All About Investment

"If you don't find a way to make money while you sleep, you will work untill you die"
~ Warren Buffet

The act of putting money, time,effort, etc. into something to make a profit or to gain an advantage is called an investment. Investment in several financial assets is the best and probably the only way for wealth maximisation for an indivisual. The farmer who goes to the nearby river to fetch water for crops will be in trouble in comparison to the one who invested his time and money to make a canal.

The investment opportunities for an indivisual investor are as follows:

• Government bonds: the government bonds are issued by the Central Government of India and managed by Reserve Bank of India. These kind of investments are for those people who do not possess a high risk appetite and focus on the security of their principal amount. options like Treasury Bills, also known as deep discount bonds, are bought at a discounted rate and sold at the market price, the difference being the profit. 91 days, 182 days, 364 days bills are currently available in india for investors.

• Banks and other financial institutions: The money deposited in the bank also yields interest. There are 4 main types of bank accounts, namely current account, savings account, recurring deposits account and fixed deposits account, named in the increasing order of amount of returns they can provide. This investment opportunities are usually meant for keeping your principal safe and not for exponential growth of your money.

• Stock markets: This is the best place to invest your savings if you aim for wealth maximisation. Carrying a high risk, the stock exchanges in india is a platform for trading the shares of all the listed public companies. however, investment in these securities carries a high amount of risk and one should always do a thorough research on the stocks of the company before investing.

• Mutual Funds. The mutual funds are a great way to invest in the securities market. It refers to a process in which several small indivisual investors pool in their money to form a large corpus amount, which is then invested in long term ventures citing a larger profit, though after carefull research and analysis by the mutual fund companies. This comes very handy and usefull to people who wish to invest in the high risk markets, but lack the time and knowledge to conduct ample research in order to select the stocks and decide the correct time of investing.

A large bunch of people are still clinging to the idea of "living their income" and ignore investing. Many others start when its too late to make wonders out of the power of investing. A quick formula for deciding in which opportunities should one invest is as follows:

"Subtract your current age from 100. The amount you get should be invested in equity, i.e, in high risk options. The residual amount should be in less risky options."

This formula seems relevant as the young generation is not burdened with many commitments on the financial front. But as one grows older, the responsibilities of a person tend to increase and hence their risk appetite also declines.

At last, one should always remember that the one who is sitting in the shadeof a tree planted and nurtured it many years ago. We should never stop investing our money and make our money work for us.