Stocks represent ownership in a company. When one buys a stock, he/she is buying a small percentage of ownership in that company. The value of a stock can increase or decrease based on various factors such as the company's financial performance, industry trends, and overall market conditions.
Overall, investing in stocks can be risky, but it can also offer the potential for high returns.
Gold is a popular investment asset that is considered a safe haven during times of economic uncertainty. Gold can be purchased in various forms such as physical gold, gold coins, and gold ETFs (exchange-traded funds). The value of gold can be influenced by various factors such as supply and demand, inflation, and currency fluctuations.
Mutual Fund investment
A mutual fund is a professionally managed investment vehicle that pools money from many investors to purchase a portfolio of stocks, bonds, or other securities. The value of a mutual fund is determined by the value of the underlying securities in the portfolio.
Investing in mutual funds can offer diversification, which can help reduce risk, as well as access to professional investment management.
Systematic Investment Plan (SIP) is a disciplined investment plan that allows investors to invest a fixed amount of money at regular intervals (usually monthly or quarterly) in a mutual fund or other investment product. SIPs help investors to invest regularly and build wealth over time, without the need to time the market or invest a lump sum amount.
Adhoc & Lumpsum investment
These are generally unplanned, unexpected investments. Adhoc investments can be both small or large investments. Lumpsump is when user invests in large sum of money in a single transaction, rather than spreading it out over a period of time through regular investments.
Pro - This type of investment can be advantageous in certain circumstances, such as when an investor has a large amount of cash on hand or when they believe that the investment is currently undervalued and want to take advantage of the opportunity.
Con - The risk it caries is that it exposes the investor to the volatility of the market at a single point in time.
Why people do such investment ?
Lack of awareness: The users might not be aware of the benefits of setting up an SIP. They might not know that investing regularly can help them achieve their investment goals in a more disciplined and systematic manner.
Cash flow management: The users might prefer to invest a lump sum amount when they have surplus cash available, rather than committing to a regular investment plan that requires a fixed amount to be deducted from their bank account every month.
Fear of commitment: The users might be hesitant to commit to a regular investment plan for a longer period of time. They might prefer to have the flexibility to make investments when they feel comfortable, rather than being locked into a regular investment plan.
Lack of trust: The users might not trust the investment platform or the investment products offered by the platform enough to commit to a regular investment plan. They might prefer to make adhoc investments to test the waters before committing to a regular investment plan.
SIP in detail
By investing a fixed amount of money at regular intervals, investors can benefit from the power of compounding and build wealth over time. Investment options available through SIPs are:
Equity mutual funds: Equity mutual funds invest in stocks of companies across various sectors and market capitalisation. Equity mutual funds can be further categorised into large-cap, mid-cap, and small-cap funds, based on the market capitalisation of the companies they invest in.
Debt mutual funds: Debt mutual funds invest in fixed income securities such as bonds, debentures, and government securities. Debt mutual funds can be further categorized into liquid funds, ultra-short-term funds, short-term funds, and long-term funds, based on the duration of the underlying securities.
Hybrid mutual funds: Hybrid mutual funds invest in a mix of equity and debt securities to provide a balanced portfolio. Hybrid mutual funds can be further categorized into aggressive hybrid funds, balanced hybrid funds, and conservative hybrid funds, based on the allocation of equity and debt securities.
Exchange-Traded Funds (ETFs): ETFs are similar to mutual funds, but are listed on stock exchanges and can be traded like stocks. ETFs can offer diversification, low cost, and liquidity compared to mutual funds. Some of the popular ETFs in India include gold ETFs, index ETFs, and sectoral ETFs.
Index funds: Index funds invest in a portfolio of stocks that track a market index such as the Nifty 50 or the BSE Sensex. Index funds are known to offer low cost and low volatility compared to actively managed funds.
Real Estate Investment Trusts (REITs): REITs are investment vehicles that invest in income-generating real estate assets such as commercial buildings and rental apartments. REITs offer investors exposure to real estate assets without the need to invest in physical properties.
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