How to get the best ROI from Investments

Arun Sharma December 2, 2019

Most investors make market investments in the manner that they get sky-high returns as quickly as possible without the danger of losing the primary amount. That’s why many investors are constantly on the lookout for high investment strategies where they could double their cash in a couple of months or even years with minimal risk.Therefore, while picking an investment route, you need to analyze the risk involved with the product before investing. There are a few investment options with high risk but have the capability to create high inflation-adjusted yields than other asset categories in the long run, though some investments consequently lower yields but are risk free.

1. Private Equity

Purchasing stocks might not be everybody’s cup of tea since it is a volatile asset category and there’s absolutely no assurance of returns. Further, not only is it tough to select the ideal stock, time your entry and exit is also not simple. The silver lining is that over long periods, equity has managed to deliver greater than inflation-adjusted yields in contrast to other asset types.To put money into stocks market, an individual has to open a demat account. The danger of losing a substantial part of funds is high unless one opts for the stop-loss way to reduce losses. In stop-loss, one puts an improvement arrangement to sell a stock at a particular cost. To decrease the danger to a certain degree, you can diversify across industries and market capitalizations. Presently, the 1 year market yields are approximately 13 percent and 3 year market yields are approximately 8 percent.

2. Equity mutual funds

Equity mutual funds predominantly invest in equity stocks. According to present Securities and Exchange Board of India (SEBI) Mutual Fund Regulations, an equity mutual fund strategy must spend at least 65 percent of its assets in equities and equity-related instruments. An equity fund could be actively managed or passively managed.Within an actively traded fund, the yields are mostly dependent on a fund manager’s ability to create returns. Equity schemes are categorized according to market-capitalization or the sectors in which they invest.

3. Public Provident Fund (PPF)

It is a financial product where most of the salaried employees invest. The yield generated from these funds are tax-free. The rate of interest depends on the market conditions but they are usually between 12 to 15 percent. PPF has a long tenure of around 15 years. With the effects of compounding provident funds can generate an enormous amount of funds, particularly in the later years.

4. National Pension System (NPS)

This a long-term retirement focused investment option managed by the Pension Fund Regulatory and Development Authority of India. The minimal yearly (April-March) donation for an NPS Tier-1 accounts to continue being active has been decreased from Rs 6,000 to Rs 1,000. It’s a mixture of equity, fixed deposits, corporate bonds, liquid capital and government funds, amongst others. Depending on risk-taking capabilities, you can choose how much of your cash could be invested in stocks through NPS.

Some of the investments mentioned above are fixed-income while some are market-linked. While market-linked investments aid in navigating the volatility and in the process create high real yield, the fixed-income investments assist in maintaining the accumulated wealth in order to fulfil the desirable goal. For long-term objectives, it’s essential to make the best use of both options. Have a reasonable mixture of investments maintaining market risk, taxation and time horizon in mind.

Arun Sharma

December 2, 2019

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