INVESTMENT IN INDIA MADE EASY

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From the current and recent data, inflation stood at 5.72% in December 2022. Fuel prices and grocery bills are increasing day by day making it very difficult for the average Joe to live a normal standard life. This problem of Inflation is not confined to a particular area but it is beyond boundaries and it is common to all citizens alike. It can be a very painful bite on the wallets and bank accounts of the commoners when they are welcomed by the sight of their wealth being drained off.

But as it was once said, “Chaos isn't a pit, chaos is a ladder,” this is the perfect time to look for diverse sources of money enhancers. This can be done through a variety of means but then there arises another drawback which is people want high returns within the safest of investment plans. The very idea of having an investment plan that can provide high returns and at the same time be safe and conservative is a contradiction in itself. A very basic inverse relationship exists between Risk and Rewards. The higher the returns the higher the risk factor involved in it. But what we can do is effectively manage the risk and have a Risk Management Plan with ourselves. Most people will think of Mutual Funds as the best option right now while reading through this. While analyzing Mutual Funds we can understand that the funds that provide the highest returns are marked as the most volatile ones. That means the highest returns are provided for the riskiest of investments. Then there are a group of Funds that provide consistent and low returns, these funds are tagged as having the lowest volatilities. Hence the concept of Safe Investment with high returns is very utopian but on the contrary, what I would like to emphasize is the point that we should develop a Risk Management Plan if something doesn't go according to idea.

1. Equity and Shares

The Equity and shares might be a tough nut to crack and understand, simply put in layman's terms it is the Share Market or the Stock Market. Where we buy and sell stocks and shares of companies through intermediaries known as stock brokers. There is a general misconception that 98% of the people present in the scene of stock market lose a major portion of their capital. But if we take a look at the long-term investments with correct fundamental and technical analysis, it can provide you with returns of more than 100% if done correctly. With the power of compounding and with a strong base of fundamental and technical analysis, a huge fortune can be created over a period and at the same time we can keep the risk to a minimum. There are different ways to approach, the stock market. An investor can aim for long-term benefits, short-term or swing trading and if you are a seasoned investor can opt for intraday trading.

DIVERSIFICATION OF THE PORTFOLIO is the most important aspect of long-term stock investments. Every investor should have a well-diversified portfolio. It can be easily understood by the very famous saying “Don’t keep all your eggs in a single basket.” This can ensure a high return over the years with safe and minimal risk.

2. Exchange Traded Funds and Mutual Funds

Exchange Traded Funds are a type of securities that keep track of the indexes like Sensex, and Nifty, and sectors like Automobiles, Pharmacy, etc, or commodity-specific ETFs. An ETF is curated in a way to track the prices of single commodities or other huge collections of securities. These are safe and stable way to grow your wealth. ETFs can provide a return of up to 6% for 3 months and up to 30% for 3 years depending on the type of ETF. The most famous ETFs that track indexes in India are HDFC Sensex and ETF Edelweiss ETF - NQ30. Other important commodity-based ETFs are Aditya Birla Sun Life gold ETF, and Invesco India Gold ETF. There are even global indexes like Nippon ETF Hang Seng BeES and Motilal Oswal NASDAQ 100 ETF. An ETF is a sort of asset that holds different basic resources, instead of just one stock. Since there are various resources inside an ETF, they can be a mainstream option for expansion and diversification.

Another collectively controlled and managed investment instrument is Mutual Fund. The mutual fund works in a unique way as compared to an ETF. In a Mutual Fund Investment Instrument, the fund is controlled by a fund manager, and this fund manager, in turn, makes decisions regarding how the fund is managed. They offer diversification by investing in different asset classes. These funds can be bought when the market opens but get executed at the next available Net Asset Value (NAV). The profits and losses that are incurred through the buying and selling of the commodities are shared equally among the vast number of individuals who have registered for the Mutual Funds. This can be used as another goal-oriented and long-term investment instrument that can provide a decent return with medium-level risk factors involved in it. But like the other mentioned instruments, mutual funds are also subject to market rates and can be risky, but mutual funds are only effective if looked through the perspective of long-term and goal-oriented investment.

3. Debt Funds

Investing in a Debt Fund can be explained as lending money to the company or entity that is issuing the instrument. They are invested in fixed interest-generating securities such as bonds, government securities, treasury bills, etc. The main advantage of investing in a Debt Fund is that we receive a steady interest rate according to the market capital appreciation. These are also a kind of Fixed-Income Securities. Debt fund invests in an assortment of protections, in light of their credit scores. A security's credit score connotes the danger of default in dispensing the profits that the Debt Fund guarantor guaranteed. The asset chief of a Debt Fund guarantees that he puts resources into highly evaluated credit instruments. A higher FICO score implies that the element is bound to pay interest on the obligation security routinely.

Debt Funds which put resources into higher-evaluated securities are less unpredictable when contrasted with low-appraised securities. Furthermore, development additionally relies upon the venture technique of the asset supervisor and the general loan cost system in the economy. A falling loan fee system urges the asset manager to put resources into long-haul securities. Then again, an increasing loan cost system urges him to put resources into transient security. This is how Debt Funds work and it is a very safe option for investment for people looking for a steady long-term wealth creation plan.

4. SGB

These are known as Sovereign Gold Bonds that are issued by the government and distributed by top lenders like SBI. The basic advantage that attracts customers into buying and holding Sovereign Gold Bonds is that they don’t have to pay capital gains tax on the capital profit or increase that they have gained over the years. The only tax that we are obliged to pay is the GST, which is taxed at the time of purchase. The investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value. The next advantage that SGB provides is that unlike physical gold there is no hassle for storage for SGB. And it is very convenient. This instrument can be used to get loans according to the value of the bonds. Sovereign Gold Bond Scheme was launched by the government in November 2015, under Gold Monetization Scheme. Under this scheme, the issues are made open for subscription in tranches by RBI. Investors can invest in SGBs through their Demat accounts or via online banking.

5. NPS – National Pension Scheme

The National Pension Scheme is a federal retirement aid drive by the Central Government. This benefits program is available to workers from general society, private and surprisingly the disorderly areas with the exception of those from the military.

The plan urges individuals to put resources into a benefits account at ordinary spans throughout their business. After retirement, the supporters can take out a specific level of the compilation. As an NPS account holder, you will get the leftover sum as a month-to-month benefit post your retirement. This is beneficial for people looking for low-risk-oriented growth and people who are looking to retire early. This is especially beneficial for people who earn a regular income from the Private Sector and their post-retirement plans can be seen as doubtful. This also has the added benefit of being tax efficient.

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BY : ANDERSON Y FERNANDEZ

yfernandezanderson@gmail.com