There is no doubt that India is one of the fastest growing economies in the world. It is also one of the biggest markets in the world. With so many opportunities, you have to wonder, how does one choose the best investment opportunity? In this article, I discuss what some of the top investment options in India are.
1. Fixed Deposit
There are many advantages to investing in a fixed deposit. A fixed deposit (FD) is like an insurance policy for your money. This means that your capital is kept secure and is returned back to you when you request for it. There is an option to get back a higher amount than the initial amount deposited. One of the main advantages is that FDs are tax-free income for the investor.
2. Mutual Funds
Mutual funds are investment products offered by financial institutions like banks and insurance companies. Mutual funds provide diversification. You can invest in different stocks and bonds with the help of mutual funds. You can also get back a higher amount than you initially invested.
3. Equity Investments
Equity investments have the potential to grow with the growth of the economy and generate higher returns over time. Many people look at equity as the most conservative form of investment but it offers high potential gains when compared to debt instruments.
4. Debt Instruments
When an economy grows, debt instruments also grow as the government or banks take loans from other investors to fund their projects. As a result, they need to be paid back so there is a constant demand for debt instruments. Debt instruments are very risky and any increase in interest rates has the potential to reduce returns. The minimum time for maturity of debt instruments is 3 months while equity is usually maturing after 12 months.
Commodities such as gold, silver, oil, etc. are considered as tangible assets and have been used in many years. These products are beneficial for investors having short-term savings. They are good products for those who need a tangible form of saving.
6. Real Estate
Real estate is considered as an asset which can be held or sold. A house is a good place to live in and have family and is a source of shelter. It also provides a stable investment opportunity. People who invest in real estate also get good rental income. However, this is not the best option for all. This is an important consideration before you buy a house or make an investment.
7. Stock Market
When we talk about stock market, we are referring to the various companies that trade their shares on a public marketplace or stock exchange. This is one of the best asset classes for long-term investments. It is very beneficial for your money because they provide dividends, which are the payments made by companies to shareholders and these dividends represent profit distribution of that particular company.
8. Balance Mutual Funds
The balance mutual fund schemes distribute profits amongst investors on regular basis (not on a payback period basis). They are very good to invest in because they provide a steady source of income and good risk-return combination. This is one of the best options to invest long-term in mutual funds.
Gold is yet another safe and sound option to invest in. This is a traditional investment and its value keeps rising every year. There has been a sharp increase in the price of gold over the last few years. This is not a viable option to invest in short-term but it is good for longer-term investments.
10. Private Equity
Private equity represents a share of ownership in a business. It offers investors with several benefits. The returns are much better than ordinary shares. But it also includes specific risks such as lack of liquidity. Also, there is no publicly available data on companies where the investors are having shares.
Therefore, investing is always a smart move, but when it comes to choosing the best investment options in India, you need to be wise enough. We hope that this article helped you in making a wise investment decision.