Money does not grow on trees; it must be earned! Every individual intends to grow their hard-earned money through investments. A systematic investment is necessary to fetch a comfortable lifestyle and fulfill dreams or goals. A smart investor should choose his investment plans keeping in mind the rising cost of living and future goals.

Individuals constantly looks for better investment options with good financial returns. Some investments carry high risk, but they have the potential to generate higher inflation-adjusted returns in the long term. On the other hand, some investments come with low-risk and therefore lower returns. Hence, while selecting an investment product, one should always match their risk profile with associated risks of the product before investing.

High returns in a short span of time are a delusion. Investors with such a wrong attitude often falls prey to plans which guarantee exorbitant returns in a short time with little or no risk. Unfortunately, a product with high-return, low-risk combination does not exist. Risk and returns are directly linked, they always go hand in hand. This invariably means, if one expects high returns, one should also expect higher risk and vice versa.

It is better to be open to a range of investment plans based on an individual’s short term or long-term goals and risk-taking attitude. It can range from short term goals like buying a car, a house, or any other assets, to long-term goals such as saving for a child’s higher education, a child’s marriage, retirement or at times a combination of all the above.

The main Investment options available in the market are listed below. An individual can opt different products based on their risk aversion and based on their short term and long-term goals.

1. Direct Equity
2. Equity Mutual Funds
3. Debt Mutual Funds
4. Bank Fixed Deposit (FD)
5. Real Estate Investment
6. Gold Investment
7. National Pension System / Public Provident Fund

We will now look into the first investment option, Direct Equity

An equity investment is money that is invested by purchasing shares of a company from the stock market. These shares are typically traded in a stock exchange. Equity investment has a proven high return compared to all other class of assets (investments). The return offered by direct equity funds are generally on the higher side when held for a longer period. To earn high returns, one needs to pick the right stock at the right time .

On the other hand, investing in shares or stocks is not everyone’s cup of tea. It's a volatile investment with no guarantee of returns. An in-depth knowledge or professional advice is necessary to invest in the equity market. The risk however can be reduced to a certain extent if the investment is diversified across sectors and market capitalisations (Large, Mid and Small Caps). To directly invest in equity, one needs to open a demat account. Many banks now allow customers to open a 3-in-1 account (including a demat). One can otherwise approach a registered brokerage firm for opening a demat account.

Coming up next week : Equity Mutual Funds