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Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the [1] principal amount, as well as security of return, within an expected period of time. In contrast putting money into something with an expectation of gain without thorough analysis, without security of principal, and without security of return is gambling. Putting money into something with an expectation of gain with thorough analysis, without security of principal, and without security of return is speculation. As such, those shareholders who fail to thoroughly analyze their stock purchases, such as owners of mutual funds, could well be called gamblers. Indeed, given the efficient market hypothesis, which implies that a thorough analysis of stock data is irrational, most rational shareholders are, by definition, not investors, but speculators. Investment is related to saving or deferring consumption. Investment is involved in many areas of the economy, such as business management and finance whether for households, firms, or governments.
2. Investments in Insurance policies Insurance features among the best investment alternative as it offers services to indemnify your life, assets and money besides providing satisfactory and risk free profits. Indian Insurance Market offers various investment options with reasonably priced premium. Some of the popular Insurance policies in India are Home Insurance policies, Life Insurance policies, Health Insurance policies and Car Insurance policies. Some top Insurance firm in India under whom you can buy insurance scheme are LIC, SBI Life, ICICI Prudential, Bajaj Allianz, Birla Sunlife, HDFC Standard Life, Reliance Life, Max NewYork Life, Metlife, Tata AIG, Kotak Mahindra Life, ING Life Insurance, etc.
3. Investments in National Saving Certificate (NSC) National Saving Certificate (NSC) is subsidized and supported by government of India as is a
secure investment technique with a lock in tenure of 6 years. There is no utmost limit in this investment option while the highest amount is estimated as ` 100. The investor is entitled for the calculated interest of 8% which is forfeited two times in a year. National Saving Certificate falls under Section 80C of IT Act and the profit accrued by the investor stands valid for tax deduction up to ` 1, 00,000.
4. Investments in Public Provident Fund (PPF) Like NSC, Public Provident Fund (PPF) is also supported by the Indian government. An investment of minimum ` 500 and maximum INR. 100,000 is required to be deposited in a fiscal year. The prospective investor can create it PPF account in a GPO or head post office or in any sub-divisions of the nationalized bank. PPF also falls under Section 80C of IT Act so investors could gain income tax deduction of up to ` 1, 00,000. The rate of interest of PPF is evaluated yearly with a lock in tenure of maximum 15 years. The basic rate of interest in PPF is 8%.
5. Investments in Stock Market Indian Stock market is very fluctuating. A smart portfolio positioned for long-term growth includes strong stocks from different industries. Before investing in stock market one should be prepared to assume risk equivalent to sum invested in the market. Investing in share market yields higher profits. Influenced by unanticipated turn of market events, stock market to some extent cannot be considered as the safest investment options. However, to accrue higher gains, an investor must update himself on the recent stock market news and events.
6. Investments in Mutual Funds Mutual Fund firms accumulate cash from willing investors and invest it in share market. Like stock market, mutual fund investment are also entitled for various market risks but with a fair share of profits. One should select mutual fund schemes based on all or some of the following criteria: Long term and Short Term Consistency in Performance during bullish and bearish Fund Managers performance with the fund's Performance Returns phases operations
A simple way to select a mutual fund scheme to invest in is to select a 5 star or 4 star rated fund from one of the following rating agencies: ICRA Value Moneycontrol Ratings Online
Research
7. Investments in Gold Deposit Scheme Controlled by SBI, Gold Deposit Scheme was instigated in the year 1999. Investments in this scheme are open for trusts, firms and HUFs with no specific upper limit. The investor can deposit invest minimum of 200 gm in exchange for gold bonds holding a tariff free rate of interest of 3% - 4% on the basis of the period of the bond varying with a lock in period of 3 to 7 years. Moreover, Gold bonds are not entitled of capital gains tax and wealth tariff. The sum insured can be accrued back in cash or gold, as per the investor's preference.
8. Investments in Real Estate Indian real estate industry has huge prospects in sectors like commercial, housing, hospitality, retail, manufacturing, healthcare etc. Calculated realty demand for IT/ITES industry in 2010 is estimated at 150mn sq.ft. around the chief Indian cities. Termed as the "money making industry", realty sector of India promises annual profits of 30% to 100% through real estate investments.
9. Investments in Equity Private equity is a type of asset consisting of equity securities in private companies that are not publicly traded on stock exchange. A private equity investment will generally be made by a private equity firm, a venture capital firm or an angelinvestor. Private Equity is expanding at a fast pace. India acquired US $13.5 billion in 2008 under equity shares and featured among the top 7 nations in the world. In 2010, the total equity investment is predicted to increase upto USD 20 billion. Indian equities promise satisfactory returns and have more than 365 equity investments firms functioning under it.