TYPES OF INVESTMENTS
With time, the market has progressed tremendously. It has led to a rise in investments in stock markets, real estate and other forms. Investing is to allow your hard-earned money to grow gradually. Before making investments in any form, one should be aware that there is always a risk of loss. But the return that is received in the end is much more in value than these risks.
Investment has become really important in today’s world. It has many advantages from saving money, its growth, saving for retirement, a secondary source of income and many more. If done with proper planning, research and at the right place, one can tackle the risk easily, and the outcome can be valuable.
There are different types of investments, and in this article, we will discuss some of the basic and vital kinds.
Stocks or shares are the most basic and famous type of investment. In this kind, one buys shares of a publicly traded corporation, which means buying some percentage of ownership. Now the investors get the right to a few fractions of the firm’s profit and asset. When the price gets high, the shares are sold to get a huge return. The stock market fluctuation is a great risk of this investment. A decline in the value of shares leads to the loss of investors.
In bonds investment, the investor lends money to a company or government officials. The bonds are established to raise money for a particular agenda. Those who invest or lend the money are promised a return with interest over some time. The interest on bonds is lesser than stocks, but it also has lesser risk. These few risks are like forming bonds with a faulty company or its sudden shutdown. But all these can be avoided by doing thorough research before investing in any company.
3 REAL ESTATE
Real estate is emerging at a rapid rate, and people find investing in them more profitable. It comprises buying residential or commercial property and generating a regular income by renting them. Another way that most people prefer is to buy the land and, after some time when its value rises, sell it to gain a higher return. Remember that the maintenance of property calls for spending a little extra money. But these upgrades and restoration of real estate help to boost up its value.
Gold is becoming more expensive, and its value in the market keeps rising every day. Hence, it is a promising option to invest in. The basic way of investing in gold is buying jewellery, gold coins and gold bars. Its value keeps increasing with time to give higher returns. During the time of emergency, it can be sold easily and get the required money. Keeping gold at home is always a risk factor. So, keeping them in a bank or locker is better option.
Everyone is investing in Cryptocurrency these days. It is emerging as the most prevalent type of investment. Cryptocurrency exists only in digital form but can be drawn as cash. It is a blockchain currency that any authority cannot govern, and its value depends totally on the market.
Cryptocurrency is highly volatile. Bitcoins, Dogecoin, Ethereum, are the most popular ones. Some countries have made bitcoin their official tender. Crypto has a lot of potentials, and capitalizing in them is a sensible decision.
6 MUTUAL FUNDS
In mutual funds, many investors invest their money in any asset, stock or corporation. These funds are functioned by money managers who are professionally trained in this sector. Their work is to distribute the capital and produce profitable income for the investors.
Mutual funds allow all investors to manage their set of funds. Hence, every shareholder is equally responsible for the profit or loss. Through these funds, one can divide its capital into different markets or stocks, which leads to a lesser risk of loss.
7 CERTIFICATE OF DEPOSIT
A certificate of deposit is known to be the safest way of investment. Although the money growth is quite less, the safety and rate of return are guaranteed. Banks or consumer financial institutions offer these deposits at an interest rate. The lump-sum money is left for some fixed period of time, and after maturity, one can withdraw the money easily. If one wants to exit the deposit before its maturity, there is also an option for that.
8 PUBLIC PROVIDENT FUND
Public Provident Fund is a scheme that comes at a high rate of interest and for a very long term. Under the Income Tax Act 80C, tax is not applicable on the interest and return earned. The tenor of this fund is of fifteen years. Before the maturity period, the withdrwl of the deposit cannot be done. one should invest every year to keep the account active. A public provident fund is the best way to stabilize your future.
9 FIXED DEPOSIT
Fixed deposit is the most promising way to grow your money with assured safety. For this kind of investment, one has to deposit a lump-sum amount for a tenor of their preference. Once the tenor ends, the deposited money starts gaining interest at the chose rate. After locking the investment, the deposit remains unaffected by the market. The money can be withdrawn after its maturity or periodically. Thus, fixed deposits offer the guaranteed profitable return without any risk of losing the principal.
10 MONEY MARKET FUNDS
Money market funds are quite similar to saving accounts. Almost every bank offers these funds to purchase. One can inscribe checks out of the account, thus making money market funds liquid investments. Through these liquid investments, a stable asset value is maintained.
Money Market funds are for a very short period, a maximum of one year. Hence one does not get bound to the fund. Their work is to safeguard the money for, say, retirement or any other purpose. Additional to that one to three per cent interest per year is the bonus.