What Are Some Safe Investment Instruments in Current Pandemic Scenario

Investment instruments in current pandemic scenario What Are Some Safe Investment Instruments in Current Pandemic ScenarioWith the 2nd wave of the deadly pandemic coming to an end, the global as well as Indian market are getting back to its best. In this scenario, let us look at some of the safe instruments to invest our money. Before invest in share market or any investment, you must match your risk profile with the risks associated with the product. Some investments are high risk but have the potential to generate higher inflation-adjusted returns than other asset classes over time, whereas others are low risk and thus have lower returns. Investment products are classified into two categories: financial assets and non-financial assets. Market-linked products (such as stocks and mutual funds) and fixed income products are two types of financial assets (like Public Provident Fund, bank fixed deposits). Non-financial assets such as physical gold and real estate are examples of non-financial assets. Here are some avenues where you can invest your money.

  • Equity Mutual funds:

    Equity mutual funds primarily invest in equity stocks. An equity mutual fund scheme must invest at least 65 percent of its assets in equity and equity-related instruments, according to current Securities and Exchange Board of India (Sebi) Mutual Fund Regulations. An equity fund can be managed actively or passively. The ability of a fund manager to generate returns is critical in an actively traded fund. Passively managed index funds and exchange-traded funds (ETFs) track the underlying index. Equity schemes are classified based on their market capitalisation or the industries in which they invest. They are also classified according to whether they are domestic (investing only in stocks of Indian companies) or international (investing in stocks of overseas companies). More information on equity mutual funds can be found here.

  • Stocks:

    Stock investment may not be for everyone because it is a volatile asset class with no guarantee of returns. Furthermore, not only is it difficult to select the right stock, but it is also difficult to time your entry and exit. The only silver lining is that, over long periods of time, equity has been able to outperform all other asset classes in terms of inflation-adjusted returns. At the same time, the risk of losing a significant portion, if not all, of your capital is high unless you use the stop-loss method to limit losses. In stop-loss, an advance order is placed to sell a stock at a specific price. To mitigate risk, you could diversify across industries and markets.

  • Debt Mutual Funds:

    Debt mutual fund schemes are ideal for investors seeking consistent returns. They are less volatile and thus considered less risky than equity funds. Debt mutual funds invest primarily in fixed-income securities such as corporate bonds, government securities, treasury bills, commercial paper, and other money market instruments. These mutual funds, however, are not without risk. They are subject to risks such as interest rate and credit risk. As a result, before investing, investors should research the associated risks. If you are planning to invest debt mutual funds, here are certain things you should consider.

  • Fixed Deposit:

    In India, a bank fixed deposit is regarded as a safer (than equity or mutual funds) investment option. With effect from February 4, 2020, each depositor in a bank is insured up to a maximum of Rs 5 lakh for both principal and interest amount under the deposit insurance and credit guarantee corporation (DICGC) rules. Previously, the coverage was limited to a maximum of Rs 1 lakh for both principal and interest. One can choose from monthly, quarterly, half-yearly, yearly, or cumulative interest options in them, depending on their needs. The interest rate earned is added to one’s income and taxed according to one’s income bracket.

30 free trades What Are Some Safe Investment Instruments in Current Pandemic Scenario

  • Pradhan Mantri Vaya Vandana Yojana:

    PMVVY is a programme for senior citizens aged 60 and up that guarantees a 7.4% annual return. The scheme provides pension income that can be paid monthly, quarterly, half-yearly, or annually, depending on the option selected. The minimum pension amount is Rs 1,000 per month and the maximum pension amount is Rs 9,250 per month. The scheme allows for a maximum investment of Rs 15 lakh. The scheme will run for ten years. The programme is valid until March 31, 2023. The investment amount is repaid to the senior citizen when it reaches maturity. The money will be paid to the nominee in the event of the death of a senior citizen.

  • Public Provident Fund:

    Since PPF has a 15-year term, the impact of compounding of tax-free interest is significant, especially in the later years. Furthermore, because the interest and principal invested are backed by a sovereign guarantee, it is a safe investment. Remember that the government reviews the interest rate on PPFs every quarter.

Some of the investments mentioned above are fixed-income, while others are financial market-linked. Fixed income and market-linked investments both play a role in the wealth creation process. Market-linked investments have the potential for high returns, but they also carry a high level of risk. Fixed income investments aid in the preservation of accumulated wealth in order to achieve the desired goal. Long-term goals necessitate making the best use of both worlds. Maintain a prudent mix of investments while keeping risk, taxation, and time horizon in mind. It is also important to remember that the 3rd wave of Covid is looming and we need to be ready to fight it. We at Tradeplus pride ourselves in the safety of our customers and our wide range of services and products will help you trade at the comfort of your home.

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