10 Ways to Invest If You’re Afraid of Losing Money
If making money is a slow process, losing it is quickly done.
Human fears have known to get the better of us for centuries. There was a time when the most feared thing in life was death, but apparently, we fear going broke even more than dying. Probably because losing money is far easier than earning it.
Going broke is indeed scary, but fortunately, it’s not as unanticipated as the other one.
If you lead your financial life simply going by a fraction of Warren Buffet’s numerous quotes, chances are, you’ll never go broke!
See this one for example:
If you are someone who is more comfortable in resting their money in the bank account than invest it, then this post might just give you a different perspective on how you can invest and yet keep your money safe.
Let’s talk about 10 ways to invest if you’re afraid of losing money:
Types of Investment options:
1. Liquid Funds:
Also known as debt mutual funds, these are practical for people who don’t wish to lock funds in a long term investment, wish to keep it handy, and still grow it in whichever way possible.
You can invest your money in extremely short-term market instruments including treasury bills, government securities and call money for a maturity period of up to 91 days. Know more about Liquid Funds here.
Liquid funds are ideal to park your surplus cash for high returns. Here are the top 5 liquid fund options in India.
2. Debt instruments
A debt instrument is a fixed income asset where you, as a lender, can earn a fixed interest on the principal amount of the debt from the taker who is raising funds at a cost. You get fixed yet higher returns in debt instruments than bank FDs. Promissory notes, debentures, and bonds are some examples of debt instruments.
Considered as one of the safest assets in our country, Gold remains a popular investment choice. However, buying and storing gold isn’t a hassle free process.
This is where Gold ETF plays an important role. Gold ETF is exchange-traded fund in which you can invest using your demat and trading account.
Here are 5 most popular ETFs available in India:
4. Bank FDs
If you are absolutely reluctant of investing your money anywhere, this is one option which still remains. You just have to deposit some amount from your savings account into an FD of a specified duration and reap the benefit of 6-7% interest which might not be as high as other investment options, but it is still better than saving your money in your savings account.
5. National Savings Certificate
NSC, a Government of India initiative, is a fixed income investment scheme which can be opened from any post office. They are again good for people who are very apprehensive of taking their money out of their savings account.
While NSC cannot provide inflation-beating returns like some mutual fund schemes do, they are still considerable as they offer a fixed interest rate which is currently 7.6% p.a.
6. Fixed Maturity Plans
Fixed maturity plans are closed ended Mutual Fund plans that come with a pre-defined tenure that ranges from 30 days to 5 years. Money invested in an FMP goes into high-rated securities and corporate bonds which ensures a reasonable and predictable rate of return.
Investing in an FMP requires you to invest in the duration of a New Fund Offer which means that there’s an opening date and a closing date of investing in an FMP.
7. Short term floating rate funds
As the name suggests, short term floating rate funds are a form of a debt mutual funds where your money goes in debt securities with a variable interest rate. This type of investment is highly beneficial when the Interest rates are going up. It also offers greater liquidity. However, it is always better to invest via mutual fund consulting services if you are a first timer.
8. Large Cap Mutual Funds
Large cap mutual funds are equity mutual funds that invest in shares of large cap companies across different sectors. Since your money is invested in large cap companies, the risk element is low and far lesser than mid cap and small cap mutual funds. This makes it a considerably good choice for investors with a moderate risk appetite.
Here are the top 5 large cap investment options:
9. Corporate Fixed Deposits
Unlike your regular bank fixed deposits, corporate fixed deposits are issued by corporates and usually have 1% to 3% higher rate of interest than bank FDs. While being an attractive and popular investment choice, they also require knowledge and caution before investment. Here are 10 things you must know before investing in company fixed deposits.
10. Portfolio Management Service
If you are still afraid of making wrong investment decisions, Portfolio Management Service (PMS) is your best bet. Having experts manage your wealth and portfolio is the easiest way to ensure that your money isn’t just safe but also grows leaps and bounds. Under PMS, you get a professional money manager to help you meet your specific investment objectives with tailored advisory.
While I hope this piece must have given you some ideas on how to let that money breathe out of your savings account and nurture itself to grow, it sure is a tricky task to decide where to invest. So when in doubt, professional portfolio management is the way to go.