Financial investments are assets or products in which people put in their money or savings to earn something out of it. So the primary motive of financial investment is to earn some interest or to receive some dividend or mostly to appreciate the value of the money that is invested. There are various products that are available that are available with different terms and features.
Products differ from each other on the following various parameters:
- Minimum amount of deposit
- Lock-in period
- Stability of returns
- Assets in which the money will be invested.
- Tax implications
- Tax exemptions, if any
- Expected returns, etc.
The products that one may choose for financial investment purpose depends on the following:
- Financial goal for which the money will be investment
- Financial status of the investor
- Time horizon for the goal
- The risk appetite of the investor
- Whether the investor will opt to hedge the principal amount and go for risky propositions
- Age of the investor
- The tax liability of the investor.
Though there are various deciding parameters, it is always better to have a mixed portfolio as every product is exposed to some risk or the other.