How to invest Rs1,000
28 Feb 2018
It is a common misconception that you need to have a substantial amount of money before you start an investment. Even if you have as little as Rs1,000, you can get started, and with the right knowledge about where to invest, expect good returns. You need to clearly understand your investment objective and the risks you are exposed to with each investment. Here is a pyramid that tells you about the different kinds of investments.
The pyramid provides a view of 4 different types of investments with varying objectives and associated risks. Any investment must be dictated by-
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The objective.
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The risk associated.
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The term period.
Let us go through each one in detail. Scenario 1-
If your goals are –
Then it's better to stick to Growth Fund Stocks.
This scenario favours risk-taking, relatively young investors with time on their hands.
Scenario 2-
If your goals are –
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Capital growth and current income generation
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Over a mid-term period of 3-5 years
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And a capacity to absorb medium to high risks
Then your choice should be:
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Balanced Fund Stocks
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Bonds and Debentures
These are more suited for pensioners and those with a limited investment timeframe.
Scenario 3-
If your goals are –
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Current income generation
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Over a short-term period of 1-3 years
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And a tendency to take low-medium risks
Then you may be attracted to Income Fund Stocks.
Type |
Securities |
Money Market Funds |
Certificates of Deposits, commercial paper, short-term Treasury bills |
Bond Funds |
Corporate and government bonds |
Equity Income Funds |
Stocks that pay regular dividends |
This is ideal for the investor who wants to generate a safe and regular income with an interest higher than a savings account.
Scenario 4-
If your goals are –
You may consider
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Liquid funds:
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Short-term deposits
This is for preserving capital and earning a decent margin within a short time.
So, get your priorities right, and put that Rs1,000 to good use.