One can divide
one's investments into parts. One part maybe used for speculate purchase;
another could be used for conservative buying etc. This leads one to the kinds
of investments that one can make.
These can be
broadly classified into the following groups:
a) Very secure
fixed income investments
b) Secure fixed
income investments
c) Fixed income
investments
d) Equity Shares
a) Very secure fixed income investments
are those
that are very safe and yield a fixed dividend or return every year. As the return is often lower than the rate of inflation, their purchasing power falls - E.g. Deposit with a bank.
that are very safe and yield a fixed dividend or return every year. As the return is often lower than the rate of inflation, their purchasing power falls - E.g. Deposit with a bank.
b) Secure fixed income investments are
those that pay a fixed return and are reasonably secure. They do bear the risk
of economic downturns. They guarantee a fixed return. E.g. Schemes floated by
mutual funds.
c) Fixed income investments are those that
give reasonable returns but are not necessarily very safe. The rate of interest
is comparatively high. E.g. Debentures and Corporate fixed deposits.
d) Equity Shares are the ordinary shares
of companies. This investment can be risky if the company makes losses or go
through an economic recession, the value in shares could plunge. On the other
hand, if the company is going through a good time, the shares can soar up.
Equity shares are divided as income shares and growth shares.
These types of shares will be explained in the future blog.
