Question

Explain any four personal investment avenues.

Answer 1

1. Public Provident Fund (PPF):
It is the safest long–term investment option for investors in India. It is totally tax–free. PPF account can be opened in a bank or post office. The money deposited cannot be withdrawn before 15 years and an investor can earn compound interest from this account.

However, the investor can extend the time frame for the next five years if the investor does not opt to withdraw the amount matured for payment at the maturity date. PPF investor can take a loan against PPF account when he/she experiences financial difficulties.

2. Mutual Funds:
An individual investor who wants to invest in equities and bonds with a balance of risk and return generally can invest in mutual funds. Nowadays people invest in stock markets through a mutual fund. A systematic investment plan is one of the best investment options in India.

3. Direct Equity or Share Purchase:
An individual can opt for investment in shares. But he has to analyze the market price of various shares traded in the stock exchange, the reputation of the company, consistency in the payment of dividends, the nature of the project undertaken by the company, growth prospects of the industry in which a company is operating, before investing in shares. If the investment is made for a long time, it may yield a good return.

4. Real Estate Investment:
Real estate is one of the fastest-growing sectors in India. Buying, a flat or plot is supposed to be the best decision amongst the investment options. The value of the real asset may increase substantially depending upon the area of location and other support facilities available therein.