What are the Various Investment Avenues Available in India ?

Did you know that according to an Ernst and Young report, published in 2015, India's attractiveness as an investment destination has increased not only due to the low cost of labour but also due to the government's proactive efforts? In today’s times, merely earning money is not enough to keep you financially secure. Smart investments in the right instruments is important. And there are a lot of avenues available for a customer in India. Here’s a look at the options you can choose from, based on your income, risk profile, preferable tenure and savings.

Lucrative Financial Investment Options

All these options come with great returns and higher risk patterns. The main aim is the creation of wealth.

·         Mutual Fund Investment: Under this, there are two interesting options to choose from.

ü  Equity Linked Savings Scheme: With a small lock-in period of 3 years, this type of fund is ideal if you want to invest small amounts of money and get good returns. Investing in SIPs can help you create long term tax free wealth and make use of tax deductions in the year of investment.

ü  Diversified Mutual Funds: If tax saving is not your criterion, then these will help you create wealth by investing in diverse sectors of securities. You can choose to invest in active funds or go with low cost indexed funds, amongst the various options for mutual funds in India.

·         Stock Markets: Seasoned players in the equity market like investing in stocks on their own. Here you have the freedom to make your own calculations and invest in stocks you think will be profitable in the future, without a portfolio manager like in a mutual fund. Select high quality companies and consider their beta value before buying the shares. If the market is in your favour, you will get huge returns. However, this could prove to be a high risk instrument.

·         Gold/Commodities: Gold generally acts as an inflation hedged investment. So, for long term returns, you can store your gold electronically in ETF format and thereby bypass costs like storage, damage, making charges or theft. The prices go up and down, so you can sell when the price are up. Keep in mind the assets under management, expense ratio and performance history before investing in an ETF.

·         Non-Convertible Debentures: These act as a source of long term capital for companies and their non-convertibility is compensated by paying investors higher returns. You can get tax benefits, as well as high liquidity from companies with high credit ratings.

·         Corporate Fixed Deposits: This is only for investors who are not risk averse. If you have a surplus amount, you can invest in corporate FDs, which are let out throughout the year. Just be mindful of your term period and the credit ratings of the company. These funds do not offer any guarantee.

Given the growing economy that India is, financial services too are growing in sync with the needs of the business owners and individuals. It is better to invest than let your savings go to waste by sitting idle. Take the risk smartly as per your needs to increase your wealth, be it mutual fund investment or equity!