Various investment options available in India:
• Savings Bank Account
The first banking product used by people, it offers low interest, making them only marginally better than safe deposit lockers. • Money Market Funds (also known as liquid funds)
It offers better returns than savings account without compromising on the terms of liquidity. These liquid funds are a specialized form of mutual funds invested in extremely short-term fixed income instruments. Unlike most mutual funds, they are primarily oriented towards protecting the capital and then later maximizing the returns. • Bank Fixed Deposit (Bank FDs)
For investors, who are ready to take low risk, Bank FDs are best for 6-12 months investment period. Also known as term deposits, Bank FDs would be offered by all banks. Minimum investment period for them is 30 days. • Post Office Savings Schemes (POSS)
POSS are popular because they typically yield a higher return than bank FDs. The monthly income plan could suit a retired individual or the one's having regular income needs. The Post Office offers various schemes that include National Savings Certificates (NSC), National Savings Scheme (NSS), Kisan Vikas Patra, etc. • Company Fixed Deposits (FDs)
FDs are instruments used by companies to borrow from small investors. Typically FDs are open throughout the year. Invest in FDs only if you have surplus funds for more than 12 months. Select your investment period carefully as most FDs are not encashable prior to their maturity. • Bonds and Debentures
These are option for large investments or to avail of some capital gains tax rebates. Besides company FDs, bonds and debentures are the other fixed-income instruments issued by companies. As a result of an illiquid secondary market and a lack-lusture primary market, investment in these instruments is largely skewed towards issues from financial institutions.
• Mutual Fund
Mutual funds are like investments made in partnership with someone else, because more or less they work on same principles. Investors pool together their money to buy stocks, bonds, or any other investments. • Life Insurance Policies
Life insurance premiums, depending upon the policy selected, include the costs of - 1) death-benefit coverage
2) Built-in investment returns
3) Significant overheads, including commissions.
This implies that if one buys insurance solely as an investment, one is incurring costs that one would not incur in alternate investment options. • Equity Shares
Maximum returns over the long-term, invest funds you do not need for at least five years There are two ways in which one can invest in equities-
1. through the secondary market (by buying shares that are listed on the stock exchanges) 2. through the primary market (by applying for shares that are offered to the public) • Gold :
This is the oldest investment option available in the world. The way gold never looses its lusture, investing in gold is never loss making proposition in medium and long term. In the last 3 years this form of investment has yielded highest return than any form of investment. This form of invest is highly liquid. • Real Estate
This form of investment has always outperformed any other form of investment. However one has to invest huge amount as there is no scope to invest small amount. Liquidity is the main concern in Real estate investment as buying and selling of property is time taking activity; however there are 2 benefits of investing in property 1. Capital appreciation
2. Rental income
1. THEORETICAL BACKGROUND
Correlation is defined as degree of relationship between two or more variables. It is also referred to as co variation (variation in one variable affecting the variation in the other variable). The degree of correlation between two variables is called simple correlation. The degree of correlation between one variable and several variables is called multiple correlations....