To avail 2x your investments in 5 years, an obvious consideration that you have to make is the rate of interest. Schemes offering high returns have the potential of doubling your money in a short period. Examples of these include market-linked instruments like mutual funds.
In an October 2018 survey, 41 reputed mutual fund houses in India reported more than 79 million active mutual fund accounts.
With this number, it can be said that investors are becoming aware of the potential for high return investments. In some cases, smart investors have even experienced a doubling of their initial deposit.
However, higher the returns, the riskier your investment. You may or may not be able to avail the promised returns after the scheme matures.
Hence, opting for secured options like fixed deposits is more beneficial. Even though the returns generated by FDs are moderate, these guarantee returns after maturity. Other than FDs, there are several other schemes that offer lucrative ROI.
Investment plans offering the most exceptional returns
Listed Below Are Some High-Return Options Open To Investors In India :
Mutual fund refers to a collection of several investment avenues in one plan. A fund manager is in charge of this pooled money, deciding when and where to invest. You can choose from several mutual funds, including high return investments, such as equity funds.
Those looking for safer options can opt for debt mutual funds or money-market funds. Although more reliable, these instruments are still riskier than fixed deposits.
Investing directly in company stocks is the fastest way to earn profits. These instruments can help you beat inflation, but also come with considerable risk. Since such stocks are volatile, direct equity investment is not a suitable option for everyone.
Only those possessing immense knowledge about the market can hope to navigate direct equity investments profitably. Apart from understanding the stock market, you should also be able to foresee or predict how the market will respond to certain political, social, economic and other factors.
To start such an investment, you need a demat account. Further, only an authorised stockbroker can place these investments on your behalf.
Initial Public Offering or IPO
To become part of the NSE or any other stock exchange, a company first needs to list the shares through an initial public offering or IPO. The investors can subscribe to shares from this IPO at issue price. The company allots the shares based on its standard regulations. Around 65% of the company stocks trade at rates higher than the issued price.
The primary risk here is that applying for an IPO share does not guarantee allotment. Moreover, the issued price is not the lowest price for that share. During price discovery, there is a slim chance that the share may lose a substantial portion.
Although safer than most of the other investment options in this list, there is still substantial risk in real estate investment. Nonetheless, the returns can be attractive as well. When comparing real estate investment to equity, you must understand that the former option suffers from limited volatility.
Furthermore, such investments can hedge the effect of inflation on your finances. A significant risk to these high return investments is that real estate prices often remain stagnant for considerable periods. A high capital requirement, along with low-liquidity signifies that real estate investment is not suitable for everyone.
Where Can You Invest As An Inexperienced Investor ?
Individuals having no experience in navigating the market can face substantial difficulties when investing in high-return plans. In such cases, the investor must start with the low-risk options, like fixed deposits as mentioned above.
From helping you plan vacations to securing your retired life, FDs offer a safe way to achieve your long-term and short-term objectives.
Read On To Understand Some of The Advantages of FDs For New Investors :
Almost as safe as savings account, with almost no cases where financial institutions defaulted on the interest payment.
The interest rate for FDs is considerably higher when compared to a savings account.
Flexible tenor options allow you to pick the perfect period of investment. Keep in mind that interest rates are subject to change based on the maturity period. Ensure you assess how the FD tenor affects its interest rate.
Apart from assured returns, FD investors can also avail additional facilities, such as loans against the deposit.
You can also withdraw the deposit early in case of emergencies after paying a nominal penalty fee.
Research the best FD rates in India before picking the ideal fixed deposit. These plans are better for you when you do not possess any expertise regarding the money market. Even though you tend to earn limited interest, such earnings are assured.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at HighlightStory
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