Investment – How's, When's and Where's
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The investment options in its broadest sense can be diversified into:
– Physical assets like real estate, gold / jewelery, commodities etc.
– Financial assets such as fixed deposits with banks, small saving instruments with post offices, insurance / provincial / pension fund etc. or securities market related instruments like shares, bonds, debts etc.
Now, for those of us having investments in the first category wont be reading this solely for the matter that they are much ahead of me in realizing their dream cos the first category of investment requires a fairly large capital to begin with :-(. But , for those for what the first category is some years away and the second category looks all gibberish with jargon's imported from the planet MARS, we shall ask MR.IT to help us enciphering the second category.I am not focusing on the first category for the reason i mentioned earlier though, with the realization of the second, we will be moving to first for sure 🙂
Now, financial assets, as they are called are the most popular tools in the market for the sole reason since they allow for comparatively less lump sums of investment money and also regular investment.But, they are not a piece of cake to understand. Are they ?? I am still breaking my head over a lot of them 🙂 The financial assets can be further d emerged into 1.Debt Instruments 2.Equity & Equity Related Instruments Before we get into the details, a point worth mentioning which i picked up from a very good magazine is that, the indulgence in these two instruments should be on a mixed basis to ensure capital gain as well as security.A generic approach suggests a 25% (debt) and 75% (equity) exposure, but then these change according to one financial goals, age and obviously various factors which we will come across later.
Debt Instruments ::: These are nothing but a glorified form of a savings bank account in more ways than one. The primary being that these are aimed protecting your capital and then, aim to maximize returns. In other words, they are essentially risk free but do not aim at high returns.Most of these instruments earn a decent 10 odd% on the investment with pros and cons of their own.So, the investors (are not we all supposedly to be addressed like this) with a low risk-appetite, this is the way to go.I am briefly considering the few options available:
1.Post Office Savings: Post Office Monthly Income Scheme is a low risk saving instrument, which can be availed through any post office. It provides an interest rate of 8% per year, which is paid monthly. Minimum amount, which can be invested, is Rs. 1,000 / – and additional investment in multiples of 1,000 / -.
2.Public Provident Fund: A long term savings instrument with a maturity of 15 years and interest payable at 8% per year compounded annually. A PPF account can be opened through a nationalized bank at anytime during the year and is open all through the year for depositing money. Tax benefits can be availed for the amount invested and interest accrued is tax-free.
3.Fixed Deposits with Banks are also referred to as term deposits and minimum investment period for bank FD is 30 days. Fixed Deposits can be considered for 6-12 months investment period.
This is just and insight into one of the very few commonly used debt instruments, which are available in the markets.Since, this form of investment is not my forte i will not divulging a lot into it.Though, i would love to clarify any doubts if one comes across.Any one willing to put their money in these instruments should take extreme caution and undergo a complete research before opting for any of these.
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