Investments

Types of Investments

• Stocks•Mutual Funds• Real Estate

•Gold and other commodities• Fixed Deposits

•LIC and other Insurance Schemes• Foreign Exchange

StocksAdvantages

• Easy to liquidate• High returns in the long run• Easy to trade• Settlement is done on the

day itself• Brokers are available easily

Disadvantages• No guaranteed returns• Can lead to loss of all

money

Mutual FundsAdvantages

• Professional Management• Profitable in the long run• The dividend received is tax-

free• Various schemes available

that invest in debt, equity, commodity instruments

• Easy settlement• Easy to invest

Disadvatages• Can be risky at times• No guaranteed returns

Real EstateAdvantages

• Steady long term returns• Rental Income• Can give various tax

benefits• Highest returns in recent

times

Disadvantages• Settlement requires time• No guaranteed returns• If proper documentation is

not there, it may lead to trouble

Fixed Deposits

Advantages• Fixed return• Safe• Easy settlement

Disadvantages• Return is less when

compared to other instruments

• You are bound to a time frame which if you break, you are penalized.

Consider two persons

Person 1:

Salary is 10lac/annum

He deposits only in savings account

His wealth is about 1.3 cr after 25 years

Person 2:

Salary is 8 lacs/annum

He invests in stocks, deposits and real estate

His wealth is about 4cr after 25 years