How to utilize money to make more money!

How to utilize money to make money!

Different investment instruments and their returns.

Imagine yourself that you’ve made a good fortune in your business or you got a promotion in your job and have been given a good annual package. Your earnings are high, expenditure is on a moderate rise and now you seek to multiply your sources of income, to secure your financial well being. That is the time you’ll look out for investment options and its suitability to your pockets.


To start with, the first investment instrument that’ll prop in your mind will be gold. The yellow metal is the most attractive thing for Indians, considering both its financial and social leverage. And why not, the bullion is a precious metal, not abundantly found in India, and if you go out to sell it at the right time, its yields will be much higher than your expectation while buying them.

In India, gold demand is huge as the country is the second largest consumer. And so, returns in gold (CAGR, Compound Annual Growth Rate) are secured by 9% over 5 year time, by a report from Morgan Stanley. The returns show an upward trend of 12.9%, 11% and 8.4% over 10, 15 and 20 years period. Gold prices in India have been hit with 10% tax by the Centre, resulting in the industry selling gold on discount. But, nevertheless it will be a major demanding commodity other than energy. Making money out of the yellow metal will both be desirable and safe.

Real Estate:

The next you’ll think about is property or real estate assets. India’s density of population is 382 per Sq. Km. Hence the demand for property here is gigantic. After having enough capital to buy property, you surely want to either live in a new home, or rent it to a tenant.  If you take a loan to fill your required capital, EMIs can be easily paid out of rent money.

Housing sector in India is seeing a robust growth after the Modi government’s plan to ensure housing for all by 2022 under PMAY (Pradhan Mantri Aawas Yojana) kick started. Also the better income, rising, middle class population’s demand in India will soon yield good returns to those who invest in property. As per the Morgan Stanley report, returns on property investments (CAGR) is 8% in 5 year, 13.4% in 10 years, 10.8% in 25 years and 6.2% in 20 years. Following the data, it clearly recommends to opt for returns in the range of 10-12 years, to garner maximum yields.

Bank Fixed Deposit:

Then comes is your idea to simply open an FD account in a good interest bank. It is a commonly adopted mode of investment, not much work, only a period guarantee for withdrawal, and disposable at pre-planned or urgent expenditure. You will definitely go to have an FD account, even after using any other instrument of investment. But it is a common sense you’ll first look out for interests on FD by various banks and then look at its yield and then will put the money in the locker.

Bank fixed deposits garner a return (CAGR) of 5.7% in a 5 year period followed by 5.2% in ten years, 5.1 in 15 years and 5.5% in 2 decades. This is as per the Morgan Stanley report. Hence bank FDs can be a good option for investment, but better for a short period of time.

Equity Market:

At last, but not the least, you’ll even prefer to turn towards equity markets for spot investment and returns. If the data given by Morgan Stanley is followed, estimated equity investments by households in India have seen a surge since FY 2006. They have gone up in a considerable rate till 2008, but then gradually collapsed owing to the global financial crisis of ’08.

After much settling of fears, the investments went up in FY 2010. But since then they have showed a rather plateau like growth figures till 2014. Post-tax returns on equities (CAGR) is the best performing among other instruments, garnering double digit returns. In a five year period, equities will yield 11% returns on investment, 17% after a decade, 13.6% after fifteen years and 12.9% after twenty years. Hence opting for equities is a really attractive, yet risky, instrument for investing your savings or bonus money.

Average inflation during the same time slabs will show a downward trend, out beating bank FDs CAGR, however remaining way below CAGR in gold, property and most significantly equities.

So why not utilize money to actually make it more productive, and gain returns worth investing.

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