Instrument Investment

What are the popular instruments of investment?

Everyone wants to invest some part of his/her income to fight with inflation and to meet the emergency of money. There are two ways where one spends his/her incomes either on consumption or on investments. When you think about investing your money there are several asset class which comes to your mind. Fixed returns instruments, Equity, Real estate, and Commodities are four most popular investment instruments available in present time. According to risk and return temperament an individual choose the suitable asset class. We will discuss above mentioned asset class in details here.

Fixed Income Instruments:

There are various investable instruments which limit your risk and pay a fix return in terms of interest in this section. The interest is paid to the individual on quarterly, semi-annually, and yearly basis on this asset class. At the end of maturity of the asset the capital is returned to the investor with interest. Typically there are four types of fixed income instruments mentioned below.

  1. Fixed deposits offers of banks
  2. Bonds issued by Government of India
  3. Bonds issued by Corporates
  4. Bonds issued by Government related agencies

These fixed income instruments have generated 8-11 % of fixed returns in the last twenty years. Which is comparatively a decent some of investments.

Investment in Equity Market:

The equity investment is about buying and selling of shares of publicly listed companies. There are two major stock exchanges in India which facilitates the trading facility of these companies. Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are two major stock exchanges of India. Investment in equity segment is considered very risky however the returns from the equity markets are also very attractive. The equity market has generated around 12-15 % returns over the last twenty years. However, several good stocks have been even multi folded in previous years. However, there are also several stocks which have become zero in no time.

Investment in Real Estate:

The real estate investment consists of buying and selling of commercial and non-commercial lands like sites, apartments, and commercial buildings. There are two types of earnings from real estate investments, rental and capital appreciation. The investment amounts in the real estate sector are generally large. The procedure of investment in this sector is also bit complex as one has to involve in legal verifications and documentations. The prices of real estate are always rising in the long run however, in the short term there are no fixed returns in this sector.

Investment in Commodities (Gold, Silver)

Gold and silver investments are considered most popular investments products in India. There are mainly two reasons of such a huge investment in gold and silver, one it is considered as a status symbol to have heavy gold jewelries and second the returns on these commodities are very fascinating. Investments in these precious metals has generated approx. 8% return in last twenty years. There are two popular ways to invest in these commodities either through buying physically or investment in Exchange Traded Funds (ETF).