TOP 10 INVESTMENT OPTIONS IN 2020
Top 10 investment options in 2020- Indeed, the risks and returns are inversely related; that is, the performances are higher, the risk is the opposite, and vice versa.
Most of the investors want to invest in such a way that they can get maximum returns without the risk of losing their money as fast as possible. This is the main reason why many investors are always looking for the best investment plans as they can double their money within a lesser period of time with little or eventually no risk. However, it is a fact that investments that yield high returns with low risks do not exist. In fact, the risks and returns are directly related; that is, the returns are higher, the risks are the risk, and vice versa.
Therefore, while choosing an investment path, you must match your risk profile with the risks associated with the product before investing. There are some investments that involve high risks but have the potential to generate inflation-adjusted returns higher than other asset classes in the long run, while some investments come with lower risks and, therefore, lower returns.
There are two types of buckets that fall into investment products – financial and non-financial assets. Financial assets can be
divided into products linked to the market (such as stocks and mutual funds) and fixed income products (such as the General Savings Fund, fixed bank deposits). Non-financial assets – most Indians invest in this situation – are real estate and/or gold. Top 10 investment options in 2020
Here are the top 10 ways to invest while saving for financial goals.
- DIRECT EQUITY
In stocks may not be a cup of tea for everyone as they are volatile asset classes, and there is no guarantee of returns. Moreover, it is not only challenging to choose the right stocks, and the timing of your entry and exit is not natural either. The only bright side is that over long periods, stocks managed to achieve returns above inflation-adjusted returns as compared to other assets classes. The risk of losing a large chunk of the capital is high unless one chooses a stop-loss method to limit losses. In Stop Loss, one places a pre-order to sell a stock at a specific price. To reduce risks to some extent, you can diversify across sectors and market value. At present, the market returns of 1-3 and 5 years are around 13%, 8%, and 12.5%, respectively. To invest in direct stocks, one needs to open a demat account. Top 10 investment options in 2020
- EQUITY MUTUAL FUNDS
Equity funds mostly invest in equity stocks/shares. This is in accordance with the regulations of the current investment fund of the Securities and Exchange Council of India (hereinafter “Sebi”), the scheme of mutual funds invest at least 65 % of its assets in equities and equity-related instruments. The equity fund can be actively managed or managed passively. In an actively traded fund, returns mostly depend on the fund manager’s ability to generate returns. ETFs and ETFs are managed passively, and these follow the main index. Equity schemes are categorized according to market capital or sectors in which you invest. It is also classified as local (investing in shares of Indian companies only) or international (investing in shares of foreign companies). Currently, market returns for 1, 3, and 5 years are around 15 percent, 15 percent, and 20 percent, respectively.
- DEBT MUTUAL FUNDS (DMF)
These are ideal for investors who want steady returns. They are less volatile and, therefore, less risky than equity funds. Debt mutual funds primarily invest in fixed-interest securities such as corporate bonds, government securities, treasury bills, commercial paper, and other money market instruments. Currently, market returns for 1, 3, and 5 years are around 6.5 percent, 8 percent, and 7.5 percent, respectively.
- NATIONAL PENSION SYSTEM (NPS)
The National Pension System is a long-term pension – an investment product focused on managing the Pension Fund Development and Regulatory Authority. The minimum annual contribution (April / March) for a category one nuclear power account was reduced to remain active from Rs. 6,000 to Rs. 1,000. It is a mixture of stocks, fixed deposits, corporate bonds, liquid funds and government funds, among others. Depending on your risk appetite, you can decide how much money you can invest in stocks with NPS. At present, the market return of the fund from 1-3-5 years is about 9.5%, 8.5%, and 11%, respectively.
- PUBLIC PROVIDENT FUND (PPF)
Public Savings Fund (PPF) is one product that many people turn to. Since the public-private partnership period is 15 years, the effect of doubling the tax-exempt interest is enormous, especially in subsequent years. Moreover, since the interest earned and the principal investor are backed by a sovereign guarantee, it makes it a safe investment.
- BANK FIXED DEPOSIT (FD)
The Bank’s Fixed Deposit (FD) is a safe option for investing in India. Under the rules of the Deposit Insurance and Credit Guarantee Corporation (DICGC), each deposit in the bank is insured with a maximum of Rs 1 lakh in both the principal amount and the interest amount. As per requirement, one can choose the monthly, quarterly, semi-annual, annual, or cumulative interest option. The interest rate gained is added to the person’s income and is taxed according to the income tax.
- SENIOR CITIZENS’ SAVING SCHEME (SCSS)
Perhaps the first choice for most retirees and older savings (SCSS) is a must in their portfolio. As the name implies, only the elderly or the first retirees can invest in this scheme. SCSS can be availed of a post office or bank by anyone over 60. The commission’s term is five years; it can be extended for three years once the plan is due. Presently, the interest rate which can be earned on social security is 8.3 percent annually, paid every three months, and it is fully taxed. The maximum investment is Rs. 15 lakh, and one can open more than one account.
- RBI TAXABLE BONDS
The government replaced the previous savings bonds at 8 percent (taxable) for 2003 with savings bonds (taxable) that were 7.75 percent. These bonds come with a 7-year period. Bonds can be issued in the form of demat and registered in the bond ledger account i.e., BLA of the investors, and a certificate of holding the investor is given as evidence of the investment.
- REAL ESTATE
The house you live in is for self-consumption and should not be considered as an investment vehicle. If you do not have any intention to live in it, then the second property you buy can be your investment.
The location of the property is the only most crucial factor that will determine the value of your property and also the rent that you can earn. Real estate investments yield returns in two ways – higher capital and rents. However, unlike other assets classes as discussed above, real estate is not very liquid. The other major risk is obtaining the necessary regulatory approvals, which were largely addressed after the arrival of the real estate regulator.
Gold in the form of jewelry has his own concerns like safety and high cost. Then there is the “cost fee,” which usually ranges between 6-14 percent of the cost of gold (and may rise to 25 percent in the case of special designs). For those who want to buy gold coins, there is still an option. One can also buy coins brilliantly. An alternative way to own paper gold in a more cost-effective way is through gold circulation investment indicators. This investment (buy and sell) takes place on the NSE or BSE with gold as the primary asset.
What you should do
Some of the above-mentioned investments have fixed income, while others are linked to the market. Both fixed-income and market-related investments have a role to play in the wealth creation process. While market-related investments help deal with the volatility and in this process generate a really high return, fixed-income investments help preserve accumulated wealth in order to achieve the desired goal. For long-term goals, it is important to make the best use of both worlds. You have a wise mix of investments keeping in mind the risks, taxes, and time horizon.