It is always better to invest the idle amount in the various possible schemes where there is no risk of losing the principal amount. There are different investment plans available where you can invest your money and can get handsome returns. But we know that almost all the investment products that give high returns have a risk factor attached to it. Risk and returns are directly related; higher the risk, higher is the return and vice versa.
You need to understand your risk-taking ability first then match your risk profile with the risks associated with the product before investing. Some investments can generate high inflation-adjusted returns than other asset classes in the long term but the associated risk is quite high. Then there are investments where there is low risk and low returns as well.
There are two types of investment products- financial and non-financial assets. Financial assets are also of two types- market-linked products (stocks and mutual funds) and fixed income products (Public Provident Fund, bank fixed deposits, etc.). In India, most people like to invest through non-financial assets i.e. gold and real estate. In this article, we have brought you a few investment options shared by Lyle Advisors which you can look for to invest your extra money.
Lyle Advisors Investment Ideas
Stocks are a volatile asset class with no guarantee of returns. You must have heard about stock market fluctuations so playing with stocks is not everyone’s cup of tea. It is difficult to pick the right stock and deciding when to enter or exit the market is also not easy. However, over a longer time period, equity can deliver higher than inflation-adjusted returns compared to all the other asset classes.
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You can opt for stop-loss method to cut out losses. This way you can lower your risk of losing a considerable portion of your hard-earned money. The Stop-loss method is where you place an advance order to sell the stock at a specific price. Better to build a portfolio and diversify across sectors and market capitalizations.
Equity Mutual Funds
The equity mutual funds mainly invest in equity stocks. As per SEBI norms, an equity mutual fund scheme must invest at least 65% of its assets in equities and equity-related instruments. Equity funds are managed in two ways, either actively or passively. The returns you get in an actively traded fund largely depend on a fund manager’s ability to generate returns. Index funds and exchange-traded funds (ETFs) are passively managed.
You can invest in various equity schemes depending on their market-capitalization or the sectors in which they invest. Equity schemes may be domestic (investing in stocks of only Indian companies) or international (investing in stocks of overseas companies).
Debt Mutual Funds
If you want steady returns to go for the debt funds which are less volatile and less risky compared to the equity funds. The debt mutual funds will invest your money in corporate bonds, government securities, treasury bills, commercial paper, and other money market instruments. All these are the fixed-interest generating securities.
Bank Fixed Deposit (FD)
The safest choice for making an investment in India is a bank FD. You can go for monthly, quarterly, half-yearly, yearly or cumulative interest option in them. The interest is added to your income and is taxed as per your income slab.
National Pension System (NPS)
The Pension Fund Regulatory and Development Authority (PFRDA) manages the National Pension System. It is a long term retirement-focused investment product and is a mix of equity, fixed deposits, corporate bonds, liquid funds and government funds, among others. It entirely depends on your risk-taking ability that how much of your money you want to invest in equities through NPS. The minimum annual (April-March) contribution for an NPS Tier-1 account has been reduced from Rs 6,000 to Rs 1,000.
Public Provident Fund (PPF)
It is yet another popular investment option in India. PPF investments are done for quite a long time period of 15 years. The impact of compounding of tax-free interest is huge especially during the later years. It is a safe option since the interest earned and the principal invested is backed by a sovereign guarantee.
Invest your extra money wisely to generate a good amount of returns. There are numerous other options available also where you can invest your amount.