Investments are beneficial for the improvement of the financial condition of an individual. As for a person who comes from a middle–class background, he might only look towards the risk–free options.
In India options like Real Estate investments and Fixed Deposits are a part of people’s long term investment plans. On the other hand, Mutual Funds are one of the fastest ways to multiply your capital. Real estate investments involve buying assets like houses and plots. It is considered to be one of the best forms of investments in the market due to the progress of the real estate industry. Fixed deposits are known for investment security and guaranteed returns. You can start an FD account in any financial institution, whereas it is important that you choose a high rate of interest on FDs as the returns are based on the interest rates offered. Mutual funds are considered as one of the fastest ways of multiplying your invested capital. It is also considered as a maximum risk option due to its market–based returns.
Some investments may seem beneficial but might have slow returns or high investment; such opinions can leave you rather confused and might change your investment perception. Hence, you can use the following parameters to check which type of investment suits you well.
Minimum Investment Amount: While investing, it is important that you consider your investment capacity, as investment options like real estate, fixed deposits and mutual funds have different investment limits. Since the real estate prices are high in the country, you might need a high investment amount that would range from a few lakhs to crores. Due to the high amount of investment, it might not be easy for everyone to manage. Mutual funds have low investment limit, and the investment amount might vary from company to company. Fixed deposits are a savings cum investment provision offered by the financial institutions and they provide good rate of interest on FD. Minimum investment limit for FDs starts from INR 25,000.
Investment Security: Investing in real estate can be risky too as there are many fraud estate agents and property dealers that might rob you off your capital. It is important that you check the details of the seller or the credibility of the estate agents before investing in real estate. Mutual funds have a reputation for being the riskiest form of investment as investments made in the mutual funds are allocated to the companies funding for production. If the company fails to perform in the stock market, you might lose your investment capital. FD have better investment security as the financial institutions do not expose your investment to other sources. In some cases, if the investment amount is very high the financial company insures the amount deposited in accords with an insurance company.
Returns: It is important that you consider the return frequency before investing in any of the sources. Investing in real estate can gain you benefits like providing you with a permanent residence, or you can generate income from it by renting the same. In mutual funds, the changes in the stock market determine the returns for your investment. You gain profit if the stock market rises and when the stock market falls, the loss is incurred to the investor. In a Fixed Deposit, you gain returns due to the interest rate applied by the financial institution. The returns offered on FDs are not affected due to any external factors.
It is essential to plan your investments by keeping your financial condition in mind. As a blind investment would not only incur a loss on savings, it might also leave you vulnerable to financial emergencies.