Various investment Options and their Rate of Return? | Finance

What are the different Options and their Rates for Investment?

When a person is investing the best Investment advice is NEVER TO PUT ALL YOUR EGGS IN ONE BASKET.

It is always best to spread your investment in various instruments.

Ideal Investment Plan for a 30yr Investor. (A person could invest in “stocks” by either buying stocks in his Demat Account or through a Mutual Fund).

Interest on Fixed Deposit in India has been continuously falling over the last 20 years. See below graph:

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Fixed Deposit Interest Rates of India have been falling over last 20 yrs

Fixed Deposit Interest Rates of India have been falling over last 20 yrs

 HOW MUCH WOULD YOU EARN? If you did a If you did a one-time investment of 3 Lakhs at 7%, 12%, 20%, 25% and 35% can be seen in the below table:

After 10 years 3L:

·       At 7% it will give you 5.90L

·       At 35% it will give you 60L

Invest in at least 3 of the below instruments (All of them give higher returns than Fixed Deposits):

• Stocks,

• Mutual Funds  

• Bonds

• Corporate Fixed Deposits,

• REITS,

• Sovereign Gold Bonds

• Non Convertible Debentures

What is Sovereign Gold Bonds?:

What is REITS?

Asset vs Liability: Is buying a House an asset or a liability?:

Whenever you spend your money always ask yourself "Is it an Asset or a liability?". If it provides an income it is an asset. If it creates expenses it is a liability.

eg:

• Buying a car is a liability.

• Buying a average priced phone is an asset (since you follow stocks on the phone)... buying an expensive phone is a liability. Also every 5yrs a phone needs to be replaced so phone is one of the biggest expenses of modern human.

• Buying a house to give out on rent is a asset.... buying a house to live-in is a liability...

• Similarly "Life Insurance" is an asset as you get back your money after the term period. The average rate of income on this is similar to FD rates.

While "Term-Life Insurance" is a liability because you do not get back any money you paid and money is paid only on death.

Simply put asset brings in cash... liability takes away cash.

FOLLOW THE 10 COMMANDMENTS while investing in Stock Market:

1. INVESTING IS EASY - TRADING IS NOT... AVOID TRADING (No Intraday, No Futures & Options).

2. NEVER PUT ALL YOUR MONEY IN ONE STOCK.

3. ALWAYS BUY BLUE CHIP STOCKS (Best company in the Industry, Monopoly Companies, etc).

4. NEVER TAKE A LOAN TO BUY STOCKS (because stocks might get stuck around the same price levels for 2-3 years).

5. INVEST IN MULTIPLE SECTORS/INDUSTIRES AND NOT JUST ONE.

6. DON'T HOLD MORE THAN 10-20 COMPANY STOCKS.

7. DON'T HOLD LESS THAN 10 COMPANY STOCKS.

8. ALWAYS ANALYSE THE FUTURE PROSPECTS OF THESE COMPANIES.

9. SELL THE STOCK IF YOU FEEL THE COMPANY IS LAGGING BEHIND ITS COMPETITION.

10. AVOID BUYING PENNY STOCKS (Cheap stocks. Its cheap for a reason).