7 Tips on choosing right and best investment option suitable for you

Overview on choosing right and best investment option suitable for you

Last week when I was discussing with some of my friends, they were confused on how to choose the best options for investment suitable for them. Many of us must be facing similar problem in identifying the good investment options.

7 Tips on choosing right and best investment option suitable for you

  1. What is your risk tolerance: One of the methods of choosing right options for investment depends on your risk tolerance.


    • If you are a high risk taker, invest in good Stocks/Shares, Invest in best performing mutual funds or sector based mutual funds. You can expect a return on investment of 20%+.
    • If you are a medium risk taker, invest in best mutual funds or invest in company fixed deposit earning high returns. You can expect a return on investment of 12%+
    • If you are low risk taker, invest in debt mutual funds or bank fixed deposit schemes. You can expect a return on investment of 9%+. There are various other options like investing in national saving certificates or post office schemes which are safer and provide returns upto 9% per annum.
  2. What is your age: Another method of choosing best and good investment option depends on an investor age.


    • If an investor is in 25-30’s, he can take risk and invest in good stocks/shares or best mutual funds
    • If an investor is in 40’s, he needs to plan for his children’s future. Hence his top priority should be choosing a good investment options for child’s future
    • If an investor is in 50’s he need to plan for the retirement ahead of time. Planning for a good retirement options would be important for him.
  1. What period you want to invest: Another method of choosing the right and best investment is based on period of investment.


    • If your investment period is short term (< 2 years), invest only in short term deposit options like bank fixed deposits, debt mutual funds etc.,
    • If your investment period is medium term (2 to 5 years), invest only in medium term options like diversified best mutual funds, sector based mutual funds, investment in stocks/shares etc.,
    •  If your investment period is long term (5 to 10 years), invest in long term investment options like investment in stocks/shares, diversified best large-cap mutual funds etc.,
  1. What is your purpose of investment: Another way is looking at the purpose of investment. If the purpose of investment is emergency fund, then invest only in bank fixed deposits or invest where you can easily liquidate. You may lose money in case you are investing in mutual funds or stocks where you withdraw in case of emergency.
  1. Are you looking for 100% safety of your investment: Some of the investors look only for safety? They should not invest in mutual funds or stocks. They can invest in good safety investment options like investment in bank fixed deposits, national savings certificate, post office schemes etc.
  1. Are you investing only for Tax Savings purpose: If your purpose is for tax savings, try to invest for 3 to 5 years in good tax savings mutual funds where you expect 20%+ returns per annum. Investment in national saving certificate for tax saving purpose is not a bad idea, but the returns are only 8% per annum
  1. What is your Individual belief?: Have you seen some people believing in investments like gold, real estate? No matter what you say, they still believe in these options for greater appreciations of investments.

Conclusion: For any investment you are planning to make, take a paper and start writing the above options. You would get a good investment option that suits you.

Readers, how are you choosing your investment options? Are you successful till now? Please give your comments

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