Good Investments

The IPL season is going on. We are constantly providing our opinion about which team should take risk and which team should not. We all have our opinions and discussions about what is a safe option and what is a risky one. While the IPL is going on we have come across different tv commercials like “Mutual Fund sahi hai”. Most of us have watched it and ignored it. So what is a Mutual fund? Where should we invest? Where should be put our money? While watching a match, we analyse the safe option and risky option for a team but when it comes to money, most of the time we donot portray such knowledge and analysis. Lets analyse in this month’s issue what are the different investment options available and where can you park your money and what is the risk associated with it?

i). Fixed Deposit - It is a tool through which you can keep your money safe in a bank. It is a one time payment scheme and you can select your tenure and the bank will provide you a fixed rate of return for that period. Yes you heard it right. The bank will keep your money safe and provide you additional money for that. So the scheme sounds interesting and you want to do it every month. No worries. You donot need to visit the branch every month. Just advice the branch to deduct the fixed amount every month and they will call it a recurring deposit. This is the most safest option and return is low to moderate depending upon time duration of investment.

ii). Equity – Always wanted to have a chunk of a very big company and got fascinated by the terms in the primetime news like Sensex, Nifty, BSE, NSE, Bazaar, Stock Exchange. Yes, you can be a part of it and have a chunk of big companies like TATA, Birla, Reliance. These companies sell the shares of their company in the stock market and you can buy it and become an investor in those company. A word of caution is investing in equity requires some prior knowledge and idea about the industry. Otherwise you will end up losing more than your earning. This a high risk and high reward option.

iii). Mutual Funds- You don’t have the knowledge and time to do your homework and still want to invest in stock market and gain some decent amount of money with less risk than equity and more risk than bank deposits. Don’t be disheartened. The finance wizards has something for your needs as well in their kitty. It is mutual funds. A knowledgeable fund manager will invest for you and give you the earnings from those investments and the manager will take a minimal charge. There are two types of Mutual funds – Equity mutual fund and Debt mutual fund. Equity mutual fund schemes predominantly invest in equity stocks. As per the Securities and Exchange Board of India (Sebi) Mutual Fund Regulations, an equity mutual fund scheme must invest at least 65 percent of its assets in equity and equity-related instruments. It has moderate-high risk profile and high returns. Debt mutual fund schemes are for those who want steady returns. They are less volatile and less risky compared to equity mutual funds and provide less return than equity mutual funds. Debt mutual funds primarily invest in fixed-interest generating securities like corporate bonds, government securities, treasury bills, commercial paper and other money market instruments.

iii). Gold- The safest and oldest investment options since ages. You can buy online gold, gold sovereign bond and ornamental gold which can be used to take loan or sell it a higher price to gain from gold. Investing in gold has become very easy nowadays. You can invest from as low as 1 rupee and maximum to the amount as per your capability and now you don’t have to store it at your home as well.

iv). NPS and PPF- The national pension scheme and public provident fund is savings for the future. These tools are used by the people for securing the future. These are safe options and usually yield high returns and the only catch is the amount saved under the PPF can be withdrawn after 15 years and for NPS its after 60. Both of these provide good returns with less risk.

Hope you have much better idea about some of the investment options and this list is not an exhaustive list. There are many more tools for investment. Next time you check your passbook or account statement, don’t keep it there idle and let the money in your account money for you.

-Nilanjan Kala