Investment : new age method to grow savings

What is investment ?

Investment is the process of allocating saving or windfall income  in form of  money, with the hope  of generating an income or capital gain  in the future course of time . It is a way of growing your wealth over time and achieving your financial goals. Normally every word have different meaning with its reference, for some person or precisely to say for middle class person investment are the way to fulfill their financial goal like higher education of children , marriage of daughter, retirement planning  etc. On other hand the person  with handsome amount of fund ,they buy more fund on cost of their credit and  trade investment instrument and make huge sum of profit or gain or return you can name anything. So as of now for me investment have is broadly divided in two segment in India  ,

1)    Middle  class investment

a)    Remain invested for long term

b)    Mostly invest in traditional mode of fund

c)    Avoid to take high risk

d)    As they remain long term investment they are part of growth engine of nation

2)    Rich class investment

a)    They invest for short to medium term

b)    Always search new type of investment

c)    Love to take risk ( risk hai to ishq hai )

d)    They always hunt for opportunity if they find same for foreign nation they will not hesitate.

Type of investment 

A)    One bases of time :

1)    Long term investment :

Long-term investment  refers to the method  of buying and holding assets for a period exceeding five years and in case of share for more 1 years  with the goal of achieving long-term financial objectives like retirement savings or wealth generation. Here's a breakdown of the key aspects:

Key benefit  of long-term investment

a)     Compounding: This is biggest USP  of long-term invest. By investing and  reinvesting your saving and returns , you earn additional profit  on your initial investment and accumulated gains, leading to exponential growth over time.

b)    Reduced impact of volatility: Short-term market fluctuations create lot of noise and fear. In case of long term investment smooth out over  periods of time , minimizing the impact of market downturns on your portfolio.

c)     Less stress and anxiety: Short term investment  expose you to  stress and anxiety due  of constant monitoring and trading, but long term investment enabling you to focus on your financial goals.

d)    Potential for higher returns: In case of long term investment it absorb short term hiccups of market  and  have outperformed short-term strategies.

 

2)    Short Term investment

Short-term investments are financial instruments with a maturity of less than five years, in case of Share less than 1 year .typically have objective of  liquidity and capital preservation while generating higher returns than traditional savings methods .

Key benefits   of short-term investing:

a)    Liquidity: Easy access to your funds, enabling you to meet short-term financial goal  and could  capitalize on emerging opportunities than come in between time period of long term investment

.

b)    Lower risk: Compared to long-term investments, these options prioritize capital preservation and offer lower volatility.

 

c)    Potential for higher returns: If any  have  person have access to news flow and alert with event could earn higher return  even  outperform traditional savings method  while offering a buffer against inflation.

 

d)    Flexibility: Allows you to adjust your portfolio quickly based on changing market conditions or financial goals.

 

B)    Based on risk

1)    High risk investment

High risk by name refer higher change of loss of investment. Higher risk of asset depend upon the nature of holding (Public sector or private sector )and regulation in market ( SEBI /Govt./ private )

                        Type of High risk investment

·         Private equity (PE ) : Investment in well established companies but not listed exchange like NSE , BSE . companies like BOAT , OLA  if any one invest in respective companies   then they are called PE or Private equity

·         Venture capital : when any company raise fund in early stage of their growth  on bases of their idea, that comes under venture capital it’s could be risk as the brand is not one of established in its space

·         Commodities : Trading and investment in  physical or derivative  assets like oil, gold, or agricultural products, subject to cyclic  fluctuations in demand and supply.

·         Crypto-currency : Investing in digital-cryptic assets like Bitcoin , Ethereum  ,tether , binance, neo, helium  which are highly volatile and speculative as its not regulated

·         Option trading : Instrument  giving the right, but not the obligation in case of buying , to buy or sell an underlying asset at a specific price (strike price ) by a certain date, offering potentially high returns but also significant high  risk.

·         Emerging market fund:  Investing in stocks or bonds from developing countries with high potential but also high volatility.

·         Forex trading : Speculating on the value of currencies against each other, requiring substantial knowledge and experience

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