We all aspire for certain things. It’s an absolute necessity to aspire for a healthy retirement life. We must save a bit of food today to be able to serve when it’s drought. Financial Investment is that part of our income that has been kept aside and which will give us some benefits after a stipulated period of time. We must ensure a safe future to stay happy and keep others happy too.
Financial Investment offers a slew of benefits which are pivotal for a happy tomorrow. But we also need to understand where and when to invest to reap maximum benefits out of our investments. Begin with planning about the investment. Understand the need to invest. Before beginning, see if the approach is sound and wise. Then explore the various alternatives available with their risk factors. If you are finding it difficult, try appointing a financial manager to suggest you the best possible way to do it.
There are various alternatives in the market when it comes to financial investment but it can be broadly categorized into the following categories
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These Financial instruments are issued for a specific period of time and carry a fixed rate of interest. They are low on volatility and is often considered the safest investment. If you are bearish about the market, invest in bonds so as to assure yourself of a fixed return. Bondholders have secured creditors and they have a mortgage on the assets of the company in case of bankruptcy.
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It’s like buying a chunk of the company in which you invest. Stockholders are part owners of the company and they receive dividends on their investments. There are two types of stocks available in the market, common stock and preferred stock. Preferred stockholders have a right to fixed dividends after every specified interval but they come without any voting rights. Common stocks carry voting rights but lack any right of payment right in case of bankruptcy.
- Cash and Cash Equivalent
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These are cash or investments in highly liquid assets which can be easily converted into money. These are not bought for their returns as the returns are negligible but more for their ability to be converted into cash within a short span of time. These are for handling the crisis situation.
- Real Estate
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You can invest in real estate either directly or through Real Estate Investments Trusts (REITs). If you have enough savings, you can buy a house with these savings. But, if you decide to invest through REITs, they will invest on behalf of you and earn returns and pass them to you. Investing in real estate is one of the safest means to secure your future.
There are many other alternatives which you can follow like investing in precious metals, precious stones, cryptocurrency, venture capital, mutual funds, etc. But actually speaking these are all covered under these four broad categories mentioned above. A sound financial investment plan can make or break your future. Today it may sound like a joke, but it’s the truth.