Where can I invest my money?

Now that you know that you need to invest if you wish to see that Volkswagen Beetle parked in your garage, I’m sure most of you must be in a dilemma as to where do you actually invest your money! The sheer number of financial products which claim to offer you great returns at minimal risk is mind boggling! Combine this with the gibberish information given in their brochures and you will be soon rethinking your decision to invest.

The single greatest factor in growing your investment is the rate of return (RoR) you get on your investment and as you will see highest returns are offered by investments that are the most riskiest. Of course there are ways to minimize your risk while maximising your RoR, but more on this later. For starters, let’s see what investment avenues are open to you as a retail investor.




Lets discuss a few important ones in detail here

1. Fixed Deposit

A Fixed Deposit or FD accrues 8.5% of yearly profits, depending on the bank and the period of investment, which makes it a widely sought after and safe investment alternative, as all banks operate under the guidelines of the RBI. The minimum tenure of FD is 15 days and maximum tenure is 5 years and above. Senior citizens are entitled for exclusive rate of interest for FD’s.

2. Insurance policies

Insurance is also considered a good investment alternative as it offers services to indemnify your life, assets and money besides providing satisfactory and risk free profits. Indian Insurance Market offers various investment options with reasonably priced premium. Some of the popular Insurance policies in India are Home Insurance policies, Life Insurance policies, Health Insurance policies and Car Insurance policies.

3. Public Provident Fund (PPF)

Like NSC, Public Provident Fund (PPF) is also supported by the Indian government. An investment of minimum Rs 500 and maximum Rs 70, 000 is required to be deposited in a financial year. You can create a PPF account in a GPO or head post office or in any any nationalised bank branches and avail an income tax deduction of up to Rs 1, 00,000

under Section 80C of IT Act. The 8% rate of interest of PPF is evaluated yearly with a lock in tenure of maximum 15 years.

4. Mutual Funds

Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. Mutual funds issue units to the investors, which represent an equitable right in the assets of the mutual fund. Like stock market, mutual fund investment are also entitled for various market risks. Depending on the objective of the funds like long term growth and low risk factor or high income growth with high risk factor or low growth rate and stability of principal, the fund manager invests in respective fields on behalf of you as shareholders.

For individual investors it is very easy type of investment because someone else manages their funds, take care of accounts and invest money over many different available securities. But a word of caution to all you novices, the performance of Mutual Funds may not have been as impressive as it seems over the years, so analyze the performance and returns of a fund before you put your hard earned money into it!

5. Stock Market

This one will bring you the closest to owning that Volkswagen Beetle! Investing in share market yields higher profits. Influenced by unanticipated turn of market events, stock market to some extent cannot be considered as the safest investment options. However, to accrue higher gains, an investor must update himself on the recent stock market news and events.

Investment in the Stock Market is quite easy, you only need a Trading and Demat Account first and many banks, private agencies offer this service. But it may not be an easy task, as there are over 5000 companies listed in the BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). Making a choice of the company for buying shares is an important thing to do. Keep watching this space for more on this topic.

What’s Next??

Now that you know all the options available to you, you need to assess your risk and return appetite.

“Show Me The Money….”

Mohit Gupta | MarketDhara@Gmail.Com

I read a quote by a famous US based Futures trader named Ed Seykota, around twelve years ago. He said “Everybody gets what they want, from the markets”. It is only recently, that the true import of this statement dawned upon me.

When you ask market participants what they want from the market, they will all say that they want to make money. However, things are not always what they seem. There may be different reasons for being in the market and making money through price differentials may not be prime amongst them. Here are a few examples :

The day trader: He is in it for the action. If you ask him a hypothetical question whether he would like to earn Rs. 10 per day through day trading or Rs. 100 per week by trading once a week, most probably he will choose the former. For such people, it is the thrill of being involved with the rough and tumble of markets that is exciting. Many even use the colloquial term “Time-Pass” when asked as to why they are glued to the screen 5×5 (Five hours a day for five days in a week). Money is the ostensible motivator but the real reason is “the kick” which they get from being a part of the action.


The stockmarket analyst: The markets have given birth to this animal called an analyst. However many a time, making money from his/her recommendations is the last thing on the analyst’s mind. They are in the market only because it offers them a well-paying job. Analysts who work in large brokerage houses usually do not buy the stocks they recommend. They justify this strange behaviour by citing “compliance-related” reasons. It is rather surprising that the compliance department does not permit an analyst to put her money where her mouth is. Not that many analysts mind it. They relish the accoutrements that accompany their job. Analyst meets in five-star hotels, plant visits in scenic locations, the networking with other analysts (which may help in securing a lucrative new assignment), etc. Why bother to stake your capital in the market when your job gives you everything without any risk…


Some company promoters: For many promoters, stockmarkets are a necessary evil. They are required for periodic fund raising and nothing more. For them, despite being market participants, money is made through their business and not from price gyrations. Of course, for investors it may make sense to tag along with managements who are involved with developing their business as compared to those who have an eye on the quotation screen.

Brokerage houses: They aim to make money by making others transact as much as possible. They are not so much concerned with price movements, as to find reasons for stimulating action among traders. In a sense, the day trader and brokerage houses share a symbiotic relationship. If the day trader is seeking action, the broker does his utmost to provide it.


The financial media: Though not strictly “market” participants, they certainly mould the opinions of several people in the market. By virtue of their daily appearances many media personnel are elevated to the status of “stars” and exult in the adulation and feeling of power that accompanies it. They love the market as that is their vehicle to stardom.


The investor: He is the most invisible market participant (save and except for a few whom the media anoints as a “Wizard” or “Oracle”). He is the one who is really in it for the money and he tries to attain his objective in as unobtrusive a way as possible. Large investors come into the limelight when they make an open offer etc. but there are many other individuals or outfits who disregard the glitz and glamour of the stockmarket as it is irrelevant to their main objective, which is wealth creation.

Seykota himself was a semi-recluse who operated far away from Wall Street as he wanted to remain unaffected. He was clear about what he wanted from the market.

Are you frustrated about not making money in the market? It may be worthwhile pondering as to whether that is what you really want or are the markets already giving you what you want and you are not aware of it…..