Types of Investments

"It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for."

Robert Kiyosaki

There are various investment options available to investors. They all vary in the risk they carry and the reward they offer. Additionally, certain investment options have lock in periods which makes them less liquid while others are highly liquid. So, as an investor, one has to make an informed decision to select any of the investment options prior locking in money.

• Bonds Bonds are a type of debt security. It is a low-risk low return instrument wherein corporates or the government borrow money from the public at interest. Various types of bonds are: Government Securities Bond: Government securities bonds are issued by the central and respective state governments. They are both short-term and long-term. Corporate Bonds: Corporate bonds are bonds issued by corporates to investors in order to raise money for expansion, debt servicing, and other requirements. Inflation-linked Bonds: These bonds are offered by the Government. Their interest rates fall and rise as per inflation. Sovereign Gold Bonds: SBG isissued by the Reserve Bank of India and has been offered to discourage investors from buying physical gold, rather than investing in the value of gold. Zero-Coupon Bonds: These bonds don’t pay any interest but when the bond matures, it gives investors a lump sum amount which is more than invested amount.
• Government Securities Bond: Government securities bonds are issued by the central and respective state governments. They are both short-term and long-term.
• Corporate Bonds: Corporate bonds are bonds issued by corporates to investors in order to raise money for expansion, debt servicing, and other requirements.
• Inflation-linked Bonds: These bonds are offered by the Government. Their interest rates fall and rise as per inflation.
• Sovereign Gold Bonds: SBG isissued by the Reserve Bank of India and has been offered to discourage investors from buying physical gold, rather than investing in the value of gold.
• Zero-Coupon Bonds: These bonds don’t pay any interest but when the bond matures, it gives investors a lump sum amount which is more than invested amount.
• Equity Stocks Stocks are an investment instrument through which investors buy a percentage of ownership in a company and in turn, share profit or loss. Since equity market is highly volatile, it offers high risk and at times high loss. Investors can buy a stock either though IPO or buy stock at stock exchange such as BSE or NSE.
• Mutual Funds Mutual funds are a type of investment instrument offered by an asset management company (AMC) that pools money from multiple investors and then invests in equity stocks, bonds, etc. In the same way, the money is pooled, and profit is distributed in the same ratio as the money invested among investors after a certain fee charged by AMCs. Mutual funds offer a safe way for investors to earn from the equity stock market in case they don't have adequate knowledge about the stock market or time to invest in it. Mutual fund offers the following types of investments: Equity: The majority of funds invested in equity stocks Debt: The majority of the fund invested in debt instruments like bonds Hybrid: It is a combination of the varying percentage of debt and equity.
• Equity: The majority of funds invested in equity stocks
• Debt: The majority of the fund invested in debt instruments like bonds
• Hybrid: It is a combination of the varying percentage of debt and equity.
• Fixed Deposits Fixed deposits are offered by Banks and are just like bonds. They offered a fixed return on investment, hence the term fixed deposit. It is a low-risk low return instrument that offers a fixed innterest rate for a fixed duration like 1 year, 2 years, 5 years, etc.
• Retirement Plans These instruments allow you to invest money over the years so that you get a steady stream of income during retirement. Various types of retirement schemes are: Public Provident Fund (PPF) Employee Provident Fund (EPF) Equity Linked Savings Scheme (ELSS) Mutual Funds New/National Pension Scheme (NPS)
• Public Provident Fund (PPF)
• Employee Provident Fund (EPF)
• Equity Linked Savings Scheme (ELSS) Mutual Funds
• New/National Pension Scheme (NPS)