In our last post we looked at difference between investment and savings. In this post we will cover major financial instruments for investment and savings. These are also called asset classes. These asset classes will help you reach your financial goals. Below are major types of asset classes
Bullion
This is investment made in bars/coins or in any other forms of precious metals like Gold, Silver or Platinum. This investment has limited liquidity. Gold and Silver being most sought after avenues of savings in India. Recommended for common investor.
Equities
This is most talked about instrument of all. Equities are shares of companies listed and traded on various stock exchanges. This asset class is volatile in short run but very good at long term wealth generation. Highly recommended for common investor.
Debt
Debt is an umbrella term used for financial instruments which includes Bank and Corporate FDs, Public and Private Bonds and any other form of lending which may yields fixed or variable returns. Recommended for common investor.
Real Estate
Real Estate investment can be in residential homes, commercial shops or showrooms or land. Among these, land is the least liquid. Both residential or commercial investments can provided rental yield. However India has one of the lowest rental yield in the world, which technically makes real estate investment less favourable among other asset class but certainly not less attractive. Not recommended for common investor as common investor owns a house which is not an investment and investing in additional house, can be very costly and not financially prudent decision.
Commodities
In India, Commodities as an asset class started very recently. Commodities relate to all agriculture produce, metals, crude oil, natural gas etc. Commodities are volatile and not suggested for common investors. Not recommended for common investor.
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Till then Happy investing !!!
