Types Of Investments In India (2023) – How To Invest In Them
Investing could be intimidating to many people. With so many types of investments in the market, it can get tough to figure out the best investment option for you. However, once you understand the different types of investments, you can make a better financial decision. Without further ado, let us explore the types of investments in India and how to invest in them. Keep reading!
What is an Investment?
An investment is defined as locking money for a certain period of time in an asset, property, stocks, etc. Investments are made to generate and increase money in the future. For instance, in accounting, the purchase & sale of long-term assets are often called investing. Now, let us look at the different types of investment in India.
10 Types of Investment in India & How to invest In Them
There are different types of investments you can choose from:
1. Stocks
Also known as shares or equities, stocks are one of the simplest types of investments. When you buy stocks, you get an equivalent stake in a particular company. You get an opportunity to hold your favourite and trusted brands in your portfolio through stock investments, such as Reliance, TATA, Apple, Facebook, etc. Invest in them, wait for the stock price to go up, and then sell them to earn a profit.
Note: One must also see that there is risk in stocks as the value can also go down. Thus, one needs to invest carefully and assess the situation.
2. Bonds
A bond is an investment in which one lends money to any government entity or business. Organisations issue different kinds of corporate bonds, and the government issues municipal bonds. After the maturation of the Bond, one gets the principal amount back along with interest payouts. To note, the return rate on the Bond is lower compared to stocks.
3. Mutual Funds
Mutual funds are managed by professional fund managers who monitor the markets, create the mutual funds, manage them and rebalance them when necessary. A mutual fund pool funds from a group of investors and the money is invested extensively in various select securities as per the fund mandate. Investors can choose between equity, balanced, and debt funds for investment. One can also invest in mutual funds through SIPs (Systematic Investment Plans). One does not necessarily need a Demat account to invest in mutual funds.
If you are searching for a reliable platform for investing in Mutual Funds or seeking lower-risk exposure to equities, the Navi Nifty 50 and Navi Nifty Next 50 index funds should be your first choice. Visit Navi Mutual Fund to know more.
*Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
4. Public Provident Fund (PPF)
Public Provident Fund (PPF) is one of the safest investment options. PPF is an investment option backed by the government. One can easily invest in the PPF by opening a post office or bank account. A minimum of Rs. 100/- needs to be submitted for opening the account. This investment option comes with a lock-in period of 15 years. The current rate of interest on the PPF is 7.10% per annum.
5. Real Estate
Investing in real estate implies that one has to purchase a commercial or residential property to generate regular rental income. If one wishes to have a higher rate of appreciation, then simple upgrades will help increase the market value of your property.
6. Fixed Deposits
Banks and non-banking institutions offer Fixed Deposits (FDs). Among different types of investment, fixed deposits are one of the safest options to grow your funds. One thing to note here is that premature withdrawal will lead to penalties. Fixed deposits are a risk-free investment option that helps boost your funds gradually.
7. National Pension System (NPS)
The National Pension System (NPS) focuses on long-term savings, making it a fantastic addition to your retirement plan. The government also backs this investment option. People can invest in various options like equity, deposits, bonds, funds, etc. One must claim tax benefits along with the principal amount. Also, one can invest till the age of 60.
8. Provident Fund (PF)
Provident Fund (PF) is a significant retirement fund that is kept as security for the future. It is the total savings an employee makes during their work in an organisation. The savings can be withdrawn at the end of the employment or during an emergency. 12% of the basic salary is submitted to the provident fund.
9. Cryptocurrencies
Bitcoin is one of the most famous cryptocurrencies that has made many millionaires over short timelines and yielded many profits to investors. Investment options like Bitcoin are not backed by the government yet. One can sell them or buy them from cryptocurrency exchanges. However, being unregulated makes cryptocurrencies one of the riskiest assets.
These are the best types of investments in India in which one can invest and make a profit. Let us now look at the things to keep in mind before investing.
Also Read: 10 Best Tax-Saving Investments For Salaried Employees
Things to Keep in Mind Before Investing
- Make an investment goal, i.e., know what you are investing for. Deposit the amount of money that you need to fulfil your goal.
- Know how much time you need to invest. For instance, a 15-year time frame is a must in the Public Provident Fund.
- Know the amount of risk you can tolerate. Cryptocurrencies and stocks have the highest amount of risk. Government investment plans such as bonds are low-risk alternatives.
- Know which investment option is best for you. For example, Public Provident Fund is a good option, wherein the interest rate is reasonable, and the money will be safe for 15 years.
Also Read: 10 Best Long Term Investment Plans in India
Final Word
Investing is a great way to create an additional income source, but it loses its purpose if investments are withdrawn before time. Various types of investments provide a reasonable interest rate for the principal amount. So, before investing, consider these things and look for the best investment plans. If you are new to investing, Navi could be the right choice for you. Navi offers the chance to invest in mutual funds at low expense rates. Looking forward to it? Visit Navi Mutual Fund and get your investment journey started.
*Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
FAQs
Ans: Investing is the way of growing money with time. The wealth created over time can help in fulfilling various goals like buying a house, college education, marriage, etc. Investing is important if one has long-term goals.
Ans: Here are the key points to keep in mind before investing:
– Know your investment goals.
– Know how much time you can wait for investments.
– Know how to invest.
– Understand which investment option is the best for you.
Ans: The best types of investments are mentioned above. Before investing, make sure that you know which investment option is the best and how much you should invest. Knowing these two things will make it easy for you to invest to reach the goal.
Ans: Cryptocurrency is quite a risky option to invest in. But investors have made great profits before. Cryptocurrency has a higher risk but as it is said – more risk leads to higher returns. The same is the case with this as well!
Ans: Public Provident Fund is the safest investment option. In this, the money is locked in for 15 years. The interest rate is high on PPF. Thus, this investment option has low risk as compared to others.
Before you go…
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Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
