There are different ways to save or invest your money like:
- Saving Accounts
- Fixed Deposit
- Buy Gold or Jewelry
- Real Estate
- Stock Market
Every investment has three things: Return, Risk and Time.
- Return means how much profit you are earning through investment.
- Risk means how risky is to invest, how many chances are there to loose all the money.
- Time is how long you are investing for. More time means more saving.
The basic rule is more risk and more time generate more money.
Which investments are best?
Saving Account: It is very safe. But the return we get from this mode is very low. The interest rate in the last few years is 4-5%.
Fixes Deposit: It is also a less risky option. There is a time bond before we can't withdraw our money out. So the interest rate here is higher than the savings account. The interest rate is 7-8%.
Investment through Gold or Jewelry: In these days, Gold and Jewelry have a significant risk, their prices fluctuates a lot.
Real Estate: The risk in these types of investments is low to moderate. It also vary from location to location. One of the disadvantages of these types investments is you need to have a lot of capital to buying properties.
Stock Market: It is very risky. If you don't have any knowledge about the stock markets, you must not invest your money in this market.
There are many other ways to invest your money apart from above mentioned options. One of them is through Mutual Funds.
Saving through Mutual Funds
Mutual funds is a special type of investment through which you can invest you money on different types together by investing at one place.
Basically you give your money to Asset Management Company and many other people do so like you do. An Asset Management Company starts mutual funds. They have experts which invest your money in different places with their knowledge. Some of the profit is kept by the Asset Management Company and the rest you get back as per the return rate.
HDFC, HSBC, ICICI, Reliance, Aditya Birla, TATA etc; are the few companies and banks who have started their own asset management companies.
The interest rate for mutual funds mostly vary from 4% to 30%. It can be of zero risk and can be high risk too. It depends upon where the Asset Management Company is investing you money.
Types of Mutual Funds:
- Equity Mutual Funds
- Debt Mutual Funds
- Hybrid Mutual Funds
Equity Mutual Funds are the funds where your money is investing in the stock markets. There can be risk.
A debt mutual fund (also known as a fixed-income fund) invests a significant portion of your money in fixed-income securities like government securities, debentures, corporate bonds and other money-market instruments.
Hybrid funds are mutual funds or exchange-traded funds (ETFs) that invest in more than one type of investment security, such as stocks and bonds.