Why Investing is Important & Where to Invest?
Investing is a technique of building wealth. Anyone can start in the present modern world there are only two ways to make money by either working for yourself or by having your assets work for you. In order to build your wealth, one has to invest their money.
Investing allows you to put your money in different assets that have the potential to earn strong rates of return. If you dont invest, you are missing out an opportunities to increase your financial worth.
Where to invest? Having figured out the appropriate reasons for investments to better future , the next obvious question would be Where would one can invest, and what are the returns one could expect by investing their hard earned money.
The following are some of the popular assets where one can invest.
- REAL ESTATE
- FIXED INCOME
let me go over all of the above mentioned points to give you a clear picture of what they exactly mean.
Equity markets are the meeting point for buyers and sellers of stocks which are publicly listed.
The place where stocks in the equity market are traded is the stock exchange.The equity shares in India are traded through two stock exchanges Bombay Stock Exchange (BSE), and the National Stock Exchange (NSE). United States( NYSE, NASDAQ)
RELATED : List of stock exchanges
Indian Equities have generated returns close to 14% 15% CAGR (Compound Annual Growth Rate) over the past 15 years.
Taxation on Equity investments held for more than 1 year is taxed at 10%, if the turnover(gains) are more than Rs 1 lakh starting from 1st April 2018(previously such investments were tax free).
This is comparatively a lower rate of tax than the other asset classes.
Real estate is the property made up of land, buildings above the land .
There are two sources of income from real estate investments namely Rental income, and Capital appreciation of the investment amount.
When it comes to investing, residential real estate is less expensive and more feasible to individuals. , while commercial real estate is more valuable and more stable.
Average 20-year returns in the commercial real estate was 10.6%.
Investments in Gold and Silver are considered one of the most popular investment avenues.
Investments in these metals have yielded a CAGR return of approximately 8% over the last 20 years.
Fixed Income Investments are those that offer a return on a fixed time(based on investor choice).
These investments are with minimum risk to the principle amount and returns are paid in the form of interest. common fixed income assets are as follows:
- Bonds issued by governments
- ETFS returns:5-6%(annually).
IMPORTANT THINGS TO KEEP IN MIND WHILE INVESTING IN STOCK MARKET.
Invest to secure your future Investment in fixed income is a good option if you want to protect your principal amount. It is relatively less risky. Risk and Return go hand in hand. Higher the risk, higher the return. Lower the risk, lower is the return.
Commodities are known to be a relatively safer but the historical return on such investment has not been very encouraging. Investment in Equities is a great option.returns on equity markets are close to 16-18% , it may vary but on an average it was a good return.
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