How to select the best option according to you

                         How to select the best investment option according to you   

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Every person thinks about his security of him/her and his/her family. For the security of his life, he thinks of earn money in a short time by selecting the option he had in his mind. But there is no legal way to earn money in a short time. So most investors would like to look after the best investment option available to get high returns in a short duration. But for a better return, he has to think of the following three parameters.

Three parameters

Liquidity: How easily can you get money back from the investment is called liquidity

Risk: It is the possibility that you lose your money

Return: How much can  money grow

Example: Saving money in the form of cash, Cash liquidity is high because when you need it, it is  right there, the risk is low it is not zero because of the possibility of stealing your cash and returns are negative. Suppose if you leave your cash in a locker or anywhere at a safe place then it is not going to increase as its own. And as time goes ahead and ahead the prices of items also get increased as per inflation but the value of your money that is in your hand will remain the same and you will realize that it is not fulfilling your requirement. That is why the returns of cash are negative. With this understanding let us analyze the following investment option.

1. Saving Account: Saving account is a basic bank account that allows us to deposit money and withdraw money all while earning interest. It is very easy to withdraw money from the bank but because of that, we often get tempted to spend which is why with saving accounts, long term investments become a challenge. Liquidity is high because you can take out your money any time you want but every bank has a set a number of financial transactions.you can do per day. Risk is zero your money is safe with the bank if you pick a trusted bank but returns are low. All nationalized  banks give an interest rate of 3.25% to 3.5% on saving

Current Account: Current account is mainly for the shopkeepers or traders as they require to transact on a daily basis but you will not get any interest in it. Here the liquidity is high and risk is also low but you will not earn any money.

Please note that even if you keep your money in a savings account you have operated the account within 6 months otherwise again as per government guideline the bank will lock your account and for unlocking there will be a lot of procedure to go through.

Now How to invest in a savings account:

 Just select a bank that you like or trust the most, walk-in to their branch that’s near you, and then they will help you open your savings account with minimal documents as per government norms.

2. Fixed deposit: To earn higher interest than savings account you have another option to keep your money in a fixed deposit of the bank. Provided you have adequate money to spare considering your day to day requirement. You will get higher returns in a fixed deposit than a savings account.

The risk is low but liquidity is medium as you cannot withdraw money before maturity and still, you required money for any reason then there will be a penalty on premature that is you will lose interest by 1-2% of the rated investment depending upon the bank that you have selected. Also, you have to pay income tax on beyond certain earned amounts as per income tax rules.

3.Recurring Deposit: This is the third option to invest, here also you will get high returns than savings amount Here you have to deposit money into the bank on monthly basis as decided by you. The liquidity is medium and risk is low like fixed deposit Here also you will  be charged penalty by the bank  on laps up of installment

4. Fixed Deposit in the listed company: You can earn 1-3% higher returns than fixed deposit in banks but here liquidity is low and risk is high. It depends upon the selection of your company. You can select the company by analyzing its past records but even though the risk remains high as per company performance.

5.Life Insurance: You can invest in life insurance it will secure your life but from investment point of view it is not feasible but from a security point of view it is a good option Here the risk is low and liquidity is medium as you cannot get money back instantly if you required it. However, you will get returns of 6-7 % on maturity. But the duration is very long. But nowadays there are insurance product options available which purely market base is. And it gives high returns also but here again the risk is high and liquidity is low you can decide the product by analyzing the options which are available online you can search on a website like policy Bazar.

6.Stock market: This is another option of investment but here Risk is high, some people have lost everything in the stock market But it has also made some people very rich As a name suggests is a market where you can buy and sell shares of the publically held company. But investing in the stock market again depends on your analysis. You should not invest in the stock market just by tips received from anyone. You should first acquire the stock market procedure and analyze the stock option then go for investment.

7. Mutual Funds: Another option for investment is to invest in a mutual fund: In mutual fund various institution, expert teamwork collects money from us and invest the money into the stock market. The mutual fund also gives higher returns subject to market risk but it has lower risk than investment in the equity market. There are also some products available which have low risk and medium return as these products are invested in debt market and bonds which are not very risky.

In addition to the above, there are some products available for senior citizens and parents who have a daughter and these products are having low risk and high returns but the tenure is long. These products are an investment in RBI bond, Sukanya Yojna.

Some tax benefit products are also available in the market like PPF/PF/NSC but their tenure is also very long.

The least, not the last one is an option on investment in the Real estate but it depends on your requirement. I will write a separate article on it.