Why And Where To Invest The Money

Why And Where To Invest The Money

Why and where to invest
Freepik

Life makes innumerable demands from us. Whether it is family, freind or self. Ultimately woven into these inescable truth that money is the pivot where everyone turns and plays a vital role in life proves that money is a means to many an end.

Whether it's A dream house,  child's education, vacations, means and luxuries money is  a prerequisite requirement and Investing it is a must.

Investing is the art as well as science of wealth creation.

If you want to build your wealth, you have to make your money work and to make your money work, you have to invest your money in various asset classes to generate returns and achieve your investment goals.

A good investing instrument(asset class) has the potential to give you a strong rate of return and at the same time can gift you unexpected returns against the traditional returns of the market.

If you don't invest your money, you are truly making your money lazy Instead of making it to work for you and missing out a lot of opportunities in the way of wealth and fortune creation.

Investment is done keeping in mind the financial goals, time horizon, risk appetite and many more requirements of the investors.

Investing has plethora of benefits.


Why to invest ?

Designed by harryarts/freepik



Wealth creation : Investing your money can help you grow your corpus. The returns and the capital appreciation helps your money to build, create and generate wealth over time.

Fight inflation : Investing money is necessary to survive the increase in cost of living and to cop up against the inflation.

To achieve Financial goals and aspirations : Investing can help you meet your various financial goals and the returns can be used to meet financial goals and aspirations like buying house, car, childs education, personal finances and may other.

Secure future : Investing your money can help you to develop strong secure future against many risks, uncertainties, emergencies and financial crisis.

Where to Invest the money ?

Designed by freepik



Before investing your money. The question that comes in mind is that where to invest? 

Before investing in any asset class an investor must keep in mind the financial goals, time horizon, risk appetite and other requirements.

For investing there are different asset classes ?

First let's understand what is an asset class? 


What is Asset class ?


An asset class is a category of investment with particular risk and return possessing characteristics.

Let's me give a glimpse of different asset class where you can invest your money.

The different asset classes to invest your money.


Fixed income instruments



Fixed income instruments are those investments that generate a specific and fixed amount of income or return over a certain period.

Fixed income instruments are low risk and low return investments.

They possess very limited risk to the principle amount invested and the return is paid to the investor as "interest".

There is safety and security of the principle amount invested.

Some of the fixed income investment includes :

  • Bank fixed deposits (FDs).
  • Government bonds .
  • Corporate or company bonds .


What investors must know before investing.


Advantages

Investing your money in fixed income instruments protects the capital invested and give you fixed and assured returns.

Fixed income instruments posses liquidity except under certain conditions.

Disadvantages


Investing your money in fixed income instruments can only be a good option if you have a low risk appetite and your risk taking capabilities are not more.

For risk and reward go hand in hand. It is relatively less risky so, lower the risk, lower is the return.

Fixed income instruments cannot be rated as a preferred investment option when it comes to beat the inflation.

It's a preferred investment option for retired personals.


Real Estate 



Real estate investments includes investing in commercial and non commercial land, house, apartments, buildings and other tangible avenues.

Investing your money in real estate can be good choice for wealth creation but it has its own pros & cons.

The sources of Income from real estate investment are:

  • Capital appreciation of the invested amount or the asset.
  • Rental income

What are the things for investor to keep in mind.

Advantages

  • Real estate investments can generate great returns over long term.
  • Real estate investments are safe investments and provides security against the invested capital.
  • Real estate also rewards great side income like rental income leasing and holdings etc

Disadvantages

  • Large amount : Real estate investments includes a hefty amount of investment and they are affordable investment vehicles mainly for high net worth individuals and not for small general retail investors because the cash outlay in real estate investment is large.
  • Procedural delays - The transaction procedures can be complex involving legal procedures.
  • No Liquidity - Real estate investments are in tangible form and are bulky investment and does not posses liquidity and selling your invested asset can be a painful proposition.You cannot easily convert the investment in ready cash fast. You cannot buy or sell at your ease or convenience as it needs, right time and right seller for the purpose to perform the transaction.
  • High Taxation - Real estate investments are liable to high taxation and tax rates on real Estates are very high compared to other investing asset classes.

Commodities



You can invest in commodities by its purchase Iike gold, silver and precious metals in the form of jewellery.

Investors can also invest in commodities through exchange traded funds( ETFs).

Investors can invest through mutual funds that invest in commodities .

Mutual Funds


Mutual funds investments has catched a lot of eyeballs and attentions from a great mass of investors.

Mutual funds have given supernormal rewards like what equity has given to the regular investors.

Mutual funds are investment vehicles for those investors who do not know much about direct equity investing

As per your needs you can invest in various funds like :-

  • Equity funds
  • Debt funds
  • Balanced funds 
  • Other funds


What are the things for investor to keep in mind.

Advantages


The risk of fraud is minimal in mutual funds because of strict regulations and supervision.

Superior returns

Investor can start with small investments amount .

Investors get assistance and expertise of professional management.

Investors benefit from asset allocation with a diversified portfolio.

Mutual funds offers liquidity.

Mutual funds are generally tax saving schemes and offer tax benefits.

Disadvantages


Fluctuating return


No control

Also Read : why to invest in Mutual funds 

Equity




Investing in equities means buying shares/stocks of the companies that are listed
on the stock exchange. These shares/stocks are traded in the stock market by the individuals as well as firms.

Investors can invest in equity through primary market IPO or through secondary market or indirect through equity mutual funds.

Equities are the best asset class for stellar rewards and supernormal returns.
Equities are subjected to many 'rags to riches' and 'riches to rags' stories too.


What are the things for investor to keep in mind.

Advantages

Equities can give you mind boggling returns and can generate enormous wealth in the long term.

Equities provide liquidity and the invested amount can be converted, sold and can be converted to ready cash easily.

Equities gives ownership rights in the company you are investing your money.
Equities gives best returns in the long run and holds great compounding effect power and saves taxes too.

Disadvantages

Capital is not safe in equity investments.

No fixed returns.

Equity is highly volatile investing instruments and prone and exposed to fluctuations.

Conclusion

How to invest


While there are many asset classes where you can invest your money and create wealth and generate returns.
An investor must choose his/ her asset class on the basis of various parameters like financial goals, risk appetite and time horizon in order to become a successful investor.

Authored by : 

Prashant Kumar Mishra
Founder of  Finomenal Wealth






Post a Comment

23 Comments

  1. Perfect! This is a question which a lot of people ask when they start earning well. I was thinking about investing in land because as that will be beneficial. Also, I wanted to know about Balance Advantage funds as a friend of mine thinks they are better.

    ReplyDelete
  2. Thank you for the post and it is very interesting to read. We can also enroll our name in such a good place like Stock Market Courses in Delhi for the bright future.

    ReplyDelete
  3. Nice blog... Before choosing the mutual funds make sure that they are perfect and suits for you. Only then you could make money otherwise you may fail or lose your money.
    how to invest in mutual funds
    Best financial advisors in Chennai
    Best Financial Planners in India

    ReplyDelete
  4. If you have strong mood to exchange your bitcoins with US dollars then you must try bitcoin price to USD for the time being and you will always want to rely upon us after your first experience. If you think dollar rate is higher nowadays and bitcoin exchange with dollar can benefit you at this hour then it will be of no use to waste your time. Anymore. Your financial success is just few steps away from you.

    ReplyDelete
  5. Thanks for sharing this article here about the financial investments. Your article is very informative and I will share it with my other friends as the information is really very useful. Keep sharing your excellent work. If anyone looking for the independent financial advisor, plutusfinancialguidance is the best choice.

    ReplyDelete
  6. Great job for publishing such a nice article. Your article isn’t only useful but it is additionally really informative. Thank you because you have been willing to share information with us. financial advisor blog new york

    ReplyDelete
  7. Great Post! thanks for sharing useful information with us. If you want to know more about this topic, then click on the below links.
    Thank You!
      Currency Trading

     Equity Market

     Forex Trading

     Forex Market

    ReplyDelete
  8. It's very interesting, Thanks for sharing a valuable information to us & Knowledgeable also, keep on sharing like this.

    Stock Investor provides leatest Indian stock market news and Live BSE/NSE Sensex & Nifty updates.Find the relevant updates regarding Buy & Sell....

    ShareTrading

    Demat Account

    Currency Trading

    Online Trading

    ReplyDelete
  9. Nice Article. Thank you for sharing the informative article with us. Stock Investor provides latest Indian stock market news and Live BSE/NSE Sensex & Nifty updates.Find the relevant updates regarding Buy & Sell....
    equity shareholderes
    tax in india

    ReplyDelete
  10. Great read! As usual helpful always.
    Thanks for sharing your valuable information. But i have a quation. How can I make money with stock trading?

    muthoot forex
    phoenix mills share price
    beml share
    phoenix mills share price
    tata investment share price
    nse berger paint
    equitas
    nse berger paint

    ReplyDelete
  11. Great Information! Its looking Nice.....

    You can invest in stocks yourself by buying individual Stocks & Shares or mutual funds,IPOs, or get help investing in stocks by Visit stockinvestor.in
    phillips carbon share price
    shakti pumps share price
    ramco industries
    mahindra amc
    bajaj electricals share price
    kolte patil developers ltd
    sbi insurance
    bsesensex

    ReplyDelete
  12. Investment has two sides. It can make you very rich, if you know, where you invest in, and, it can also make you poor. You must take everything into account.

    ReplyDelete
  13. Investments are a good way to save and increase your funds, Excellent American college essay assistance but in order not to lose them, you should entrust the investment process to a specialist who can assess all the risks.

    ReplyDelete
  14. Thanks for sharing. Really useful information and it’s a great article with good resources. Checkout our Stock Investor website for more latest stock market update.
    Bharat Bhushan Finance & Commodity Brokers Share Price
    Bharat Bijlee stock price
    Bharat Dynamics stock price
    Bharat Electronics stock price

    ReplyDelete
  15. Nice article. stockinvestor.in shares information related to stock market like stock market analysis, advices the tips to invest in stock market and also provides stock market recommendations.
    companies
    shares
    Equity shares

    ReplyDelete
  16. Just wanted to say I love reading your blog. we provide financial advisor fiduciary at affordable charges. to know more visit our website.

    ReplyDelete