- Cash – Domestic & Foreign currencies
- Fixed Deposits – Corporate & Banks
- Bonds – Corporate, RBI and post office schemes
- Equities – Stocks, warrants, Convertible Bonds, Preference shares
- Mutual Funds
- Commodities – Gold, Silver
- Real Estate
- International Assets – Equity & Bonds
Option 1: Your cash balances in rupee account are the most owned asset. NRI’s hold foreign currency balances. This is a default option for all investors and fits into the ‘low-risk low return” category
Option 2: Fixed deposits are traditional investment avenues for people for many years. They can be broadly classified into Corporate and Banks deposits. Bank deposits offer more comfort for investors. The general perception that Bank FD’s are safe and guaranteed is a myth which is slowly changing with time
Option 3: Corporate bonds broadly classified into private and public. Some of the popular options are tax-free bonds and Government bonds. Post office schemes are other popular investment schemes that have been the biggest investment vehicles.
Option 4: Equity is the most desirable asset class for its high potential to generate returns. But the risk associated with it makes it difficult for investors to manage on his own.
Option 5: Mutual Funds are the most popular investment vehicle. The highlights are
- Professional management
- Transparent pricing
- Disclosure norms
- Better Investment returns
- Tax advantage in terms of dividend income and capital gains.
- Ease of liquidity
Option 6: Insurance can be classified into and traditional products. Overall Insurance was relegated to pure insurance cover products as ULIP could not prove the competitive edge in investment returns. The revenue streams for insurance advisers have been the major motive for investment and is thankfully in a downward spiral
Option 7: Commodities – Investment opportunity in Gold, silver, etc. Investors look up to this asset class for short-term Trading purpose rather than long term investing. The volatility is too much for retail investors to tolerate and has been a choice for res
Option 8: Real Estate – It is the most admired asset class. Uncertainties clouding the real estate markets have kept investor off. The high returns offered by real estate in the past is difficult to erase it from the minds of people and continues to get some support. However With liquidity concerns and lack of transparency it is no more a preferred choice.
Option 9: International Assets form an interesting investment option. Investors considering investing in equities of China, Hong Kong, US, and a few other Asian countries. Bonds are mostly restricted to US Treasuries which is more a currency hedge
Summary: Investors need to choose wisely and every class does not fit all. They need to be aware that most trending asset class need not file their profile.