09 Aug 2018
#FinancialBytes: Top 5 investment options for best returns
Investing money in a safe investment option that offers high returns with minimal risks goes a long way in ensuring your long term financial security.
However, we understand that choosing the best investment option for yourself can get pretty confusing, and rather tedious.
To help you out, we've listed top 5 investment options with high returns and low risks.
Real estate investment lacks flexibility but offers high returns
There are two ways in which real estate investment can earn you money - either through rents/leases, or through capital appreciation. Both of these are dependent on factors like locality, house-size, infrastructure etc.
Though real estate investment lacks liquidity and flexibility, the returns are usually high and less demanding in terms of efforts required.
However, keeping track of market fluctuations is necessary.
Say goodbye to physical gold; invest in Gold ETFs
With the introduction of paper gold or gold ETFs, you can encash the market appreciation of gold, and track the same easily through stock exchange indices.
This makes investing in gold cost-effective, transparent, and easy, even for small investors and beginners.
Additionally, it's better than physical gold as it offers greater liquidity, frees you of safety concerns, issues of impurities/adulteration, and facilitates real-time monitoring.
Despite offering high returns, direct equities are a risky option
Despite offering high returns, direct investments in stocks might not be up everyone's lane, owing to risks and volatility involved.
Additionally, timing your entry and exit and picking the right stock can be bothersome and difficult.
When investing in stocks, it's advisable to have a diverse portfolio across various sectors to reduce risk.
You need a demat account for investments in direct equities.
Equity mutual funds
EMFs come with professional management, and high returns
Equity mutual funds (EMFs) allows users to earn money off the stock market without directly taking the risks.
EMF schemes are required to invest at least 65% of their assets in equities/equity-related instruments.
There are two types of EMFs - actively traded, and index funds/ETFs. In the former, returns depend on the financial manager's competence, while the latter tracks the underlying stock index.
Public Provident Fund is tax-free, and offers high returns
PPF is a popular investment option among job-goers in India.
The various benefits offered are safety (as it is backed by the government), tax-exempt interest income, long-term systematic payments, and higher returns compared to fixed or recurring deposits.
Additionally, one can avail loans between 3rd and 6th years against such investments.
Minimum and maximum annual deposit requirements are Rs. 500, and Rs. 150,000, respectively.