Best Investment Options to Get Higher Returns
The money you earn is partially spent and the rest is saved for meeting future expenses instead of keeping the savings idle you may like to save to get a better rate of Interest in the future Which is called Investment.
The Need for Investment
This money is a solution for an uncertain future. One of the main reasons for investing is to counter inflation, which raises the cost of living as the prices of goods and services increase by 4-5% annually. The aim of investment should be to achieve a rate that exceeds the inflation rate, ensuring the investments are beneficial to the holders.
When Should a Person Start Investing?
The answer is simple: the sooner, the better. By investing early, you give your investment more time to grow, allowing the power of compounding to boost your returns.
The Golden Rules of Investment
• Invest Early.
• Invest wisely and regularly.
• Invest for Long Term.
Due Diligence While Investing
When investing, it's essential to:
1. Read and understand the document.
2. Find the cost and benefit associated with the Investment.
3. Assess the risk and return Profile.
4. Know the Liquidity and safety of Investment.
5. Compare with other Investment opportunities available.
6. Deal with only authorized and Trusted Financial Intermediaries.
Interest Rate and its Determination
Interest is an amount charged to the borrower for the privilege of using lender money. The rate of Interest is determined by
• Demand for Money.
• Level of Government Borrowing.
• Supply of money.
• Rate Determined by RBI
• Inflation Rate.
Various Investment Options for Investors
1. Physical Assets: Investors can consider purchasing physical assets such as real estate, gold jewellery, and other commodities. These are tangible investments that hold intrinsic value over time.
2. Financial Assets: Financial assets include bank and post office deposits, provident funds, and securities like shares, bonds, and debentures.
For investors seeking secure options with moderate returns, post office saving schemes, Public Provident Funds (PPF), and company fixed deposits are worthwhile. Although these schemes offer adequate security, their returns may be comparatively lower than other investment options.
In post office schemes, senior citizens can earn an interest rate of 7.2% per annum. The maximum allowable investment is INR 9 lakhs in a single account and INR 15 lakhs in a joint account. This monthly income scheme is a popular choice among retired individuals. The scheme has a maturity period of five years, with no withdrawals permitted before one year from the date of deposit.
A Public Provident Fund (PPF) is another popular investment option. This Government of India savings scheme has a maturity of 15 years and offers a 7.1% interest rate per annum, compounded annually. Tax benefits are available on the invested amount, and the accrued interest is tax-free. Withdrawals are allowed from the seventh financial year after opening the account, with a withdrawal limit of 50% of the balance at the end of the fourth preceding year.
Company Fixed Deposits (FDs): These are borrowings by companies at a fixed interest rate, typically ranging from 7.8% to 8.25% per annum, paid monthly, quarterly, or annually.
Mutual Funds and Direct Equity: Mutual funds pool public money to invest in diversified assets like shares and debentures, making them suitable for those who may not have the time or expertise to invest directly in the stock market. The benefits of mutual funds include professional management and diversification. Mutual funds generally serve as long-term investments, with categories like money market mutual funds for short-term goals.
Top-performing Mutual Funds in India include:
• SBI PSU Direct Plan-Growth
• Aditya Birla Sun Life PSU Equity Fund Direct-Growth
• HDFC Infrastructure Direct Plan-Growth
• ICICI Prudential Infrastructure Direct-Growth
• HDFC Balanced Advantage Fund Direct Plan-Growth
• Quant Multi Asset Fund Direct-Growth
• ICICI Prudential Equity & Debt Fund Direct-Growth
• Aditya Birla Sun Life Medium Term Plan Direct-Growth
• UTI Credit Risk Fund Direct-Growth
• Nippon India Strategic Debt Fund Direct-Growth
These funds have provided good returns, with small-cap, mid-cap, and large-cap funds delivering returns ranging from 12% to 25%.
Direct Equity: Investing directly in the Indian stock market is an option for those interested in primary and secondary markets.
Initial Public Offerings (IPOs): When unlisted companies issue new securities to the public for the first time, they enter the stock market through an IPO. Some recent IPOs yielding over 100% returns include companies like Bajaj Home Finance, KNR Energies, Premier Electric, R.R Kabel, and Tata Power.
Secondary Markets: In the secondary market, securities are traded after their initial public offering. The secondary market comprises equity and debt markets and has produced multi-bagger returns recently.
Top Stocks in India include:
• Tata Consultancy Services
• Dixon Technologies
• Sun Pharma
• JSW Steel Power
• HCL Technologies
• Ultratech Cement
• Grasim Industries
• BSE (Bombay Stock Exchange)
• State Bank of India
• NTPC (National Thermal Power Corporation)
• Coal India
• ONGC (Oil and Natural Gas Corporation)
• MRF (Madras Rubber Factory)
Real also: Looking for Ethical and Sustainable Investment Options?
Financial Education at SAGE University Bhopal
SAGE University (SUB) offers MBA and BBA programs with specializations in Finance and Banking, where students prepare through mock stock market games. They gain comprehensive knowledge about the various aspects of financial markets and the risks associated with financial instruments. Students analyze the risk profiles of different instruments and understand the misleading advertisements frequently seen on social media platforms. They learn both fundamental and technical analysis of stocks and review company prospectuses before making investment decisions or offering advice. SAGE University also familiarizes students with the rules and regulations for safe investing.
Comprehensive Curriculum: SAGE University offers a well-structured curriculum that covers all aspects of finance and banking, from financial management to investment analysis and financial regulations, preparing students for the competitive industry.
Industry-Relevant Knowledge: The programs are designed to provide students with a deep understanding of the latest financial trends, stock market dynamics, risk management, and investment strategies. Students gain hands-on experience through real-world case studies, simulations, and mock stock market sessions.
Expert Faculty: The finance and banking programs are taught by experienced and highly qualified faculty members who bring industry insights and practical knowledge into the classroom.
Practical Exposure: Students are given opportunities to participate in stock market games, mock investment sessions, and financial planning exercises to enhance their analytical and decision-making skills in real-time market conditions.
Cutting-Edge Infrastructure: The university provides state-of-the-art facilities, including financial labs, to help students develop a practical understanding of financial instruments, equity analysis, and market trends.
Internship and Placement Support: SAGE University offers strong connections with leading financial institutions and corporations, providing excellent internship and placement opportunities for students to kick-start their careers in finance and banking.
Focus on Safe Investment Practices: The programs emphasize the importance of safe and informed investing, teaching students to critically evaluate financial instruments, understand market risks, and avoid misleading investment schemes often seen on social media.
Holistic Development: Beyond academics, SAGE University focuses on developing leadership, communication, and soft skills, preparing students to excel in both managerial roles and entrepreneurial ventures.
Choosing SAGE University Bhopal for a BBA in Finance Management & MBA in Finance and Banking ensures that you receive a robust education that combines theory with practical application, helping you stand out in the dynamic financial industry.
Dr. Apurva Bhatnagar
Associate Professor
School of Management & Commerce