The Investment Guide Categories

Today, the average Indian has no shortage of rewarding investment types and options. From stocks, bonds, mutual funds, systematic investment plans, corporate fixed deposits, NPS to PPF - the list is long.

Both market and non-market-linked investment types attract investors of all capacities, risk appetites, age and occupations. Picking a suitable basket of investments can be confusing, especially if you’re unaware of some of the top-performing investment types. What are these? Keep reading to find out where your fellow Indians are investing these days.

The Beginners Guide to Investment Types

There is no right or wrong when it comes to defining your financial identity, meaning what may work for a conservative or risk-averse investor will definitely not work for an aggressive investor. Despite this difference, you must maintain a balanced portfolio, where a significant chunk of your corpus must lie with fixed-income securities or instruments that offer guaranteed returns. These can double as long-term savings are kept aside for a rainy day.

Once you have these sorted, think about investing in the following investment types:

1. Mutual Funds

Even if you don’t have a mutual fund portfolio yet, you have most likely come across this instrument. Considered one of the safer and high return generating financial investments, mutual funds pool money from various individuals or institutions to invest in a diverse set of securities. These often include stocks (equity), bonds, other money market instruments, etc.

Returns on this financial investment are subject to the performance of the underlying assets. Since there is a variety of mutual funds available, an investor has the option of choosing a mixed bag of funds, balancing between debt, equity and mixed funds.

Diversifying within your mutual fund portfolio lends you safety without compromising substantial returns. Here are the seven broad varieties of mutual funds you can invest in:

1. Equity mutual funds
2. Debt mutual funds
3. Liquid mutual funds
4. Index funds
5. Hybrid or balanced mutual funds
6. Tax-saving funds

You will find a few more categories being offered by fund houses, but the above give you a good place to start.

2. Stocks and Bonds

Also termed as shares and equities, these financial investments are the most popular category for people looking for capital growth over preservation. In simple terms, when you purchase shares of a listed company, you become part owner of that organization. And, therefore, have a stake in its profits and losses. Know that the risk-reward ratio of this investment category is higher than most other instruments.

You can balance out a high-risk-reward stock portfolio by investing in bonds around the same time. This financial investment is a debt instrument. Therefore, it extends guaranteed returns at a prefixed interest rate. Examples of bonds include government securities, treasury bills, corporate bonds, etc.

3. Fixed Deposits

When talking about different investment types, one cannot forget good old, fixed deposits. These are evergreen instruments that offer incredible safety and capital appreciation year after year. Even the most aggressive share market player has a repository of fixed deposits.

Banks, NBFCs and private corporations offer them. Several people invest in them because FDs are free from market fluctuations, can be started at very nominal amounts, allow premature withdrawals, and can be opened online.

4. Exchange Traded Funds

No list of different investment types is complete without mentioning Exchange-traded Funds or ETFs. This sounds similar to mutual funds but are in a category of their own. You can't purchase them the way you buy mutual funds at a fund house. Instead, ETFs are bought and sold directly on the stock market.

ETFs are an excellent investment vehicle for new investors who are ready to dip their feet into the pool of the stock market, as they are more diversified than individual stocks. You can also minimize risk by choosing ETFs that track a broad index and dissolve them, like mutual funds, when you wish to cash in.

5. Public Provident Fund (PPF)

Within different investment types, PPF is a name that resonates with many individuals, especially salaried investors. They choose this instrument for its sovereign guarantee, fixed rate of return, tax exemption and to inculcate financial discipline. The last one is because PPF has a 5-year lock, after which a partial withdrawal is possible.

Presently, this instrument offers an interest return of 7.1%, compounded annually. Also, investing in a PPF is not subject to market risks. It is an independent instrument on which you can claim a tax exemption up to Rs. 1.5 lakhs under Section 80C of the ITA.

6. Insurance

Wondering what are the types of investments that offer protection along with paying out a lump sum at maturity? Certain insurance products do. They have many names like endowment plans, term insurance, life insurance, children's plan, and many others. Insurance is designed to meet a certain objective, which is to take care of your beneficiaries in the unfortunate event of your passing, as opposed to providing monetary returns alone.

Choose Tata Capital Moneyfy and Start Investing

In addition to these different investment types, you can also park your corpus in real estate. However, to make substantial money off these asset classes, you must have a long investment horizon.

Want to park your corpus in various types of investment options? Find them all on the Tata Capital Moneyfy website or the Moneyfy app. Through our user-friendly digital portal, you can easily filter through the instruments best suited to your investment philosophy.

Visit our website today!