to to buy gold is when the market is low but sell it when gold’s value appreciates. You also need to take a lot of precautions in terms of physical investment when it comes to gold. There is always going to be an apprehension in the quality as well as the purity of the gold. You also need to take in account the management expense. When it comes to ETF, the funds might charge anything between 0.62%-1.20%. The main difference in the returns of gold as well as Gold ETF is the charge of the expense ratio. Best ones to invest in right now- - Birla Sun Life Gold ETF - Goldman Sachs Gold ETF Bonds Bonds are one of the most widely known investment options that are authorized by the government and even various trusted companies release them for people to invest in. The way bonds work is basically by the entity releasing a certain investment prospect where in the money that people invest is used as a loan by companies in need. The government bonds are used by the authorities to sanction infrastructure, the company’s economy, etc. Now, it is not like the money that the investor puts in just goes for funding somebody else’s business for free. The issuer of the bond has to offer interest to the investor for helping him expand his business or fund the government when in need. While the biggest advantage of a government bond is the tax exemption as well as the trust, other bonds have higher returns. When a corporation goes on to expand a business, in most cases they will have higher earnings resulting into better interest rates for the investors. Both of these however, (in most cases) offer higher returns then simple fixed deposits. Other advantage of a bond is that you can opt for monthly dividends making it a great option for retirement or some extra income in the future. However, like all the other investment options, one cannot simply place their money in a bond without any research. You need to figure out the performance of the company and then choose an option that is best suited to your needs in terms of investment amount as well as the lock in period. Best ones to invest in right now- - Indian Railway Finance - State Bank of India - ECL Finance Ltd ULIP The term ULIP stands for an unit linked insurance plan. It is an investment option for people who want to take advantages of insurance payout benefits. The money is used by any of the investment vehicles to invest in products which offer appreciation of capital in return. There are various advantages of investing in an ULIP for you as an investor. It would not be very difficult to understand the technicalities of a ULIP if you are well aware of a mutual fund’s working. The assets of the entity or the investment vehicle is measures daily in the form of Net Asset Value. The value in amount is calculated depending on the units an investor buys. A lot of ULIPs even offer returns upto 20% (rates varying on various factors). However, just like mutual fund, even returns from an ULIP are highly dependant on the fund you invest in, the risk taking factor as well as the duration. Best ones to invest in right now- - Future Generali Life- Dhan Vridhi - Bajaj Allianz Life- Future Gain - Kotak Ace Investment Stock trading provides great returns as well but people who fall in the day trading trap find it very difficult to get out of it. All of the aforementioned options might not be a 100% safe, but when invested wisely will give you good returns for sure. |
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