Striking a balance between the risk and the returns is an art. It often creates a lot of confusion regarding where to invest, which are the best investment plan with high returns in India, are there any short term investment plans with high returns and so on. In this article, we will try to solve all your confusion about the best investment plan with high returns.
Firstly, you need to understand what is risk free investing?
What Is Risk Free Investing?
Now let us learn about the different types of risks that are associated with investment instruments.
Different Types of Risks
•Interest Rate Risk
Whether you are looking to invest in monthly investment plan with high returns or short term investment plans with high returns or any other investment plans in India with high returns, the above risks shall be applicable to all.
Since you are now aware of the different types of risks related to investments, you must also know the spectrum of risk associated with the different investment options.
Spectrum of Risk
This means the quantum of risk associated with any type of investment. The various types of risks on investments can be broken down in the following manner:
•Very Low Risk and Very Low Return:
Ways of Investing in Best Investment Plan with High Returns
Popular Investment Options Carrying Low To Moderate Risks
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
Do’s and Don’ts of Stock Market Investing for Beginners Making money in the stock market is an art. Often people enter in the share market and invest money without a disciplined approach. Likewise, beginners often speculate and bet on the stock hoping that the price will go up. However, this is not the right approach for stock market investment. To help the beginners with stock market investment, we suggest some of the stock market investment tips that they can follow to be successful in the market. This mini stock market investment guide will enhance your knowledge on the basics of the market and make you an informed trader or investor. Things to do in Stock Market• Learn and InvestAs a beginner, the first thing you must do is to acquire sufficient stock market education and learn more about it. Self-education is the best education here. Start with the basic concepts and information. By doing so, you will understand how to do stock market investments. • Take Small StepsAs a beginner, you must start with small investments in the stock market. When you get sufficient knowledge and confidence, gradually increase your stock market investment. This approach will make you a successful and better investor in the long run. • ResearchOne of the important stock market investment advice for beginners is to invest in shares after a good research. Beginners must research about the fundamentals, financials, management and many other areas before making any investment. • Keep a Check on EmotionsStock market investment requires a practical approach. Decisions taken on the basis of emotions can prove to be fatal. Often beginners make decisions out of panic and book losses. This must not be done and a check on emotions in the stock market is compulsory. • DiversifyAnother important stock market investment tips for the beginners is to diversify their portfolio. It is always recommended to not put all your eggs in the same basket i.e. not invest all money in a few stocks. Diversifying the portfolio protects you from loss in one sector against profit in another sector. • Invest Surplus OnlyIt is always advisable for the beginners to invest only their surplus money in the stock market. This is because the stock market is volatile, risky and returns are not guaranteed here. Therefore, only that portion of money must be invested in the market which will not affect your regular lifestyle. • Have Investment GoalsThe investor must invest in the stock market with an investment goal. It is important that the beginners must have a future plan in mind while investing. He must know what he expects out of his investment and the time period of the investment. An investment with a goal helps you in building a good portfolio and creating wealth for the future. The above-mentioned are a few things that a beginner must do in the stock market. Now let us learn about the things that a beginner must not do in the stock market. Things Not to do in Stock Market• Don’t Invest on TipsAn important stock market investment advice for beginners is that they should not buy shares on the basis on tips. Any recommendation or tips from near and dear ones must be ignored. Beginners should invest in shares only after conducting their own research and analysis about the company. • Avoid Herd MentalityNever invest in shares looking at what most of the people have purchased. It does not matter how much returns others have generated with the investment. Your investment decisions must be based on your own research rather than following what the crowd is doing. • Avoid Unnecessary RisksAs a beginner, you are learning about how to do stock market investments. You must avoid investing in high risk shares in the hope of high returns. The greed of earning quick money often forces you to put money in stocks that have lot of associated risks. • Avoid Stocks You Don’t UnderstandAnother important stock market investment tip for beginners is that they must avoid investing in stocks which they don’t understand. Beginners must take time to understand the business of the company and invest only after knowing its full profile. Investing after analysing the future performance of the company will help you in making higher returns. • Avoid Overtrading As a beginner and an investor in the stock market, your aim is to invest money for the long term. You must avoid taking intraday trades because that is for people looking for short term gains. Moreover, overtrading often results in capital erosion and huge losses. As an investor, you must analyse the company and take a long term bet. The above-mentioned points act as a stock market investment guide for beginners. If you are a beginner and want to invest money for the long term, you can open a demat account with IndiaNivesh. Our in-house professionals and experts help you in making a diversified portfolio after understanding your risk appetite and duration of the investment.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
Why you should invest in balanced mutual fund? One of the ways to grow your savings is to invest in the stock market. Historically, investments made in the stock market have given a higher rate of return as compared to investments in fixed income products over the medium to long term. But investing in equity is highly risky since the performance of the equity shares oftentimes depends on market conditions as well as performance of the company. Choosing a company to invest in takes a fair bit of research which may not be possible for everyone. The next best alternative is to invest in an equity mutual fund, which too is highly risky for people who don’t have a higher risk appetite. The correct alternative for such investors would be to invest in balanced mutual funds. What are balanced mutual funds? A balanced mutual fund or a hybrid mutual fund invests its corpus in a mix of equity and debt. There are two types of balanced mutual funds: • Aggressive hybrid fund (More than 60% in equity and balance in debt instruments)• Conservative hybrid fund (More than 60% in debt instruments and balance in equity) A balanced mutual fund gives the investor the high growth that equity does and also the stability of a debt instrument. For investors looking to begin investing in equity, choosing a balanced mutual fund is a good way to start. What does a balanced mutual fund invest in? Balanced mutual funds divide their corpus between equity and debt instruments. When it comes to equity, the investments depend on whether the fund is aggressive or conservative. Aggressive funds may also invest in mid cap stocks and small cap stocks. Conservative funds invest a majority of their resources in large cap stocks which may not grow as fast, but are a stable form of growth. When it comes to debt instruments, the best balanced mutual funds invest in a range of instruments such as: • Government of India bonds• State Government bonds• Certificate of Deposits• Non Convertible Debentures• Treasury Bills• Commercial Paper• Company issued debentures and bonds It is possible to find out the portfolio on the mutual fund house’s website or on other finance websites. The debt portfolio is split up based on instruments and the risk level of the securities. Generally, hybrid mutual funds tend to invest in low risk securities. Before you pick one of these funds to invest in, it is better to analyze balanced mutual fund advantages and disadvantages so that you know whether this type of investment is the right one for you. Here are some reasons why to invest in balanced mutual funds: 1. Diversification of risk:Balanced mutual funds provide an excellent way to diversify portfolio risk. By investing in equities, they provide higher returns, however, since some portion of funds get invested in debt, they also stabilize the overall risk of the portfolio. For investors who are conservative, investing in a balanced mutual fund can provide a slightly riskier outlet with a higher rate of capital growth. On the other hand, for aggressive investors, diverting some portion to a balanced mutual fund can reduce the overall portfolio risk. 2. Higher returns:When it comes to balanced mutual funds India offers many alternatives to all types of investors. Conservative investors can put their funds in conservative hybrid funds that put a majority of their resources in low risk debt instruments and the balance in equity. This provides higher returns as compared to investing in pure fixed income instruments. For aggressive investors, these funds provide a fixed return which is useful in case of market downturns. 3. Tax advantages:Investing in an aggressive hybrid fund (more than 60% in equities) will give tax benefits since this gets classified as an equity fund. The gains on this will be taxed like an equity mutual fund with a holding period of 1 year for the gains to become long term. This provides significant advantages to the investor. On the other hand, conservative hybrid funds are classified as debt funds with a holding period of 36 months for gains to be long term. 4. Dividend:There are monthly dividend paying balanced mutual funds which provide dividend to their investors. Putting resources in these funds provides a regular return in the form of dividends as well as capital growth through equity investments. 5. Automatic portfolio rebalancingOccasionally, the balance between the equity markets and the stock markets is tipped to one side. Either of the market can be overvalued. In such situations, you may want to invest more in one of the two markets. However, in other funds, this may not be possible as the funds may be restricted due to the SEBI rules. However, when it comes to balance funds, the fund manager has the leeway to move between the two asset classes. Now that you have understood what are balanced mutual funds, where they invest and why to invest in balanced mutual funds, are you looking at making investments in balanced mutual funds? Here are some IndiaNivesh recommended balanced mutual funds which have given good returns to the investors. Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
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