Taher Suterwalla explains basic investment types :

Earning money is not easy but when it comes to investing it, the task is all the more daunting. It’s your hard earned money. How can you just invest it with any ponzi scheme acting as if you don’t care if the money is jeopardized? You cannot. I mean you can jeopardize your money (if that is what you prefer) but under normal circumstances,you won’t. You will do enough research before taking any decision. But even then, the problem isn’t solved. You will be left baffled with all the varied choices the investment market has to offer. You will keep rolling your eyes hoping to find some guiding light. Well we think Taher Suterwalla can simplify a few things for you by introducing you to various types of investments that you must know of:

  1. Bonds
    Understand bonds as debt, not a debt that you have to repay but a debt that someone else owes to you. So when you purchase a bond you actually are lending your money to some company or government. In return, they will pay interest on your money timely and eventually pay you the principal amount. As per Taher Suterwalla,the best thing about bonds is that they are relatively safe. In most of the cases your investment will earn you guaranteed profit. However, since the risk factor is less, the profit or interest given to you is also less. So what you get in return isn’t very much, but nonetheless confirmed.

You must have heard of the word equity. Well that is essentially a stock. The wall street people use equity word just to deceive you. Buying a stock allows you to be a shareholder of the company with which you are investing. The company in return gives you profits, if any, depending upon the percentage of stocks you purchased. This profit which is divided among the shareholders is called dividend. If you hold a large number of stocks, then you get a decision making power in the company. (Although that depends upon the company’s policies).That means you will be able to vote at the shareholders’ meetings. Stocks offer you good amount of return but they are highly volatile. They fluctuate on daily basis and hold high risk factor. There are times when the stocks in turn cause you loss. Therefore one needs to be careful while investing in stocks.

As the name suggests, mutual funds refer to the funds that are created collectively by a group of people and then given to a banker for investing them in rewarding schemes. People generally prefer hiring a banker to handle this.

  1.    Deposits

People can deposit their money in banks. They will be offered suitable return on their  money. But in this case as well, returns aren’t much. Example – fixed deposits.

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