How Many Types Of Investment in India: Over the year, the financial market of Indian has evolved and there are various types of investments available in the market. Basically, there are two types of investment in India i.e. short-term investment plans and long-term investment plans. But this investment is not suitable for all investors. Each of these has varying levels of risks. Thus, investors have to choose those types of investments that best match their financial plan and goals. So, if you are serious about investing, It may make sense to find a financial advisor to guide you and help you determine which investments can help you meet your financial goals.
What is an Investment?
An investment is a process of acquiring an asset an intention to make money from it. Investment requires a sacrifice of some present asset like time, money, or effort. The main purpose of investment is to generate money from the invested asset. When a asset is purchased for the purpose of investment, the investor will not consume it instead, the investor will use it to create wealth from it. The most popular investments are stocks or equities, fixed deposit, mutual funds, corporate bonds, etc.
How Many Types Of Investment in India
There are numerous types of investment in India, and we have divided them into three main categories, they are –
- Fixed Income Investments: These investments give you guaranteed returns in the form of interest and these are low risk investments compare to other investment. Below is a list of some of the best fixed income investments
- Market Linked Investments: This types of investment do not guaranteed returns and the returns depend on the market movements. It is considered one of the high risk investment but the returns from these investments are also high.
- Other Investment: Investments that do not come under fixed income or market-linked investments are called other investments.
Let’s discuss the types of investments in India in detail below:
Stocks which is also known as shares or equity is one of the best and well known investment in India. When you buy stock or equity, you are buying an ownership stake in a public trade company like Apple and Facebook. Investors invest in stocks with a purpose to earn regular income in the form of dividends and also profit from capital growth. When the stock price rise, investors can benefit by selling the shares or equity. The risk, of course, is that the stock price may go down, in which case you lose money. To invest i shares you need to have a demat and trading account.
2. Mutual Funds
Mutual funds is another types of investment in India that invest in market-linked instruments such as stocks, bonds, or a mix of both equity and debt instruments. Its a pool of many investor’s money that is invested broadly in a number of companies. There are various types of mutual funds available in the market based on the assets.There are also mutual funds that offer tax benefits. Mutual funds carry the same risks as stocks and bonds, depending on what they are invested in. Though the risk is often lesser because the investments are inherently diversified.
Cryptocurrency is another types of investment in India. Basically, a Cryptocurrency is a digital currency that is encrypted and often decentralized. The first cryptocurrency is Bitcoin which is based on block-chain technology. Bitcoin is one of the most popular and valuable cryptocurrencies, leading to the creation of thousands of alternatives or altcoins. There are different types of altcoins in which some are close variations of Bitcoin, like Bitcoin Cash or Bitcoin Diamond. You can buy and sell them on cryptocurrency exchanges.
4. Fixed Deposit (FDs)
Fixed deposits which is also known as FDs, offered by banks and non-banking financial organisations (NBFCs), are a great option to grow your revenue while maintaining the highest level of safety. Fixed deposits offer guaranteed returns and one of the popular types of investment in India. They have a tenure ranging between 7 days to ten years. The fixed deposit interest rate is on between 3%-7%. Moreover, senior citizens are given extra interest on their FD investments.
5. Public Provident Fund (PPF)
PPF considered one of the safest option among the different types of investment in India. Basically it is one of the types of post office savings schemes launched by the National Savings Institute. You can invest in Public Provident Fund (PPF) by opening an account with any bank or post office. In some banks the minimum investment amount is as low as Rs.100. Thereafter, the annual PPF deposit limit ranges from a minimum of Rs 500 to a maximum of Rs 1.5 lakh.