Navigating through different investment options available in the market can seem frustrating to the uninitiated. Hiring a financial advisor or expert to guide you through the thicket of current investment trends might come in handy. If you’re the do-it-yourself type then you should try comparing different online trading platforms or investment vendors. While you’re at it, take a look at features like liquidity, taxation, tenure, rate of interest, or returns of the product. Remember to consider the penalties you’d have to pay in case you do a premature withdrawal.

If you’ve been fretting about the risk of investments or low returns, then it’s time to keep your scepticism aside and take a rational look at some of the products that might suit your needs. Here’s a list of popular investment vehicles you can put your money in.

Bank Products

Savings and Fixed Deposits are some of the most stereotypical investment instruments in India. A Fixed Deposit is a savings scheme that comes with a fixed term and Fixed Deposit rates, and isn’t subject to the sudden fluctuations that can be seen in the market. Depending upon the vendor you approach, an FD can come with an interest rate of 5-12%. You can’t withdraw this money unless the maturity expires or unless there’s a clause mentioned in the contract. Use an FD interest calculator to compare the different vendor rates before you sign on the dotted line.

Saving accounts on the other hand come with a flexible term and a lower rate of interest. There’s a principal security and moderate rate of return. Depending upon the vendor you approach, there would be a certain limit on the number of withdrawals or number of cheques you can write within a stipulated timeframe. So before investing in FD you need to know all about fixed deposit pros and cons .

Mutual Funds

When you invest in Mutual Funds, your money is distributed in assets like shares, equity, real estate, and other liquid investments that pose an element of risk. The rate of interest charged on this product is subject to changing market conditions and inflation. Once you have crossed the minimum holding period, you can liquidate the asset. Withdrawing money prior to its maturity can penalise you and lower your returns.

If you want to gain tax benefits from mutual funds then you’d have to invest in vehicles designed especially to save tax. For instances, assets like Equity-Linked Savings Scheme (ELSS) and Rajiv Gandhi Equity Savings Scheme (RGESS) let you claim tax benefits under the Section 80C of the Income Tax Act.

Real Estate

Real estate is one of those rare investment tools that lets you gain a higher capital appreciation over a long period of time. Investing in real estate would also help in diversifying your investment portfolio. You can reduce your per-unit risk or the overall risk factor by going with this tool. If you don’t have necessary funds to finance this purchase, you can even apply for a Home Loan.

Opting for a Home Loan would help you in maximising your tax benefits according to Section 80C and Section 24 of the Income Tax Act. You can claim tax benefits on the principal amount, interest, and stamp and registration charges. Let’s not forget the positive cash flow you stand to gain from the rental income of the property. The income generated from this instrument is directly proportional to inflation and that’s why this investment would act like a hedge for investment during an inflation crisis.

Stocks and Bonds

Stocks and bonds fall under the high-risk and high-return investments category. With no guaranteed returns, this can jeopardise your savings if you haven’t planned for any contingencies. The versatility of bonds allows you to experiment with different types of returns and maturities. Floating Rate Bonds, Fixed Rate Bonds, and Zero Coupon Bonds are some of the popular types available in the market. You stand to gain consistent income from the interest generated on the principal amount invested, depending upon the type of bond you go for. You can also sell your bonds prematurely and get back most of the amount you invested in it, if not all of it. Depending upon the type of bond you choose or the vendor you go with, you may or may not be charged a penalty for it.

If you want to invest in a company and also get to claim a margin of the company’s profits or a vote in the administration, then buying the company’s stocks will help you do that. Stocks can come in forms of securities, shares, or equities, and over a long-term tenure help you gain a considerable income. They have a better capital appreciation potential than other high-risk investments and increase your purchasing power for the future.

Insurance

If you want to cover yourself financially against any loss or risk that you might incur in the future then going for insurance is your best choice. Depending upon the plan or vendor you go with, you would be asked to pay yearly, half-yearly, quarterly, or monthly premiums. Life Insurance , Health Insurance , Vehicle Insurance, Travel Insurance, or Home Insurance are some of the most sought-after covers in the market.

Apart from letting you reach your investment goals and letting you secure your finances, an insurance plan lets you use it as a collateral against a loan. You can get insurance for yourself within the very comforts of your home, thanks to the easy access to hassle free online applications.

Though it’s advisable to check the previous performances of financial products, it isn’t the only record you need to look at. Instead of investing a major chunk of your savings in just one investment instrument, you can diversify your portfolio and lower your risks by distributing your money in a range of investments. The earlier you start investing the better your returns would be. Don’t hesitate to seek help from financial advisors and experts from banks or other financial institutions to gain better insights into the world of investments.

Author's Bio: 

Aman is working in the domain of Investment management in one of the top universities. He has published research papers and case studies in Investment and Fixed Deposit marketplace. He is an avid blogger in the domain of Investment management. you can also find him on social networking platforms.