have noticed that most people invest in stocks because they want to make quick money. They see their relatives and friends investing in stocks and getting rich over time and want to follow suit.
But then there are other ways of making money too. Ways that seem much safer than investing in the stock market. Like bonds, gold, real estate, Public Provident Fund, monthly savings scheme, etc. So why run the risk of losing money by investing in stocks where the risk is higher? Well, read on.
Gold is a good hedge against inflation. Today, 100 gm of gold can purchase the same amount of goods and services as it could purchase 400 years ago. By investing in gold, one can preserve one's purchasing power, but one cannot increase it. But what else can you expect from the safest investment instrument?
In India, bonds have given annual return of about 10%-11% in the last 30 years. This return marginally beats inflation and investors could preserve all of their money if they invested in government securities or bonds floated by fundamentally sound companies.
By investing in bonds, investor can improve their purchasing power over a period of time.
Real estate investments have given a compounded annual return of about 12-15% over the last 30 years. But actual returns could vary depending upon the location of the property and the timing of the purchase.
For example, land or a flat purchased in Mumbai about 30 years ago would have given much higher returns compared to land/flat bought in smaller cities. But a flat or land purchased in smaller cities about four years ago would have given much higher return compared to Mumbai!
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