The year 2020 has been more of a dramatic roller-coaster ride for investors. The Covid-19 pandemic felt like the Great Recession of 1930, and the Dot Com Bubble wrapped together and compressed into 12 months. That experience provided a lesson for investors in 2021 that – Predicting the future is a risky game.
With many new and emerging non-professionals taking up trading as proactive investors or as a means of other sources of income, these trends in investment with a diversified portfolio are available for investors in the market.
Some investment avenues available in 2021 for investors are the following:
Stocks are an investment in the share market that gives stockholders a share of ownership in a company. The brighter side is that over long periods, equity has been able to deliver higher than inflation-adjusted returns compared to all other asset investments. To invest in equity, one needs to open a DEMAT and Trading account.
Why invest in stocks?
- Appreciation of capital
- Voting Rights
2. Mutual funds
A mutual fund is a professionally managed investment fund that pools money from many investors and invests them in securities such as stocks, bonds, and debentures. The combination of such holdings is known as its portfolio. Mutual funds offer investment management and potential diversification of both investment and risk. An investor may earn money in mutual funds through dividends, capital gains distribution, and through the increase in NAV (net asset value).
3. National Pension System
The National Pension System (NPS) is a government-sponsored retirement planning instrument, which gives the investor the option to set a preferred allocation to various assets, such as government bonds, equity market instruments, and corporate debt. It is a long-term investment plan for retirement.
4. Public Provident Fund (PPF)
Public Provident Fund (PPF) scheme is a long-term investment option that offers an attractive rate of interest and returns on the amount invested. The earned interest and the returns are not taxable under Income Tax. One has to open a PPF account under this scheme, and the amount deposited during a year will be claimed under section 80C deductions. A PPF account can be opened with either a Post Office or with any nationalised bank like the State Bank of India or Punjab National Bank, etc.
Cryptocurrency is a digital currency. Bitcoin is the most widely available cryptocurrency, and its price fluctuates a lot hence attracting many traders. Cryptocurrency has very significant risks, including ones that could turn any individual currency into a complete zero, such as being outlawed because it is yet to be under a proper legal framework in India yet. Digital currencies are uncertain and may fall (or rise) hastily even over very short time frames.
6. Real Estate
Investment in real estate is costly but highly rewarding at the same time. Investments in real estate give returns in two ways – capital appreciation and rental income. Real estate is highly illiquid. Over a while, well-chosen real estate appreciates at a rate that outpaces annual inflation. Real estate investors are entitled to unique tax benefits that allow investors to grow their wealth over time. Rental income earned is not subjected to self-employment tax, and the government offers tax benefits to real estate investors.
Gold is highly liquid, and a scarce resource. It is an investment as much as a luxury good. Gold is one of the safe and secure investments. Investing in gold is worthwhile because it is an expanding investment. For investing in gold, one can invest in Gold ETF’s through SIP’S or in gold mutual funds.
Disclaimer: Information provided is only for educational purpose and general point of view. We are not SEBI Registered, before taking any positions seek professional advice.