Investment and The Different Types of Investment || Today we will learn about Investment and its Different Types. Risk and returns are the most important factors in all types of investment that we will understand through this blog.
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| Investment and The Different Types of Investment || theeco.info |
The Investment / what is investment.
We know that every person has some dreams in his life, to fulfil which he keeps a part of his income which in common language is called savings.
Usually, when the salary comes to the bank, some people save it in the bank account, that means they save some part of their salary for saving in the bank itself. This method is very useless because the stable money losing its value, every year the inflation increases, then the money kept in the bank also starts losing its value.
The inflation rate is between 3% to 5% every year, which means that the saving money has lost the value from 3% to 5%.
Why to investment? - The money kept does not lose its value, so people investment.
Investment and its factor
If we are involved in some kind of investment, then we need to know a lot about these four factors "Risk, Returns, Volatility, Time". Because these are less and more dependent on our profit and loss.
Risk - Risk means chances of losing money.
In today's time, no investment is 0% risk free. Although the lowest risk is in the savings account, but if the bank is bankrupt, then there is not even 0% risk free, in the end the risk is a big factor in the investment.
Returns - Earnings on investment funds are called returns.
If someone is not able to beat the return inflation rate of investment, then that investment is not for profit. Meaning that the inflation rate is less than or equal to the investment returns, money is going to be lost, so we have to take care of the returns.
Volatility - Volatility means low and high return rates over a period of time.
Sometimes the returns are very large and sometimes the returns are reduced. This is also a very important factor of investment because if the volatility is very low in a year and at the same time we need a lot of money, then we may have to face a huge loss.
Time - Time means how long the investment good for returns.
Time is also an important factor for best returns. It is very beneficial if invested for a long time.
If the risk, time, and volatility are more together then the returns are going to be very good.
Different Types of Investments.
If we talk about types of investments, then there is a lot of investment in the present time. Whose returns depend on the risk on that investment, so it can be said that "Returns = Risk" means the higher the risk, the greater the returns.
To understand this, let us look at The Seven Different Types of Investment.
- Saving Account.
- PPF (Public Provident Fund)
- (FD) Fixed Deposits.
- Mutual Fund
- Real Estate.
- Gold & Jewellery.
- Stock market.
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| Investment and The Different Types of Investment || theeco.info |
Saving Account.
Investing in a savings account is considered the safest because the risk here is very low. Depending on the investment formula, "the more the Risk the more Returns", hence the returns here also get max 5%. The returns for different banks also vary. The returns here are sometimes equal to the inflation rate, which is not beneficial in any way.
There is no time limit in this, you can withdraw money whenever you want.
PPF (Public Provide Fund)
PPF is considered to be the best long-term security option in India and it also gets tax rebate. Its interest rent or returns are 8% to 9%, due to which the investment risk is less than the returns. Here, there is a lock-on period of at least 15 years for investment, in which the investor can take a loan after 6 years.
(FD) Fixed Deposits.
FD investment has very low risk and time limit like PPF. Its investment returns are around 6% to 8%. Different banks have different FD plans, due to which the returns are slightly up-down.
Mutual Fund
The Mutual Fund is run by the Asset Management Company, which collects the money from the people and shares it in the Equity / Debt Market, whoever receives the Benefit Returns from it, distributes it to those Investors. For this services, mutual fund company keeps some of the
commission of the returns.
In this process, there is a high risk from the moderate and Returns are also high from the moderate. This risk is less than the risk of the stock market, so the returns here can be between 6% to 15% or more. Mutual fund depends on risk, volatility and time. The higher it is, the higher the returns.
If a person wants to go to the share market, then the mutual fund is the best for as a beginner.
Real Estate.
Real estate, as you may know, the investor buys the land, building, plot, property etc. and after some time earns returns by selling it. investment in real estate is moderate to high risky. Investor needs a lot of money to get returns.
Before investing on an estate, it is very important to analyse it.
Gold & Jewellery.
Gold is an evergreen investment that always yields good returns. Those who invest on buying gold, have the risk of losing gold and testing the gold.
Apart from this, there are other ways to invest on gold like Gold Deposit Schemes, Gold ETF, Gold Mutual Fund etc. which are less risky.
Stock market.
"There is a lot of money in the stock market " It is easy to say but it is very difficult to get money from here.
The stock market is very risky so the returns in the stock market are also manifold. Here, before buying a stock, it is necessary to analyse it, which can only be done by working very long in the stock market.
Before investing in a stock market, I would advise you to invest only if you have knowledge of it, otherwise you will start from the mutual fund.
Apart from these, there is investment in other markets like Govt. issued bonds, corporate bonds, crypto currency & bitcoins etc.
That is all we have on this topic "Investment and The Different Types of Investment || theeco.info." if you have any question please do write in the comment section below and do not forget to Subscribe to our Newsletter for more such great post have a great time ahead.
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thanks for sharing.FXGM
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