Top 5 INVESTMENT AREAS WITH STRONG RETURNS

KEY OBJECTIVES

This blog article is very useful if you are struggling to choose the right investment platform with the right balance between risk and return. You will learn:

• Difference between passive and active income

• 5 powerful areas of investment

• How real estate investment can be rewarding as compared to other investments?

• Various risks associated with different investment types

Have you ever heard of passive income? The work you're doing is giving you a monthly pay check. That's Active Income because you're working for the money. Passive income is where the money is working for you.

RIGHT INVESTING MINDSET

Say you're opening a fixed deposit. For a certain period, the principal you spent will lead to a future interest, depending on the interest rate. This is one source of passive income. There are, however, many fields in which the investment will produce massive returns.

Yet high returns normally come with high risks. Skilled investors will usually be gambling on high-risk investments as they can build up their portfolio in a short period. However, their gambling will be backed up by their years of indispensable experience and knowledge of the functioning and success of the market.

Besides, both high-risk and low-risk investments help diversify the portfolio. Low-risk investments usually have low returns, such as getting a savings account or a deposit scheme.

LOW-RISK INVESTMENT:

Some of the low-risk investments are as follows:

• Savings Account (3.5 percent to 6 percent )

• Fixed or recurring deposit rate (Bank and Post Office) – 6.5 percent to 9 percent

• Government bonds – 8%

• PPF – As per the government norm. It's at 8.5 percent now.

• Debt Mutual Fund – 8 to 10 percent

HIGH-RISK INVESTMENT:

• Real estate

• Share market

• Mid-and Small-Cap schemes Mutual Funds

Take a closer look at five big investments with large returns and the risks associated with each investment.

1. DIRECT EQUITIES

This is a type of asset that includes investing in stocks and bonds. The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) list the stocks of the different organizations. It does, however, fall under secondary markets. The index for 1-3-5 year returns is currently 13 percent, 8 percent, and 12.5 percent respectively.

You ought to have an undue amount of business experience to invest directly in equity. This is because direct equity is highly volatile and has significant risks. The stock can unexpectedly fall to zero and the factors responsible may not be known as a multitude of them.

But the silver lining is that equity can produce higher returns relative to other asset groups.

2. PUBLIC INITIAL OFFERING (IPO)

The IPO market is the main market. As the company's sales and income increase, the share price is increasingly increasing. For example, when Apple first became public in 1980, it had a share price of $22. Now the share price is $255. Those who invested in 1980 would have increased their investment 10 times.

There are possible volatility risks, however as the share price graph will decrease between positive and negative. This could be due to a lack of income in the business or to economic transitions. Unless you are an expert on the equity market, you would not be able to forecast the circumstances.

Even if the company goes out of business, you will face an absolute loss of investment. It is advised, therefore to acquire vast knowledge of the share market before investing.

3. REAL ESTATE

Real estate is generally recognized as one of the markets with the ability to produce big returns. Volatility is very low and can deliver monumental returns for a long period. Considering Pan-India, the average yield per sq. ft is currently 3%, but some micro-markets have yields of up to 4.5%.

Property with a value of less than Rs 6000 per sq. ft in the rental market yielded more than 3 percent while properties valued more than Rs. 6000 per sq ft yielded between 2.4-3 percent. But it's healthy to invest in affordable properties.

There are options for Residential Real Estate and Commercial Real Estate to invest in and each comes with its own set of benefits.

Yet real estate requires a large amount of capital in advance. And it can also take a long time to liquidate.

4. BIG-CAP MUTUAL FUNDS

This falls under equity investing, except that you would not have full leverage overstocks. The fund manager, who is an investment specialist and has extensive market experience, can control and take care of the stocks. The money will be invested in the stock of major corporations to bring about the massive growth in a short period.

However it needs a minimum duration of 3 years, but you will be provided with several withdrawal options.

5. SAVINGS AND DEPOSITS SCHEME

The savings and deposit scheme is a very low risk. Both Fixed Deposit and Recurring Deposit will give you a generous sum of money after the necessary amount of time.

In general, entry-level investors who are only trying to play safe are favoured. The returns from these schemes will, however, fall to a low level.

SUMMARY

We present here 5 Investment areas with strong returns and the risks associated with each investment. Skilled investors will usually be gambling on high-risk investments as they can build up their portfolio in a short period. Direct equity is a type of asset that includes investing in stocks and bonds. High-risk portfolios include real estate, share market schemes, mutual funds, and government bonds.

The index for 1-3-5 year returns is currently 13 percent, 8 percent, and 12.5 percent respectively. The Bombay Stock Exchange (BSE) and the National Stock exchange (NSE) list the stocks of the different organizations.

Public Initial Offering (IPO) The IPO market is the main market. Real estate is generally recognized as one of the markets with the ability to produce big returns. The average yield per sq. ft is currently 3%, but some micro-markets have yields of up to 4.5% in some areas of India. The investment in real estate requires a large amount of capital in advance and it can also take a long time to liquidate.

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