The pandemic has been a very hard time for almost everybody. But it has been especially hard for people who have no second source of income like an investment. This hard time has made a lot of people realise the value of having a second source of money that is reliable during tough times, and more and more people are now looking to invest as the world starts moving back to normal. Here are some of the best investments you can make:
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1. Stocks (direct equity)
While cryptocurrencies may be the rage currently, stock market is the original volatile source of income, though not as volatile as cryptocurrencies. The stock market never was and still isn’t everyone’s cup of tea. However, if you can get yourself a good broker or manage to mirror a successful person’s portfolio, you can get some money for yourself. Alternatively, instead of looking for rapid cash or day-trading you can invest for the long game. Put that money in a stock that will definitely keep rising like Google or apple and forget about it till you fall in trouble.
2. Real estate
While most things you buy depreciate in value, real estate is one of the few things that just keeps on rising. Like in any other investment, you have to smart here as well. Real estate price doesn’t fluctuate daily like silver price does but it is generally on an upward trajectory. All you have to do is make sure you don’t buy a place in a bad or unwanted part of town and if everything goes well, you will leave with more money than you put in.
Word of advice: Try not to panic and sell the estate during a recession when prices start to fall.
3. Debt mutual funds
If you are a weak-hearted person and cannot handle the volatility of the stock market and cryptocurrencies but want a steady source of income, you might consider investing in Debt Mutual Funds. These mutual funds are very less volatile and will serve you perfectly by giving you stable returns. The reason for their volatility being less is that they invest in things like government securities, corporate bonds, treasury bills, which generate a fixed interest like most things in the money market. However, less volatility does not mean that these funds are risk-free. There are certain risks like credit risks and interest rate risks. Do read about all these risks before investing (as you should before investing in anything).
4. Fixed Deposit in a Bank (FD)
In countries like India, investing in a fixed deposit in a bank is easily one of the safest options for investment. From early 2020, under the DICGC rules each depositor gets an insurance cover which can have a maximum value of up to 5 lakhs (for both interest and principal). This is a big change from the earlier maximum limit which was just 1 lakh rupees for both. One of the best things about an FD is the number of options you get. You can just choose an option suitable for your income and start an FD.
5. Gold
Everyone loves their 22k gold around the world and why shouldn’t they? The allure of gold is enough to keep its prices high in the market. Gold has always been one of the safest options to invest in because of a surety that even if the price doesn’t rice much, it’s not going to fall much either. Gold rate is not extremely volatile either and has a rather steady trajectory. While many people want to own gold in the form of jewellery we recommend otherwise. Jewellery has its making charges which can cost quite a chunk of money according to the amount of gold used and have a danger of losing their value due to any damages that may occur. Instead, you should be going for gold in the form of coins or ingots. Even banks are selling gold coins nowadays.
Another newer way to invest in gold is via paper gold. This is the safest way you can invest in gold and saves you money as well. You can trade in it via gold exchange traded funds and such investment actually takes place in the stock market with your asset being gold. Other ways of investing in gold are through mutual funds (known as gold mutual funds) and sovereign gold bonds.
No matter what you invest in, keep a few things in mind:
- Use money that you aren’t using:Don’t invest money that you need in the present for the future. That will only make your life difficult.
- Do read about the risks and pitfalls of the commodity you are investing in:Even if you get a broker for yourself, the broker’s primary concern will be his commission and his firm. Make sure you do your homework well and leave the rest to the market.
- Investing in anything is generally a long-term commitment:While it is really important to know when to get up and leave, it is equally important to not panic over sudden fluctuations when you are in it for the long game.
The commodities for investment mentioned above are a few among many out there. You will see that you will be able to broadly classify them into 2 categories: investments linked to the market and investments having a fixed income. Both of them are very important if you want to create more money from your existing money. While the investments linked to the market offer higher rewards, they also come with higher risks. Meanwhile, the fixed income investments offer a steady source of income for a long, long time. To make sure you gain a good amount of money, it is important that you invest in both and manage them well. Most rich people are rich because they had more than 1 source of income. There is no reason why you cannot do so too, even if you start with something as little as a few hundred bucks.