Sunday, 30 January 2011

Various Investment Methods for Investors

Following are some investment options which are helpful for new investors or beginners. These are not only for beginners but for all investors. But this is given for the information of beginners in investment field. These are only a brief explanation for each type of investment products and if you need to know more about any item use the search box below or search with any other search engines.

401K

This is a type of investment where an employer deduct money from the employee’s salary and deposited in various investment options as per the option of the employee and the part of salary invested in 401K is exempted from tax and interest earned for the same is also exempted from Tax till it is withdrawn. The 401K is in United States and the employer also contribute almost same amount. This invested amount can be utilized for the retirement needs of the employee.

Employees Provident Fund

This is also just like 401K and a percentage of the salary deducted and deposited in the Fund or any registered trust for the retirement or any important financial goals of the employee. The employer also invest the same and both the amount deducted from the salary and the interest earned also exempted from Income Tax.

Voluntary Provident Fund

The employee can direct the employer to deduct an additional amount from his salary other than provident fund and deposit in the same fund as provident fund. No tax will be levied for the VPF amount and interest thereof.

Life Insurance

Life Insurance policies assure a certain amount at maturity or the death/disability of the insurer. This cannot be considered as an investment but it is a deemed investment. Insurance Companies allowed bonus or any other type of profits for each policy as per the terms of the policy. The premium amount deposited in Life Insurance policies, the maturity value and the claim amount are also exempted from tax with some limitations.

Shares of companies

Shares or stocks are small units of the shared ownership of a company. One can invest in stocks and can earn a part of profit of the company as dividends. You can sell the shares to the share market and can fetch profit from the changing market value of shares. One can trade with shares to get more profit.

Bonds

Bond is also an investment instrument where you can invest money and can earn a guaranteed pre determined interest. This can be done with government or any companies. Bond is a safe or low risk investment and the guaranteed interest can be collect periodically or lump sum with post dated cheques or Electronic clearance (ECS) as per the terms of each bonds.

Mutual Funds

Mutual funds are also investment option where the pooled money of a set of investors investing in shares, securities and other money market instruments by fund houses.  Mutual Fund is a good investment option for the investors, those who do not know how to invest in shares and also wish to earn money from share markets. An expert fund manager will handle the money and investment portfolio.

Money Market Funds (Money Market Mutual Fund)

This type of funds is issued by Mutual funds, banks or brokerage firms. Normally this is a short term investment and the fund holders get interest. This money is invested in high quality securities, liquid and debt instruments. This is a low risk investment option.

Unit Linked Insurance Plan

ULIPs are financial products of insurance companies which have double effects as insurance and the units are act as mutual funds. You will get the insurance protection and growth of your investment from shares, securities and money market instruments.

Annuities

Annuities are onetime payment to the insurance company to get back a regular income for a fixed period of time or till the death of the investor whichever is earlier.  Good for retired people to get a fixed amount just like pension.

Certificates of Deposit (CDs)

Certificates of Deposits are a type of deposit where you can deposit money and can earn interest a little bit higher than savings account. This also may call fixed deposits and a very safe method of investment. You can withdraw the money after the time period or whenever you require money.

Investment in Properties

You can purchase house property; land etc. and can get rent for letting out or can make profit from resale of the property. You will get a regular rental income or profit from the escalated price. Real estate investment is a better option of investments.

Gold and Precious metals

You can purchase gold, silver and other metals and can sell it off when you need money or when the price is high in the market. The price of gold shows only an upward trend and you will not lose your money. When you buy gold for investment purpose, buy pure gold (24 K) in the form of bullion, coins or bars. When it will in the form of ornaments the purity may be compromised.

Currency Trade (forex)

Currency exchange is also a method of making profit and you should be experienced for the same. Some forex sites allow you to start a free demo account with virtual money and after getting enough experienced, you can shift to real trade.

Antiquities

Precious Old and ancient arts, crafts and other equipments can be collected and sold for profit. But always check with concerned government departments, because some ancient items cannot be purchase or sold legally.

All the above options are good for making more money through investments, but remember that the profit or loss is in the hands of the investor. Remember the universal rule of investment is that “do not put all your eggs in one basket”. Diversify your investments and play with your hard earned money wisely after enough research and analysis.

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2 comments :

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