All investors want to make investments in such a way that they get high returns as quickly as possible without risking their principal amount. However, a high-return, low-risk combination in an investment product, does not exist! Risk and returns are inter-related, i.e. the higher the returns, the higher the risk. While investing in the stock markets, you have to match your risk profile with the associated risk of the product without investing. Look at the top 5 investment products an Indian investor considers for their financial goals.
1. Direct equity:
Stock investment in Direct Equity is the only silver lining in these uncertain times it has been able to deliver higher than inflation-adjusted returns compared to all other asset classes. To avoid high risk one should opt for a stop-loss method to prevent losses.
2. Equity mutual funds:
As per SEBI's stock analysis, an equity mutual fund scheme must invest at least 65 percent of its assets in equity and equity-related investments. An equity fund can be actively managed or passively managed. Equity mutual fund schemes are categorized according to market-capitalization or the sectors in which they invest.
Keeping gold in the form of jewelry has its own concerns such as safety and high cost. Making charges go as high as 25 percent of the cost of the gold. So, an alternate way of owning gold is via paper gold. Investment in paper gold is more cost-effective and can be done through gold ETFs. Such investments happen on stock exchanges with gold as the underlying asset.
4. RBI Taxable Bonds:
The RBI with effect from July 1, 2020, has launched the Floating Rate Savings Bond, 2020 (Taxable). The difference between the earlier 7.75% savings bonds and the newly launched floating rate bond is that the interest rate on the newly launched savings bond is subject to reset every six months.
5. Public Provident Fund (PPF):
The PPF is one product a lot of investors look for. Since the PPF has a long tenure of 15 years, the impact of compounding of tax-free interest is huge, especially in the later years. One of the major reasons why PPF is popular is that the principal invested is backed by a sovereign guarantee, it makes it a safe investment. The interest rate on PPF is reviewed every quarter by the government.
Market-linked investments offer the potential for high returns. So, looking at the time value of money and the risk associated, an investor must choose his product wisely, and to educate them, BSE Institute Ltd offers a courses on this. To know more Click Here