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Where to Invest?

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I don’t know where to invest some extra

money I have. What do you suggest? Which

is the best investment?

Oh, there are many options. You

choose what is best for you..

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Property

Gold / Silver

Bank or Post office deposits

Share market

Mutual FundsInsurance

plans

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Buy house / apartment or Land Earn rent income Or can be used to live and enjoy the

comforts

Property

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The good and bad about property

Advantages

Asset Value will go up Can earn regular income Can live in better comfort

Disadvantages Small amount investments

not possible. Will have to take loans

Not easy to sell Maintenance is expensive Pay tax on rent and sale

gains

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Fixed deposit in bank, Post office or companies

Earn fixed regular interest incomes Can be assured of a fixed value at maturity Interest income is taxable Can be converted to cash fairly easily

Fixed Deposit

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The Good and bad about fixed deposits

Advantages

Earn regular income Low risk hence stability in

wealth Easy to liquidate and

convert to cash

Disadvantages

Interest rate can fluctuate (in 1990s > 12%, in early 2000s <8%, now about 9%)

Interest is Taxable Not completely risk free

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A company when it needs money for expansion or other business needs, raises money from people willing to invest

Those who invest become joint owners of the business

If business does very well then profits to all the shareholders (owners) can be high

At the same time, losses in the business will also be borne by the joint owners (shareholders)

When companies issue share for the first time it is called IPO (initial public offering)

Shareholders can choose to buy and sell their shares within themselves in the share (secondary) market through demat and trading account

Share market

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The Good and bad about share market investing

Advantages

Very easy to Buy and Sell Can make high returns Good companies can grow a

lot in value over a long period of time

Can earn regular dividends Mostly earnings are tax free

Disadvantages

Risk of even losing invested amount in short term

Dividends are not regular or guaranteed

Need demat and trading a/c to operate

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Invest indirectly in stock and bond market Invest in a fund, fund manager will choose

which stock to buy or sell and when Expertise and research enabled investing Small amounts can be invested Regular investments possible Regular and easy withdrawal also possible Tax efficiency

Mutual Funds

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The Good and bad about Mutual Funds

Advantages Very easy to invest and redeem.

Online free portals available Experts research before

investing Small amounts can be invested

Disadvantages

Fund managers cost money – charge fees

No guarantee of dividends or returns

No control over which stock is bought or when

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Actually insurance is only to protect against risk

But some policies like endowment, ULIP, money back policies also provide investment options

Forced saving is a good feature Long term returns are less than

most other options Tax benefits both at the time of

investing and maturity

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The Good and bad about Insurance

Advantages

Secures your life Some policies also give

returns Tax benefits

Disadvantages

High premium on high Sum Assured

Returns may be lesser than even inflation (endowment)

ULIP returns linked to share markets – hence no guarantee

High costs

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Gold and Silver are types of commodities

Protection against inflation Invest in physical form, through

mutual funds or through exchanges like MCX, etc.

Price volatility – no guaranteed returns

Gold / Silver

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The Good and bad about commodities

Advantages

Inflation protection Low entry capital Easy to invest

Disadvantages

Earnings not assured Safekeeping costs money Taxable returns

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But with so many options it is so confusing.

What is the best ?

Well, the best investment gives High

returns for no risk, comes free and is very

easy to buy and sell and is not taxable.

Unfortunately, there is not such option at all….

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Then what to do? My friends

are all suggesting

different things?

Will you go to the medical shop and ask for the best medicine

available? Or just because your friend is taking a medicine will

you take the same medicine? NO.

Why take such risks with your hard earned money

then?

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Yes, that I agree. What to do then?

Though there is no best investment, you can find what is most suitable for you. This will depend on what you want to use the money for and what will

give you peace – your life goals and risk tolerance..

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Life goals, risk tolerance… wow, what are these?

They should be the guiding light to your

investments. Understand them

well with the help of a professional

unbiased adviser. Invest in what will

make YOU live a rich life and not someone

else !

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Happy Investing

Did this make sense to you? Did you learn a bit or two?

Can you take a minute to give your valuable feedback on the link here

please. Thanks in anticipation.

Financial Freedom Golden Practices506/507, Morya Landmark-II, Near Infinity Mall, Link Road, Andheri (W), Mumbai- 400053. Contact no.- +91 2242224333 E: http://ffreedomgoldenpractices.in

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