Mutual Fund
Mutual funds: - Mutual funds have several advantages over holding individual securities in your investment portfolio. 1. Professional Management — A mutual fund offers investors access to full-time, professional money managers who have the expertise, experience and resources to actively buy, sell, and monitor investments.
Different ways to invest in mutual funds:
Lumpsum investment or one-time investment or systematic investment plan(SIP) are the two ways to invest in mutual funds. Lumpsum investment and SIP have different benefits. As the name suggests, in lumpsum investment, investors make a single investment at a time and there are no recurring payments.
SIP is a great investment tool for salaried people as it helps them to invest a certain amount of money regularly. While investments can be made on a quarterly, monthly, weekly basis, monthly SIP is the most popular.
One can start investing with as little as Rs.100 per month. Investors can also step up their SIP amount every year. You can also make lumpsum investments in the fund which will help you to build a bigger corpus and reach your financial goals faster.
Equity/ Capital Market
In the context of stock market investments, equity refers to the shares in a company’s ownership. In simpler terms, it is the total amount of money that a shareholder is eligible to receive if all of a company’s debts are paid off and its assets liquidated. When an individual invests in a company’s equities, he/she becomes its partial owner.
On investment in a company’s stocks, he/she can earn profit via capital gains or stock price appreciation. Further, investing in a company’s shares also bestows an individual with a right to vote in matters pertaining to the Board of Directors.
Investing in equity shares is popular among individuals because they are high-return investment options. However, despite their potential to bear high returns, they also expose an individual’s investment portfolio to a certain degree of risk. For this reason, it is pertinent for individuals to gauge their risk appetite before deciding to invest in equity stock.
Types of Equity
Equities are market-linked investments that do not come with an assurance of bearing fixed returns. Returns on equity thus depend on the underlying asset’s performance.
Equity investments can be broadly divided into several categories, each bearing its own set of risks and rewards.
Following is a broad categorisation of equity investments –
Shares
The units of partial ownership in a company are commonly known as shares. They are traded via designated stock exchanges like the Bombay Stock Exchange or National Stock Exchange (provided that they are BSE or NSE equity shares of a listed company).
The potential returns from investing in shares can be quite substantial, with their risks being equally high.
Equity Mutual Fund Investments
Mutual funds are investment options wherein capital from various investors is collected, pooled in and invested in various equity and debt instruments. Equity mutual funds are those options whereby at least 60% of the total assets are invested in the equity shares of different companies.
Based on their market capitalisation, equity mutual funds can be divided into the following categories.
i. Large-cap equity funds
These are funds with investment only in well-established large-cap companies and have the potential to provide stable returns at comparatively low risk.
ii. Mid-cap equity funds
These equity mutual funds are invested in the stocks of mid-cap companies. They make for the most beneficial investment options as the risk-reward ratio is well balanced with these funds.
iii. Small-cap equity funds
These are mutual funds invested in the shares of companies that have small market capitalisation and are comparatively more volatile than other categories of diversified funds.
iv. Multi-cap funds
These mutual funds come with the liberty to invest in different sectors and market capitalizations.
Equity Futures
These are investment instruments where the investors have an obligation of purchasing or selling the underlying assets at a predetermined price and a predetermined rate. Equity futures generally come with an expiry period of three months and the settlement day is usually the last Thursday of the 3rd month.
Portfolio Management Services
PMS or Portfolio Management Services, on the other hand, offer a more flexible regime to investors. The instrument allows the fund managers to be more active in their fund management and reflect their views more accurately in the portfolios they build. ... Hence, one must pick their funds and fund managers very wisely. Investor can choose portfolio management service based on his risk profiling where fund manager can take risk accordingly.
Insurance
Life Insurance: - Life Insurance products provide a definite amount of money in case the life insured dies during the term of the policy or becomes disabled on account of an accident. Life Insurance is needed: To ensure that you’re immediate family has some financial support in the event of your demise
Life insurance is important; as it protects your family and lets you leave them a non-taxable amount at the time of death. It is also used to cover your mortgage and your personal loans, such as your car loan. Your individual life insurance follows you when you retire and you are no longer insured by your employer.
Health Insurance: - Buying a health insurance policy for yourself and your family is important because medical care is expensive, especially in the private sector. Hospitalization can burn a hole in your pocket and derail your finances. It will become even tough, if the person who brings in the money, is now in a hospital bed
Unlisted Shares
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Realestate Planinng
There are several types of real estate investments, but most fall into two categories: Physical real estate investments like land, residential and commercial properties, and other modes of investing that don’t require owning physical property, such as REITs and crowdfunding platforms.
Investing in traditional, physical real estate can offer a high return, but it also requires more money upfront and it can have high ongoing costs. REITs and crowdfunding platforms have a lower financial barrier to entry, meaning you can invest in multiple types of real estate for far less than it would cost to invest in even one traditional property. These alternative real estate investments also offer the distinct advantage of not having to leave your house or put on pants to start investing.