Types of Investments and Its Returns

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Investment
Types of Investments

There are varied types of investments in the market with differential returns. In this article, we shall discuss the major types of them one by one:

  • Land: This is the most traditional type of investment. We have heard our grandparents had more interest in purchasing immovable property than any Fixed Deposit in bank. The basic reasoning behind this is very high returns on holding the asset for a long period. Basically, there value may inflate up to 1000% as the population keeps on increasing. However the only issue with immovable property is that it is difficult to get the right purchaser at right time. Hence, its duration of conversion into liquidity is long.
  • Bank or Post Office Deposits: The returns vary from 5% to 15%. FDs of duration of 5 years or more can also be used as tax saver while filing Income Tax Return. The advantage with this type of investment is that nominal value is involved and one can withdraw even before set time duration provided they may lose the interest amount. However, it is one of the most liquid asset.
  • Mutual Funds: The liking for Systematic Investment Plans has increased now, particularly with advancement in technology and availability of mobile applications of various stock brokers. One can get there demat account opened at one click and purchase whatever plan is suggested through Artificial Intelligence and analysis by experts.  They can give maximum returns if one keeps holding them for maximum period of time. However, one can withdraw also provided the fund is an open ended fund. If it is a close ended fund, then various charges are imposed on withdrawal before lock in period so one may lose the returns.
  • Shares: Intra-day trading is increasing with great pace now a days wherein investors purchase share at certain price at the start of the day and before the day ends, they sell it at higher price. This the fastest but very risky mode of share trading. On the other hand, if we talk about buying shares of a prospering company based on market dynamics for a longer duration and then selling it after few years, it will give better returns and will be less risky. Plus the dividend earned is additional advantage. There is no bar on returns hence they may incur up to an extent of 500% or more also.

There are various other new age ways of investing that we may discuss later. However, for a beginner, the above given are more suitable.

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