Explore 5 Share Market Investments

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One of the most common ways to raise money is through investments in the stock market. The company issues shares in return for the money. Holding shares is as if you were a part of the company. Then, the shares are traded in India’s stock market. Share market investments are of various kinds. 

With the help of this article, let’s explore the various types of share market investment.

Top 5 Share Market Investment

There are, in general, two broad umbrellas for investments, namely growth-oriented investments and fixed-income investments. The growth-oriented investment option aims at increasing capital values over time, whereas the fixed-income investment option seeks to provide steady and sometimes growing income streams that may be paid or reinvested while seeking to maintain the original value of an investment.

In both of these investment styles, we can look at the various types of investments:

1. Mutual fund Investment

As an investor, there are many options to choose from when it comes to parking your money in order to earn a return. You can use your SIP calculator to estimate the potential returns that an investment could provide, while a fund’s performance is based on its underlying assets.

An investor may choose from a number of fund types available to them on the basis of their risk profile, investment horizon and financial objectives. There are six types of mutual funds, which include growth and equity funds, liquid money market funds, government bonds and debt funds, balanced or hybrid balanced funds, index funds and tax-efficient savings funds. Mutual funds are useful to investors for achieving their financial goals, whether short or long-term.

2. Bonds 

A bond is a debt instrument representing an equity loan from investors to companies or governments, which are also known as securities. You will allow the bond issuer to issue you a fixed interest rate in exchange for the use of your capital when you buy a bond. Bond examples include Treasury Notes, Municipal Debts, Corporate Bonds, Government Securities and so on.

3. Stocks

Stocks, also known as shares or equities, are one of the favourite investments for growth investors. As soon as you buy a share of the listed company, you acquire ownership and are able to profit from part of its profits. In equity investments, the risk-reward ratio is usually very high relative to other forms of investment.

4. ETFs, or exchange-traded funds

Exchange-traded funds, or ETFs, are groups of investments that track an underlying index, including stocks, bonds, money market instruments, and so on. They are a combination of many investing strategies that provide the advantages of equities and mutual funds. Exchange-traded funds, or ETFs, are exchanged on stock exchanges and share many regulatory, structural, and managerial similarities with mutual funds. 

The ability of ETFs to be actively traded on the exchanges at any time of day, allowing investors to take advantage of real-time price differentials, is one of the primary distinctions between them and mutual funds. Conversely, buying or selling mutual funds, active or passive, must occur at the end of trading.

5. Fixed deposits

One of the safest investment alternatives that investors have access to is bank fixed deposits (FDs). Banks and other non-banking financial institutions offer them so that investors can have a certain period in which to occupy their unused funds at an appropriate interest rate. 

Market fluctuations ensure a greater degree of safety in investment, which makes the interest rate predictable and not affected by them. Fixed deposits are good for investors who do not want to risk their money, from the ease of flexibility to the different types of instruments offered by an investor.

Conclusion

The risk-reward ratio varies according to the type of investment. However, you should not decide which kind of investment product is best for you solely on the basis of risk and return. Factors such as asset allocation, fees, previous performance, liquidity and so on should also be taken into account by the investor. You should make sure that your portfolio is aligned with your risk tolerance, investment objectives and time horizon when you plan to invest. Investments are the basis of an investor’s future. They’ll help you bridge the gap from your dreams to reality. One of the best stock market app to invest in the future is Kotak Securities.

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