Consider the different types of investments as instruments for achieving your financial objectives. From bank products to stocks and bonds, each broad investment category has its own set of features, risk concerns, and methods in which investors might use them.
When you save money, you set aside funds to help you during times of need. However, you can always multiply your savings by investing them smartly. Investing your savings not only helps you build wealth, but also uncover opportunities to increase your financial worth.
Investment plans are essentially financial instruments that aid in the creation of long-term wealth. To reach our financial goals, we can use various investment plans in India to put our savings into various money-market items in a disciplined and periodic manner.
Overall, investment plans provide the much-needed benefit of optimising our resources through methodical, long-term investments and generating future wealth. The first step toward having an investment plan in India is to evaluate your risk profile and financial needs, and then select an investment plan that meets those needs.
Top 10 Types of Investment 2022
For those looking for a diversified and balanced portfolio, here are the best investment options you need:
- Stocks and equities
- Debt mutual funds
- Fixed deposits
- Provident funds
- Certificates of Deposit (CDs)
- Real Estate
- Retirement Plan
1. Stocks and equities
Stocks and equities are one of the most common types of growth-oriented investment avenues that can help you grow the value of your original investment over a medium to long time interval. While you can receive higher dividends, there is always a higher level of risk. The investment returns and risks for stocks vary, as per the economy, political scene, company’s performance, and other stock market indices.
2. Debt mutual funds
Debt mutual funds are a mix of fixed income securities, such as treasury bills, government securities, corporate bonds, liquid or money-market funds, short-term income funds, gilt funds, and other debt securities of different time horizons. These have a fixed maturity date and pay a fixed rate of interest. The returns include interest income and capital appreciation or depreciation in the value, due to market fluctuations.
3. Fixed deposits
Fixed deposits are financial instruments where you can invest a lumpsum amount, to earn guaranteed returns. Your investment can be locked in for a specified period, during which your interest gets accumulated. This interest is pre-decided and unaffected by market forces, so you can get guaranteed returns.
This certainty of returns can help you plan your finances in a better way. Fixed deposit enables you to earn higher returns, with flexible tenors and options to choose periodic payouts as per your convenience.
While investing in growth-oriented investment avenues can help you earn high returns, it is also important to balance your portfolio by including stable investment options like fixed deposits.
Bajaj Finance Fixed Deposits offer guaranteed returns, flexible tenors, periodic payout options and you can be assured of the safety of your principal amount. Bajaj Finance FDs have the highest safety ratings by CRISIL and ICRA, which ensure that your investment amount is never at risk.
When you invest in bonds, you lend your money to the issuer in exchange for periodic interest payouts, along with the returns on the investment amount. Bonds are issued by corporations, municipalities and government agencies.
5. Provident funds
Provident Fund is a major part of your retirement funds, which must be kept securely for your future. It is the sum of savings accrued, with contributions made by an employee, during the time he/she worked in the organisation, along with an equal contribution from the employer. These savings can be withdrawn at the end of the employment or during retirement.
6. Certificates of Deposit (CDs)
A certificate of Deposit (CD) is a short-term negotiable money market instrument held with a SEBI-registered (Securities and Exchange Board of India) depository. A negotiable instrument assures the repayment of the initial deposit amount and interest receivable at the pre-specified rate. CDs are governed by the RBI and issued by authorised banks against the funds deposited by an investor.
7. Real Estate
Real estate is one of India's fastest-growing industries, with promising future potential. Among India's various investment possibilities, purchasing an apartment or plot is one of the most effective. The risk is low because the property rate is anticipated to climb every six months, and real estate operates as an asset that provides significant returns over a long period of time.
8. Retirement Plans
The National Pension System (NPS) is a profitable government-backed investment option that offers pension alternatives. Bonds, government securities, equities, and other investment options are among the options available to you. Because the scheme does not mature until the investor achieves the age of 60, the length of the lock-in period is dictated by the investor's age.
Cryptocurrency, or crypto, is a type of digital or virtual currency that uses encryption to protect transactions. Cryptocurrencies lack a central issuing or regulatory authority, instead relying on a decentralised system to track transactions and issue new units.
Investing in commodities can be done in a variety of ways. One option is to buy various amounts of physical raw materials like precious metal bullion. Futures contracts or exchange-traded products (ETPs) that directly track a single commodities index are also available to investors. These are high-risk, high-complex investments that are usually only recommended for experienced investors.
Growth-oriented vs fixed-income investments – How should you invest
Investments commonly fall under two broad umbrellas – growth-oriented investments and fixed-income investments. A growth-oriented investment option aims at increasing the value of the capital over time. In contrast, a fixed-income investment option aims at providing a steady (and sometimes rising) stream of income that can either be paid to the investors or re-invested while seeking to maintain the original value of the investment.
A balanced mix of growth oriented and fixed-income investment instruments can help you reap the benefits of higher returns, and you can offset your portfolio against risks of market fluctuations and inflation.
There are different types of investments from which to pick. Some are suitable for novices, while others necessitate more research and experience. Each sort of investment has a distinct level of risk and reward, so no matter what your goal is, you'll find a decent alternative or two. Before deciding on an asset allocation that matches with their overall financial goals, investors should think about each form of investment.
Frequently asked questions
The 4 types of investments are:
National Pension Scheme (NPS)
The 3 main types of investment are:
Ownership: These are more volatile investment option like stocks, and real estate
Lending : These are low risk investment options like Fixed Deposit, and bonds
Cash Equivalents: These investments are as good as cash," which means that they can be converted back to cash easily and quickly, like money market funds.
If you are looking for short term investment option, Fixed Deposit is a profitable tool that offers risk-free growth of your money.
If you are looking for an investment for 6 months, Fixed Depsoit can help you earn profitable returns.
Bajaj Finance Fixed Deposit offers interest rates up to 7.75% p.a. You can start your investment from as low as Rs. 15,000 for tenor ranging between 12 to 60 months.
3 risk-free short term investment options include:
a. Fixed Deposit
b. Systematic Deposit Plan
c. Recurring Deposit
If you are looking for a short term investment options, multiple investment tools are available. Check the 5 best short term investment options.