These four sources of investment will help you expedite your decision-making process and figure out the best course of action that can be taken to maximise your return on investment.
Most people get rich by making sound investments that yield substantial returns. Here are some investment avenues that you can opt for, if you want to multiply your finances.
For investors seeking stability of returns and safe earnings – without being affected by market fluctuations, fixed deposits are the most preferred investment option. When investing in fixed deposits, you invest a lump sum amount for a specified time period. Over this time, the interest accumulates, and you can either choose to gain your interest at maturity or go for periodic pay-outs instead.
While both banks and companies offer fixed deposits, you may get higher interest rates when investing in company FDs, which offer higher returns. However, it is important to invest in a company with high safety ratings, as there may be risks involving loss of capital or delays.
A recurring deposit scheme is similar to that of a fixed deposit, with a few key differences. A recurring deposit mandates investment of a specific amount every month, as opposed to an initial lump sum amount. Again, recurring deposits provide comparatively lower returns, as compared to fixed deposits. This is because unlike the case of a fixed deposit where the interest is accrued on the entire amount over time, recurring deposits have interest calculated for each subsequent instalment. Ultimately, the level of income generated would be lower than that of a fixed deposit.
As growth-oriented investments, mutual funds are always subject to market risks, which may directly impact your investment amount. While it’s possible for you to attain decent returns on your investment, the chances of your investment going down due to unfavourable financial conditions are always there.
A systematic investment plan (SIP) is a form of mutual funds, albeit with monthly investments as opposed to a lump sum amount. SIPs share the same drawbacks as recurring deposits and mutual funds – along with being unstable in terms of returns, the overall income will also be lower, as compared to if you choose to go for the usual system of mutual funds.
Companies that go public enable people to invest in their shares to obtain a profit. On paper, this might seem like a good deal, but company stocks have a higher level of risk. Your investment can take a turn for the worse if you are unable to analyse the stock market properly.
Every individual wants to select a viable investment avenue that will help them make the most of their current income or savings. These four sources of investment will help you expedite your decision-making process and figure out the best course of action that can be taken to maximise your return on investment.
Source: Tax Guru