Investment options available in India

Various investment options available in India

1. Deposits

• Post office Recurring deposit
• Fixed deposits in banks
• Fixed deposits in companies

2. Government offers

• National Savings Certificate - NSC
• Public Provident Fund - PPF
• Kisan Vikas Patra - KVP

3. Debt Instruments

• Public Sector Bonds
• Government Securities
• Treasury Bills
• State Government Bonds
• Debuntures from companies
• Bonds from Financial Institutes
• Commercial papers

4. Mutual Funds

• Growth Oriented Funds
• Returns at fixed interval
• Balanced Funds

5. Derivative Products

• Futures
• Options
• Forwards
• Warrants
• Swaps

6. Shares

• Equity Shares
• Preference Shares

Which one to select to make an investment? It depends on your needs whether you want your money to be safe and risk free, want higher returns, liquidity i.e able to encash your investment in short time.

Fixed Returns

These schemes fixes a certain percentage of yearly return on your investment. You will get that amount for sure. You will not get extra. Fixed Deposits in Banks, Post Office, Debuntures and Bonds give fixed returns and your investment is also safe.

Variable Returns

Mutual Funds and Shares comes under this category. You can not be absolutely sure about the returns. You may or may not get good dividend. You may or may not get bonus shares. The returns depends on the companies performance and market conditions.

Tax Exemptions

Income from Government Post office deposits, NSC, KVP will get Tax benefits. Some mutual Fund Incomes are also exempted from Tax. Dividends from shares are also exempted from Tax!

Time Limited

Fixed Deposits in KVP, NSC is are Time limited. After the fixed Time period the deposit will mature and you will claim your money. Except KVP and NSC you can buy other schemes in the market at the prevailing rate.

You can get loan against NSC and KVP bonds.

Mutual Funds, Shares and Derivatives have no time limit. You can buy them any time and sell any time.

Keep an eye

Fixed deposits in Banks and POST office does not require your attention. The returns will be the same whether you watch it or not. But you have to be careful about investment in Mutual Funds and share. You have to buy them at right time and sell at right time. Profit or Loss depends on the timing of purchase and sales.