According to the nature of an investment, your rate of return can differ. Hence having an understanding of your returns can be really important.Fixed deposit in many cases is the easiest investment options for most of the people to go with, as the value of the money and the interest eventually increases 8% p.a. Most of the known banks and NBFCs have FD Schemes with a return rate of interest of 8 – 9%. But it is likely to go even lower due to the new system in the financial market since 2016 December and after the effects of demonetization.
Another factor affecting returns is inflation. Inflation makes the value of your cash lower in the coming future. Inflation means in basic economics, that the value of money today will not be equal to the same money in the future.Also, the risk is a part of every financial investment. Even if you save your money and do not invest it, you will still have a risk of losing the value of that cash. Also, savings accounts do not have enough of a rate of interest to provide you with any return. Hence in all aspects, you need to handle risk. Risk management is one the best ways by which you can make a profit.
An investor now has more options like investing in Gold, Real estate, fixed income, and commodities. Investments like gold and fixed deposit do get affected by the inflation and can get you low returns completely opposite to what you were told.
If your goals are long term wealth building, gold helps investor’s hedge against inflation or currency depreciation. Gold has a store value that maintains its price year by year. However gold has no parallel relationship with the interest rates. So if in future the rate of interest is lower, gold will still hold its purchasing value.
Real estate is also a better option for many in terms of looking for some kind of stable return. Since past 10 years, the real estate has given people almost 3 times of their invested value in India. But real estate is also affected by any financial crises or economic inflation. Yet this option is still better than any fixed deposit, as you can earn good rent on your investment, and you can sell off the asset and get liquid cash. But the return is based on the location of the property and many area factors must be considered before you invest in real estate.
Additionally, equity can be profitable if invested in for more than 3-5 years. As equity returns are based on compound interest calculations that make the investment even more beneficial if kept for a long period of investment. You can check your returns with the help of fixed deposit interest calculator. If you are looking for short term investment plans, then equity can be riskier than fixed deposit.Hence your investment plan always depends on your goal. According to the goal, you can choose from various investment options that best suit your needs