On the crossroads of investments

Surat is known to be the world's fastest growing city from 2019-2035 (source economic times). Surat’s GDP has picked up a good pace since last few years and the natives has always believed to invest aggressively in various investment avenues but the question here arises that, is their investment bearing fruitful returns?

Let us look at the various investment options from the financial consultant’s perspective…

Starting with direct equity, consultants usually prefer to invest in them because they have genuine knowledge about it and it can become a major source of investment which can give them unlimited profits. However, the individuals who lack the sufficient knowledge of it are advised not to go with this option even though their stock brokers influence them to do so. By knowledge, it does not mean receiving a tip from someone or knowing the price of various stocks, it means knowing all the required ratios, studying the financial statements and practical application of all the other analysis. Investing in stocks without knowledge is just like gambling in a casino. Luck is all that matters.

Financial consultants who are patient enough to wait for earning higher returns over a long period of time prefer to invest in equity mutual funds. Unstable and impatient investors should not choose to invest in mutual funds as in a short run, it can give minimal as well as no returns. However, investors with low risk appetite can always go for debt mutual funds, as they offer regular and safe returns i.e. up to 9% p.a.

Investment experts having a comparatively bigger ticket size can go for Portfolio management services (PMS) where they get the luxury of getting their investment portfolio customized in order maximize their returns. For opting these services, the minimum investment must be of 50 lakhs. The investor should ensure that consultant firms must have a portfolio management license and a minimum of 5000-7000 crores assets under management (AUM).

Investors who lack appropriate knowledge and expect safe returns generally go for the traditional plans such as national pension scheme (NPS), public provident fund (PPF), national saving certificate (NSC) and senior citizen saving scheme (SCSS). Although, financial experts do not consider it a preferable source of investment as the rate of return goes on diminishing (source) every year and gradually after taking inflation into consideration, the real rate of return is near to nothing.

Although if the investors have a little knowledge and still wants to gain good returns, considering to play safe, they can always opt for fixed deposits as it offers 6.3% interest on an average. Moving forward, if the investors pertains more knowledge about the markets, but have a low risk-taking appetite, they can choose to go for corporate FD’s or Public undertaking bonds which offers an interest rate of around 8% p.a. Most of the public undertaking bonds are exempted from paying tax.

So far it has been discussed about investments in a stable market but what if the markets are not doing good? This is where investments in gold comes into the picture. It has been usually observed that whenever the market is declining, the prices of gold shoots up as they are considered a safe and a liquid source of investment. Generally, people are seen more inclined towards investing in physical gold or making gold jewelleries. However, financial experts always prefer gold bonds over physical gold as it does not include any cost of storage or making charges. Investors can enjoy the factor of price appreciation and it is the only source of gold investment which offers an interest income of 2.5% p.a.

Anyway, all the investment avenues are available right at your door step, where it takes just one right decision to get fulfilling returns. And this is what financial experts do for you…   

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