[fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none” last=”no” hover_type=”none” link=”” border_position=”all”][fusion_title size=”1″ content_align=”left” style_type=”underline solid” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]Types of Financial Instruments in India[/fusion_title][/fusion_builder_column][fusion_builder_column type=”3_4″ layout=”3_4″ last=”no” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ animation_offset=”” class=”” id=”” min_height=””][fusion_text]
In India there are many families who save money on monthly basis from their income to make their future more secure. They simply put all their money in the savings account or in their locker, but the question is,
Is their money multiplying?
Their money remains in the bank account over the years and the amount remains somewhat same. What can we do to multiply our savings? INVEST. Many people confuse savings with investment, both the things are different and both have different purposes.
Money kept aside to meet the future need is called savings. Savings can be done to buy a new vehicle, to buy a new electronic device or anything for that matter.
Investments help you to meet your long time needs and larger financial goals. The main reason why people refrain from investing is that there is some amount of risk attached to it. The higher the risk, the higher is the return on investment and investing smartly can multiply your savings and can help you to fulfill your financial goals in the long-run.
For investments there are many financial instruments that are available in India where the investor can invest to get the best returns. Choosing the right type of financial instrument to match your purpose is very essential.
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Equities
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Futures and Options
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Mutual funds
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Bonds
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Deposits
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Cash and cash equivalents
[/fusion_li_item][/fusion_checklist][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none” last=”no” hover_type=”none” link=”” border_position=”all”][fusion_title size=”1″ content_align=”left” style_type=”default” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]1. Equities[/fusion_title][/fusion_builder_column][fusion_builder_column type=”1_1″ layout=”2_3″ last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ animation_offset=”” class=”” id=”” min_height=””][fusion_text]
Equities are the type of security where ownership in a company can be represented. Equities are traded (bought and sold) in the stock market. In India share trading actively takes place in NSE and BSE. Some people trade on a daily basis as their profession, whereas normal investors invest in stock market and hold a stock for couple of months/years to book their profit.
Equities give a good amount of return on investment among all the other instruments, but there is also a substantial risk in investing in equities, if you invest without knowledge. Getting trained in stock trading and analysis can help you earn good amount of side income.
[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none” last=”no” hover_type=”none” link=”” border_position=”all”][fusion_title size=”1″ content_align=”left” style_type=”default” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]2. Futures and Options[/fusion_title][fusion_text]
Derivatives Instruments are a Financial Contracts which solve the primary purpose of hedging the asset price fluctuation. It Derives value from its underlying assets, hence it is called as derivatives. There are various types of derivative used world wide, but in India currently we have Two Exchange Traded Derivatives namely Futures and Options
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Apart form hedging, trader uses these instruments as it offers better leverage, convenience in holding Long and Short positions, Low Cost to trade compared to Equity delivery and enable traders to profit sideways movement using options.
- Futures contracts gives Rights with Obligations to the Traders, hence the open position is settled on the maturity date.
- Option Contracts gives Rights to the Buyer with NO OBLIGATION, hence he needs to pay some premium to the seller to get the contract. Seller of the Option has the Obligations
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Call Option Buyers – Has Rights to Buy
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Put Option Buyers – Has Rights to Sell
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[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none” last=”no” hover_type=”none” link=”” border_position=”all”][fusion_title size=”1″ content_align=”left” style_type=”default” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]3. Mutual Funds[/fusion_title][/fusion_builder_column][fusion_builder_column type=”1_1″ layout=”2_3″ last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ animation_offset=”” class=”” id=”” min_height=””][fusion_text]
In India mutual funds are very popular because the initial investment is very less and moreover risk is also diversified. Mutual fund allows a group of people to invest money together and have it professionally managed. Mutual funds also have sound regulation so there is no question of insecurity. There are many thematic mutual funds to choose from, the risk and return ratio may differ according to the plan.
One interesting part about mutual fund is that one can start investing with only Rs.1000/ Per month.
[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none” last=”no” hover_type=”none” link=”” border_position=”all”][fusion_title size=”1″ content_align=”left” style_type=”default” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]4. Bonds[/fusion_title][fusion_text]
Bonds are issued by both private and government entities to raise their working capital. Bonds are also called as fixed income instruments. Central and state government both issue bonds and private organizations like private companies, private financial instruments also issue bonds to garner their funds. Government bonds carry the lowest amount of risk but they take time to give the returns. As far as return on investment is concerned private bonds offers betters returns but they carry high amount of risk.
[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none” last=”no” hover_type=”none” link=”” border_position=”all”][fusion_title size=”1″ content_align=”left” style_type=”default” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]5. Deposits[/fusion_title][/fusion_builder_column][fusion_builder_column type=”1_1″ layout=”2_3″ last=”yes” spacing=”yes” center_content=”no” hide_on_mobile=”no” background_color=”” background_image=”” background_repeat=”no-repeat” background_position=”left top” hover_type=”none” link=”” border_position=”all” border_size=”0px” border_color=”” border_style=”” padding=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”” animation_speed=”0.1″ animation_offset=”” class=”” id=”” min_height=””][fusion_text]
Almost every Indian family has a savings account or fixed deposit or post-office deposits. This is one of the most common ways to keep their surplus funds and to earn with that money.
The return on investment is very low but it is almost risk free and secured.Keeping money in deposits cannot fulfill your long term financial goal. Investing your money smartly is very essential.
[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”” padding_top=”20″ padding_bottom=”20″ padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none” last=”no” hover_type=”none” link=”” border_position=”all”][fusion_title size=”1″ content_align=”left” style_type=”default” sep_color=”” margin_top=”” margin_bottom=”” class=”” id=””]6. Cash and cash equivalents[/fusion_title][fusion_text]
All the securities that can be readily converted to cash within 3 months can be called as cash and cash equivalents. In Case of immediate requirement the cash / bank balance helps a lot, so it is good to create corpus in saving account which can be used only in case of financial emergency. Gold can be purchased in Demat format under ETF schemes, This are available in India, Traded in NSE and an investor as buy even Just 1/2 Gram
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Cash is Always the King
Gold are not just ornaments, it can provide Financial Confidence
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To conclude
In India these are the major financial instruments. Saving is a good habit but to invest your savings is even better habit. This will make you financially secure in the long run and will help you to achieve your financial goals. Investing early and in a smart way can make a difference in your financial position.
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