If you’re looking forward to investing some of the side income and get the best possible returns with a minimal amount of losing principal money. This is the reason why a lot of people are always on the lookout for top investment plans where they can easily double or triple the principal money in just a few months with limited risk. In this article, we will discuss the top investment options that you can spend your money on.
Although, a high return and low-risk combination investment don’t really exist in the market. If you’re going to invest money then you should know that risk and reward are directly related, which means the higher the risks and the higher the return.
While choosing any one investment option, you will need to determine the risk of products. There are a lot of investments that carry high risk but have the potential to provide higher returns than other assets in the market. On the other hand, some investment types come with low-risk which provides lower-returns.
There are mainly two categories that investments can be divided into. Financial assets and Non-financial assets are the two categories of investments. Financial assets are basically market-linked products such as stocks and mutual funds, it also includes fixed income products such as provident fund, and bank fixed deposits. Non-financial assets which a lot of people tend to invest in is physical gold and real estate.
Best Investment Options to Choose From
1. Direct Equity
Investing in stocks may not be everyone’s idea for an ideal investment as it is a volatile asset and there are no fixed returns. Furthermore, not only it is incredibly hard to find the right kind of stock, finding the right time to invest and the right time to exit the market is difficult as well. The good part is that if you’re investing for a long time, equity is known to deliver higher returns in comparison to all other assets.
While the returns can be high, the risk of losing a huge part of the capital money is high as well. To reduce your risk of losing money, you can diversify your stocks. If your heart is set on investing in equity, you will need to open a Demat account.
2. Equity Mutual Funds
Equity mutual fund schemes predominantly invest in equity stocks. In an actively traded fund, the returns are mostly dependent on a fund manager’s ability to generate high returns. Index funds and exchange-traded funds (ETFs) are managed passively. They are categorized by the fact of whether they are domestic equity mutual funds or international funds.
3. Debt Mutual Funds
Another investment option that you can keep your eye out for is the debt mutual funds scheme. Debt mutual fund schemes are ideal for investors who need steady returns. They are a less volatile type of investment, thus they are much less risky than equity funds.
Debt mutual funds mainly invest in fixed-interest generating security such as corporate bonds, government securities, treasury bills, commercial paper, and other money market instruments. You should keep in mind that these funds are not completely risk-free, they carry risks such as interest rate risk and credit risk. If you’re going to invest in debt mutual funds then you should read about the risks before investing your hard-earned money.
4. Bank Fixed Deposits
A bank fixed deposit is probably one of the safest investment options that you can look out for. Under the deposit insurance and credit guarantee corporation (DICGC) rules, each depositor in a bank is insured up to a maximum of Rs 5 lakhs.
Before the year 2020, the coverage was a maximum of Rs 1 lakh for both principal and interest amounts. As per your need, a user can opt for monthly, quarterly, half-yearly, yearly, or cumulative interest options. The interest rate earned on the principal amount is added to one’s income and is taxed as per the user’s income slab.
5. Real Estate
One of the investment options in any type of economy is real estate. The house that you currently live in is for your personal use, so it shouldn’t be considered an investment. If you don’t intend to live in it, then buying a second property can be a huge investment.
The location of the property will be its most important pricing factor also the rental that it can earn. Investments in real estate can provide returns in two ways, increased value, and rentals. Although, unlike the other assets, real estate is very tough to liquidate whenever you want to. Another big risk of investing in real estate is that you have to get along with a lot of regulatory approvals. If you want, you can invest in real estate for getting rental or capital appreciation.
Processing gold in the form of jewelry has its own concerns and they all cost higher. You will also have to bear the “making charges” which typically range around 6-14% on the cost of gold. If you want another investment option, then you can buy gold coins.
Almost all the banks sell gold coins nowadays, another way of owning gold is by paper gold. Investment in paper gold is really cost-effective and it can be done easily through ETFs. If you want, you can also invest in sovereign gold bonds, which is another option to own paper gold.
7. Public Provident Fund (PPF)
Public Provident Fund is one investment plan that a lot of people turn to. Since the PPF has a long tenure of 15 years, the impact of compounding tax-free interest is major, especially in the later years. Since the interest earned and the principal amount is backed by a sovereign guarantee, it is an overall safe investment. You need to remember the interest rate on PPF is reviewed each quarter by the government so you can expect great returns overall.