What to consider while investing in market-linked instruments in India

There are numerous approaches to put resources in the Indian markets. Different kinds of choices have different parameters and highlights. An investor should settle on a decision according to his/her necessities and inclinations. Investors have many available options to invest in, one is market-linked and another is fixed income options.

If we look at the market-linked investment options, they might offer better returns in the long run and are apt for investor who are ready to take a significant amount of risk. These investments are linked to the market, and there are risks associated with the market.

Today, many investors are trying to grab opportunities in the market and managing risk at the same time. Ambitious investors who want to reap high profits in lesser time are investing in market-linked products, whether they are equity-linked, debt-linked or a mix of both. Inclination towards equity-linked products is more as the returns might end up being higher. But, if an investor wants to play safe, then these investment products may not be the right choice.

Based on the financial objectives of the investors, investments can vary from short duration to long duration. In case of a long term investment, some risks can be managed because time-in-hand is more, but still chances of losses are still there. Fixed interest ventures always have an upper hand in such situation.

While creating an investment portfolio, investors must opt for fund diversity to have security and growth at the same time. Investors should keep a mix of securities and funds to keep the chances of high profits.

If we talk of fixed income plans, these do not offer any kind of market leverage because the mode of operation is to keep the principal amount safe and provide growth in the safest manner possible.

Investors who have fund safety as the top priority can invest in fixed income plans. In these type of plans, the returns are fixed and stable till maturity. Some of the common fixed income investment options are different kinds of Government bonds, Company Bonds and Municipal Bonds, Debentures, Bank Fixed Deposit (FD) and Commercial Papers (unsecured debts).

If an investor is new in the field of investment, then he/she must be mulling over the options of market-linked investment or fixed income investment. A good portfolio can be a mixture of both options to increase the chances of good returns in the long run. If the investor is successful in developing such a portfolio, then there will be a bright chance to understand the financial needs and at the same time protect the initial capital.

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ARN: ED/09/19/15785