With the ever rising cost of living and increasing expenses, you must be looking to invest your money in avenues which can fetch you high returns. While you take an investment decision, it is vital to consider the risk factor because losing hard earned money is something you cannot afford.
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?
In simple language, risk free investing is a way of investing where there is almost no risk of loss of capital and there are assured returns. Investors always look for the best investment plan with high returns.
Now let us learn about the different types of risks that are associated with investment instruments.
Different Types of Risks
•Interest Rate Risk
This type of risk is associated with fixed income instruments. The risk involves loss in the value of instrument due to change in the interest rate.
•Political Risk
Political risk leads to a loss in the value of investments due to certain political developments or political changes in the country.
•Market Risk
Market risk is associated with equity and fixed income instruments. This risk can lead to a loss in the market value of the instruments.
•Liquidity Risk
Liquidity risk is when the fixed income instruments or real estate is not able to get its equitable price in the market because of less or no buyers.
•Taxation Risk
Taxation risk is the one where the return on capital would decline due to an increase in taxes.
•Purchasing Power Risk
Purchasing power risk applies to fixed income investments. Under this risk, the purchasing power of the investment declines due to inflation.
•Reinvestment Risk
This risk is applicable to fixed income instruments. Here the risk involves reinvestment of the investment at a lower rate of interest upon maturity.
•Legislative Risk
This risk is applicable to all investment avenues. In this type of risk, the investment looses its value or other advantages due to a change in legislative.
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:
Insured municipal bonds and fixed deposits.
•Safe and Low Returns:
Life insurance, saving bonds, treasury securities, fixed deposits, etc.
•Low Return and Low Risk:
Corporate bonds and uninsured municipal bonds.
•Moderate Risk and Moderate Return:
Selected equity stocks and mutual funds.
•Medium Risk and Medium Return:
Equity stocks of blue-chip companies, equity mutual funds and real estate.
•High Risk and High Return:
Stocks of small cap and mid cap companies, equity small cap mutual funds and mutual funds that invest in particular sectors of the economy.
•Aggressive Returns:
Commodities, small or penny stocks, derivatives, limited partnerships and oil and gas investments.
After understanding the spectrum of risk, let us now learn about the ways through which you can make a monthly investment plan with high returns or short term investment plans with high returns or long term best investment plan with high returns in India.
Ways of Investing in Best Investment Plan with High Returns
•Invest Regularly
If you are starting with an investment plan, make sure you invest regularly in it. Like for example, mutual fund SIP must be made in all the phases of the market. The disciplined approach towards investing helps you in creating good wealth for the future.
•Debt Plan
What makes debt plans attractive is the fact that they guarantee fixed returns. There is no risk involved and the returns are assured. As an investor, you are at peace because it is not risky. As a beginner, you must make your first investment in debt plans.
•Timing Market
When you are looking for the best investment plan with high returns in India, you must never try to time the market. Just be regular towards investing and that will help you reap long term benefits.
•High Return Options
After making an investment in various less risky options, you may invest some part of the money in high return options. Here you must analyse various risks that are associated and accordingly make an investment decision. You can invest in any of the pre-decided investment options like stock exchange, derivatives, etc.
By following the above mentioned points, you can become a disciplined investor and create wealth for the future. Since you are now aware of how to invest risk free, let us now learn about some of the popular investment options available to the investors which have very low to moderate risks.
Popular Investment Options Carrying Low To Moderate Risks
•Value Stocks
Investing in the stocks of blue-chip companies is one of the best investment plans in India with high returns. You need to prepare a list of 10-12 stocks in which you would like to invest. The list must be prepared only after a thorough analysis of the companies. Always compare the current price of the stock versus the intrinsic value of the stock. Whenever the price of the stock falls below its intrinsic value, it is the best time to invest.
•Sectoral Funds
One of the best investment plan with high returns comprises of sectoral mutual fund units. By investing in the mutual funds that invest in specific sectors of the economy can give incredible returns. Investing in sectoral funds can be done in the form of SIP. Here you have to pick mutual funds having a good track record. This type of investment must be done in that sector which has underperformed over the years. This is because when recovery will happen, the value of sectoral funds will rise quickly. These funds can give up to 12% return per annum.
•Dividend Paying Stocks
Dividend paying stocks are those stocks in which the company shares its part of profits with the shareholders. By investing in stocks which pay dividend on a consistent basis, you earn a regular source of income. You must carefully pick the stocks that pay high dividends. The time of purchase for such stocks is very important. You must look to add them at every 10% fall from a preferred price. Apart from income from dividend, the share price appreciation further increases the returns.
•Fixed Deposits
One of the best investment plan with high returns and no risk is fixed deposits in the bank. The fixed deposits give an assured return on your investment. You can invest any amount in the fixed deposits and hold it for the long term.
•Real Estate Investment
Investing in the real estate or property is another safe and high return investment option. You can invest in a property at a strategic location and hold it for the long term for appreciation in the value. Furthermore, you can even rent out the property which can give you good returns on a consistent basis.
The above mentioned points suggest some of the best investment plan with high returns in India. If you are a beginner at investing or need some assistance regarding investment, you can contact IndiaNivesh Ltd..
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
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