Types of Investments– Investing in three best ways, one can easily make money: firstly they can lend they money to someone it can be any business and government, and get the fixed interest on it. Secondly, they can become part of business ownership at any particular company. By buying the shares or stocks of that specific company. And in, last, they can buy some assets and invest their money in real estate and sell it at a higher price after some time of investment. The universe of investment lies in some essential components: fixed income (bonds),  gold and silver, cash and cash equivalents, and equities (stocks of any registered company).

Read this article and learn about different types of investments.

Why is Investing Better than Savings?

For a bright and prosperous future, investment is the best key. Investing can fulfil the gap between dreams and reality. Some of the following are the best benefits of investing.

  •  To reach your financial goals: Investing helps you reach your financial goals in different ways. Such as buying a car or a house, paying for children’s education and marriage, and even planning for retirement. Investing always helps you. For achieving long term goals investing is the most appropriate way.
  •  To beat inflation: Inflation can also beat if you invest in the right ways. If you choose not to invest and put your money in a savings account, your purchasing power will reduce due to inflation. Thus investing can give you inflation-beating returns.
  •  To earn Significant Returns: Stocks and mutual funds are some investment avenues that give higher returns than saving account fixed bank deposits.

Different Types of Investments

In two broad falling umbrellas, investing is separate into fixed income-orient investments and growth-orient investments. In the case of fixed-income investment, one will get steady growth on the acquisition, and in the case of growth-oriented investment, one will get higher returns quickly.

Now under these two styles, let’s understand the different types of investments.

 Mutual Fund

Mutual funds determine the financial instrument. It pools the money from different kinds of investors and invests it in various securities such as stocks, money market and bonds etc. Based on market performance, the results and returns are all dependent. Investing in mutual funds can be done in two ways by every investor one is via SIP (Systematic Investment Plan), and the other is through lump sump payment mode.

There are various kinds of mutual funds available in the market selection that can be done by investors base on investment goals. The profile of taking the risk, amount of investment, and horizon of investment. Hence, mutual funds are divided into six parts: equity and growth funds, money market and liquid funds, debt and fix-income funds, balance and hybrid funds, and tax-saving and index funds. For achieving financial goals mutual funds help every investor to in short and long both terms.

For the Indian stock market, SEBI (Security Board Exchange of India) has mentioned every category of mutual funds, which helps every investor decide their investment.

 Stocks/ Shares

The term stock or shares refers to investing in equities. Among every investment type, stocks are the most growth-oriented type of investment. Hence, one needs complete guidance and knowledge of the stock market for buying stocks because one wrong decision increases the chances of loss. That’s why it is always advisable to join Stock Market Institute in Delhi and learn about the stock market under the guidance of well-experienced faculty. Although once you purchase the stocks or shares of any company, you become part of the ownership of that particular company. You can stand and get the yield when the company earns profit based on your investment. And in comparison to other types of investments, the risk is higher when investing in stocks or shares of any company.

 Bonds

Fixed income securities are another name for bonds. In the case of bonds, investors give the loan to the government or the company and. Gain the returns base on getting interest in the given loan. That’s why they are known debt instruments. When you buy any bond. You are allowed to issue a fixed interest rate as the bond issuer and collect the interest for using your capital income. Treasury bills, corporate bonds and government securities are some best examples of different kinds of bonds.

 Exchange Traded Funds (ETFs)

The collection of different investments is referred to as the Exchange Traded Funds. It includes bonds, stocks and instruments of the money market etc., which track the underlying index. Different kinds of investments are mash-up in this where they offer the best attributes with the availability of the other characteristics of two assets- stock and mutual funds. And when it comes to management, structure and regulation, just like mutual funds. Also Read- What Makes A World Market A Good Investment Is It Save Or Not

 Fixed Deposits

From every type of investment bank, FDs are the safest investment option and are available to every investor. By banks and other NBFCs, this fixed deposit facility is available. In which investors can deposit their idle cash for some particular period. In return, they will get a fixed deposit. The interest rate is already set and predecided by the banks, which cannot be change on the basis of market performance. This helps to ensure the safety of the investments. With the ease of flexibility, investing in fixed deposits is a blessing for risk-averse investors.

Retirement Planning

The two essential aspects of financial planning are saving money for retirement and well-managing cash at retirement. For every investor, various kinds of retirement plans are available in the market. Senior Citizens Saving Scheme (SSCS), National Pension System (NPS), Public Provident Funds (PPF) and fixed bank deposits are the best retirement plans for every investor.

Cash And Cash Equivalent

Offering a high rate of liquidity cash equivalents helps protect investors’ investments. However, compared to other asset types, cash equivalents have a lower potential for returns. Well, getting the capital growth is not possible in cash equivalent. They have the potential to give regular returns at fix period. Also, they play an essential role in protecting your investment capital. It help to reduce the risk of your investment to a greater extent. Overnight funds, time deposits and liquid funds are some excellent examples of cash equivalents.

Real Estate Investments

There are huge prospects which hold by real estate. These are hospitality, retail, commercial housing, manufacturing and many more. For getting a significant return, investors can invest in commercial and residential properties. While they can also invest in mutual funds of real estate. Timing plays an crucial role when investors select real estate as per investment option. Before investing in real estate, every investor should know that it is highly illiquid; hence, it becomes pretty tricky when you want to sell your property at urgent monetary. 

Provident Funds

Employee Provident funds and Public Provident funds for the retirement corpus are significant. Provident funds are consider the mandatory subject by the government and are given to the employee at their retirement in lump sum payments.

Insurance 

In part of the investment, insurance funds come often. Life insurance, endowment funds, child funds etc., are some different parts of insurance. For instance, every aspect of insurance has different kinds of objectives. Hence, life insurance helps to meet your expenses at different ages, and on the other hand, term insurance helps give you benefits to your family after your death.

The Bottom Line

From the different types of investments, selection can be made based on risk tolerance and the total amount of capital a person wants to invest. And before investing as an investor, always check the rate of investment, speed of liquidity and the performance of a particular asset you want to invest in.

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