Investment Options

Investment is the purchase of an asset or item with the hope that it will generate income or appreciate in the future and be sold at the higher price.Money we earn is partly spent and rest saved for meeting future expenses. Instead of keeping the savings idle we like to use savings in order to get return on it in the future. This is called Investment.


Investment is an art and a science, key to successful investment is focused and effective investment planning. An Investment should be made once we known the Investment scheme clearly & Suitability of the scheme with us.Financial Planning/Investment will be a Successful with right Investment scheme/Instrument/Option with available Investment Options.
Here some of the Instruments/Investment Options available.let us segregate Investment options can be classified as Short term & long Term as per Tenure of the Investments.Investment Options can be classified Traditional & Alternative Investment options as per modes of Investing.

Short Term Investing Options

Saving Bank Account

Money Market Funds/Bonds

Fixed Deposits with Banks

Savings Bank Account

In Savings Bank Account Use only for short-term (less than 30 days) surpluses. It s Often the first banking product people use, savings accounts offer low interest (4%-5% p.a.),making them only marginally better than safe deposit lockers.In most developed economies, banks try to keep the interest rates on savings accounts equal to the inflation rate. Money Market Funds Money market Funds Offer better returns than savings account without compromising liquidity  Money market funds are a specialized form of mutual funds that invest in extremely short-term fixed income instruments. Unlike most mutual funds, money market funds are primarily oriented towards protecting your capital and then aim to maximize returns. Money market funds usually yield better returns than savings accounts, but lower than bank fixed deposits. With the flexibility to issue cheques from a money market fund account now available, explore this option before putting your money in a savings account.  Fixed Deposits with Banks Bank Fixed Deposits low risk appetite for Investors,It s a best Investment for 6-12 months investment period  Also referred to as term deposits,this product would be offered by all banks. Minimum investment period for bank FD is 30 days.  The ideal investment time for bank FD is 6 to 12 months as normally interest on bank less than 6 months bank FDs is likely to be lower than money market fund returns.  It is important to plan your investment time frame while investing in this instrument because early withdrawals typically carry a penalty.   Long Term Investing Options Public Provident Fund Mutual Funds Life Insurance Policies Equity Shares Post Office Schemes Fixed Deposits with Companies Public Provident Fund Public Provident Fund(PPF) is a best fixed-income investment for high tax payers  PPF is a very attractive fixed income investment option for small investors primarily because of Low risk - risk attached is Government risk  Lack of liquidity is a big negative.Withdraw your investment made from 6th financial year. Loan facility available from 3rd financial year up to 5th financial year. Maximum Investment Rs.1,00,000 in a year only allowed,Currently Interest rate 8.7%. Mutual Fund Mutual Fund is an Investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. Investing through mutual funds allows an investor to -  1. Avail the services of a professional money manager (who manages the mutual fund) 2. Access a diversified portfolio despite making a limited investment  Life Insurance Policies Life insurance solely as an investment  Life insurance premiums, depending upon the policy selected, include the costs of -  1) death-benefit coverage  2) built-in investment returns (average 8.0% to 9.5% post-tax) 3) significant overheads, including commissions.  This implies that if you buy insurance solely as an investment, you are incurring costs that you would not incur in alternate investment options.  It is, however, important to insure our life if our financial needs and profile so require. Equity Shares Equity Shares are investing Company Shares/Stocks. There are two ways can invest in equities-  Primary market (During Initial Public Offer (IPO) of a Company) Secondary market (During a share listed on the Exchange) Over the long term, equity shares likely to offer the maximum return to investors.But it Holds very high level of risk.Five years as consider as Equity Shares to fetch Good Returns. Post Office Schemes Post Office Schemes come with Low risk and it has no TDS for the Returns of the Investment. Post Office Schemes are popular because it yields higher return than bank FDs. The monthly income plan perfectly suits to Retired individual or have regular income needs.  The Post Office offers Schmes like National Savings Certificates (NSC), National Savings Scheme(NSS), Kisan Vikas Patra, Monthly Income Scheme and Recurring Deposit Scheme. National Savings Certificates (NSC), National Savings Scheme(NSS), Kisan Vikas Patra Can also be used for Tax Benefits.

Fixed Deposits with Companies

Companies Fixed Deposits is other  Option fixed-income with Maximize Returns Investment portfolio.
 
These Fixed Deposits(FD) can be avail from Non banking Financial Institutions

FDs are instruments used by companies to borrow from small investors. Typically FDs are open throughout the year. Invest in FDs only if you have surplus funds for more than 12 months. Select your investment period carefully as most FDs are not encashable prior to their maturity. 
For Traditional  & Alternative Investment Options ---To Read