What is the best thing to invest in?
There is no doubt in the fact that investing is highly beneficial. It can help you appreciate your capital or park it safely according to your investment goals. But choosing an investment option can be a chore. This is because there are plenty of options to choose from, and you need to first figure out your investment goals and risk appetite. But even if you filter it down using risk appetite and goals, there could be plenty to choose from. But fret not, below is a list of some of the best investment options to make choosing easier for you.
Stock market investments
Stock market investments are said to have the best potential for growth. As of mid-september 2022, Nifty, the index that tracks the top stocks of the stock market in India, has risen more than 65% in the last five years. This shows the growth potential stock market investments have. Their returns are usually higher to beat inflation as well.
But they come with a higher risk, too. You could lose a considerable amount of money in just a matter of a few minutes if you are not careful. Hence, they demand a higher level of market expertise and closer monitoring.
If the risk associated with stock investments is not your cup of tea, you could try bond investments. Bonds are a form of debt. Governments and corporates usually raise money through bonds. The investment you make buying bond units go to the issuer of the bond as debt. For the money you borrow, you will be entitled to receive a fixed till the end of the maturity period. At maturity, you will get the entire corpus back as well. Since there is no market linkage, bond investments are one of the safest investment options that give fixed returns.
As said above, investing directly in securities like stocks or bonds could be beneficial. But it could be a lot of work as well. Let us take the example of a stock investment.
To begin with, you have to find stocks that match your investment horizon and risk appetite. Once you have that ready, you need to create a well-balanced portfolio of stocks. But your work doesn’t end there! Now you have to monitor your investment regularly and make changes to your portfolio because stocks can be volatile.
Mutual funds could be a lifesaver here! Mutual funds have a fund manager that creates a portfolio according to the theme of the fund. They also pool money from different investors and invest in the same. Furthermore, they ensure your portfolio is monitored and updated whenever necessary. This makes investing much easier.
There are two major drawbacks to investing in mutual funds. First of all, they come with an expense ratio. This is a charge levied from the investors by the fund houses to meet their expenses, including for the payment of the fund manager if you are not careful about the expense ratio, it may eat into your earnings.
Secondly, you have limited knowledge of what basis the portfolio is changed. But ETFs could be a solution for this. They follow an index as it is, and hence, there is no scope for bias. For instance, if an ETF tracks nifty, the portfolio will be the same as Nifty’s composition. Furthermore, ETFs are tradable in the stock market, making them more liquid.
There is a plethora of options to choose from to invest in. But ensure you choose the right option according to your goals to get the best out of your investment.