Do You Keep Your Returns In Your Mind?

Indian investors
In general we can categorize Indian investors in three main categories namely

1- Traditional or conservative

2- Moderate

3- Aggressive

Most of the investors in Aggressive category prefer to invest in share market in order to increase their profits within very short time. However the investors in the category of conservatives or traditional do not invest where they do not feel secured or ready to take the risk of losing their money also have certain profitable fixed income options. However there is another factor that can fail the purpose of investment if the rate of inflation is not kept in mind. In some cases the rate of inflation can actually reduce the worth of your principal amount.

You should look at actual benefit instead of profit of its face value. Your actual return is the gain you get after reducing the inflation during the period you money was invested and you can call your return profitable only when the net yield is positive beating the inflation. Here is an example- Suppose you have invested a certain amount at the rate of 10% per year and you fall in the 30% tax slab and the inflation rate is 8% in that case you lose 1% on your deposit. Every investor is suggested to review his investment and see to it that he is earning at least 2-3% after making provisions for tax deduction and at the same time keeping a close watch on inflation rate.

Your options
In India, the best option for fixed income, as the name suggests are Fixed Deposit or schemes by Indian Post Office, Kisan Vikas Patra, Senior Citizen Schemes, and National Saving Schemes etc. However, if a depositor is in higher income group he will find that these income plans are not beneficial for his savings, although quite useful for persons in lower income group.
The persons in tax paying slabs it’s better to opt for better paying schemes namely Bonds, Rated Company Deposit/Debentures, Fixed Maturity Plans of Mutual Funds and Short and long term Target Date funds.

Note- The suggestions made in this article may not be applicable for all investors according to their age group, employment or tax liabilities.