“Money without financial intelligence is money soon gone.” – Robert Kiyosaki, Rich Dad Poor Dad. This a very famous quote and something to think upon. But what is this financial intelligence? In short, it is the art of knowing how to invest in assets and get the best return out of them.
In this contemporary world, it is imperative to understand how to use money as a tool. Investment has been there as a concept for a long time but what’s really important is to differentiate between an asset that can be turned into a good investment rather than a liability.
In this article, we’ll discuss five key things to consider when choosing the best assets to invest in. We will also discuss how assets can be used to generate a secondary income and talk about some of the best-performing assets in the market as of now.
5 Things To Consider Before Choosing The Best Assets To Invest In
Investing in assets can seem like a daunting task at first. It involves analytics and a certain level of risk-taking as well. When one is thinking of assets to invest in, it becomes rather important to keep several factors in mind to make an informed decision that will make good returns in the future.
Here are five key things to consider before choosing any assets to invest in:
Most people are apprehensive about losing their money when investing. Low-risk assets are the first choice for many as it keeps their money safe and secure.
Fixed Deposits, Mutual Funds, and Government bonds are a few examples.
- Steady Income
A regular flow of steady income is what most people seek when investing. They look for assets that can guarantee them some form of regular profit so that it supports their finances.
Rental properties and dividend-paying stocks are one example of that.
- Capital Growth
Capital growth is the appreciation of the value of an asset over a period of time. It basically means that any asset you invest in should observe some level of growth so that your profits increase proportionally as well.
A few examples of this are equities or shares, infrastructure, and investing in real estate.
- Market Future
For maximum benefit, one should properly research and go over the current and future prospects of the assets to invest in. Comparing past and present news of that asset is one way.
This is to make sure that one is investing in an asset that will keep their money safe as discussed above in the first point.
- Tax Deduction
What if I told you that investing in assets can not only make you gain profits but save up on taxes as well? Sounds lucrative, doesn’t it?
There are certain assets that offer tax benefits, which are tax-free bonds or investments in equity-linked savings schemes (ELSS). These investments can help reduce your tax liability and maximize your returns.
Well, these are some factors one needs to keep in mind before investing in assets. Further, talking to a financial expert and reading up more about investing is the way to go. One should always be prepared head to toe when making decisions like investing.
How To Invest In Assets To Make A Secondary Income?
Now we’ll discuss some steps you can follow on how to invest as a beginner :
- Fix up how much to invest
Before investing in assets, it’s important to determine how much you can afford to invest. You should never invest money that you need to cover your living expenses or other financial obligations.
A good rule of thumb is to invest only the amount that you can afford to lose. This will help you avoid financial stress if your investments do not perform as expected.
- Set Up A Time Frame
It’s important to set up a time frame for your investment. Determine how long you’re willing to hold the asset and how much time you’re willing to spend monitoring it. This will help you choose the right type of asset to invest in.
- Consider Your Investment Options
There are various types of assets to invest in, such as stocks, bonds, real estate, and commodities. It’s important to consider your investment options and choose the one that best fits your goals and risk tolerance.
- Filter Assets Based On Your Risk Tolerance
Different assets carry different levels of risk. You need to consider your risk tolerance before investing. If you’re risk-averse, you may want to consider low-risk investments, such as bonds or real estate. On the other hand, if you’re comfortable with taking risks, you may want to consider high-risk investments, such as stocks or commodities.
- Choose Asset Based On Returns
It’s important to choose an asset that provides good returns. Look for assets that have a history of providing consistent returns over a long period of time. However, keep in mind that high returns also come with high risks.
To understand more about Where to Invest Money to Get Good Returns in India, give our blog a read.
What Are Some of the Best Performing Assets to Invest In?
Investing in assets is a smart way to increase your profits in the long run. It can be a little overwhelming to start since there are so many options available. Fret not, in this section we’ll take a look at some of the best-performing assets to invest in and provide tips on how to invest in them :
- Renewable Energy
With the rising impact of global warming, it has become increasingly clear that renewable energy will make up the major crux of the market in a few years. As everyone from scientists to industrialists has realized the importance of looking for renewable sources of energy such as solar energy, hydraulic energy, nuclear energy, etc, it is clear that this boom will be evident in the stock market as well.
Solar Energy has been around for the last few years and as it stems from the most abundant source – the sun, it seems to have a brighter future than others.
If solar energy is something that catches your eye, you could look at SustVest which offers the chance to find solar assets to invest in.
For more details on How To Invest In Solar Renewable Energy In India And Make A Profit, check out our blog!
Investing in shares, also known as stocks or equities, is a way that has been around for ages. The famous show Scam 1992 was also based on that.
Shares represent ownership in a company, and as the company grows and becomes more profitable, the value of the shares can increase. It is important to do your research before investing in shares to ensure you are investing in a profitable and stable company.
Investing in shares has also been a favorite type of investment for many. The best way to go about this is to read any economic newspaper daily to know the tips and tricks of this.
Bonds are a type of investment where you lend money to a company or government in exchange for regular interest payments. Bonds are generally considered to be less risky than shares, although they also offer lower returns.
Types of bonds in India:
- Government bonds
Government bonds are usually issued by the Central and State Governments, also the municipalities. They are considered to be one of the safer investments as the government pays back the issuer at any time they ask for it.
- Corporate Bonds
Corporate bonds are the bonds issued by companies both big and small. They are usually issued by companies to meet their financial needs. Although some Corporate Bonds are known to sink, investors are advised to perform their due diligence before investing.
- Sovereign gold bond
These Gold Bonds are issued by the Government of India and are a great alternative to buying physical gold. The investor gets an opportunity to increase his wealth by investing in these bonds and at the same time receives interest on the amount invested. These funds have proven to be highly popular in India, as carrying physical gold has its own risk and many people are keen on capturing the premium from the rise of gold in India, without holding it physically.
- Convertible bonds
These are special types of bonds that allow the conversion of the bond amount into equity, on terms that are pre-determined.
- RBI Bonds
Recently, in 2018, the bank regulator decided to issue 7.75% taxable bonds in India, to permit HUF/residential citizens to invest in safe and secure bonds, without any monetary ceiling.
An IPO, or Initial Public Offering, is when a company first sells shares to the public. Investing in an IPO can be risky, but it can also provide significant returns if the company performs well. It is important to thoroughly research the company and the IPO before investing.
ETFs, or Exchange Traded Funds, are a type of investment that allows investors to buy a diversified portfolio of assets in a single transaction. ETFs can provide a low-cost way to invest in a variety of assets, including shares, bonds, and commodities.
But what is the difference between a mutual fund and ETF?
The price of an ETF’s share will change throughout the trading day as the shares are bought and sold on the market. This is unlike mutual funds, which are not traded on an exchange, and which trade only once per day after the markets close. Additionally, ETFs tend to be more cost-effective and more liquid compared to mutual funds.
Gold is a traditional safe haven asset that has been used as a store of value for centuries. Investing in gold can provide a hedge against inflation and currency fluctuations, but it is important to remember that the value of gold can also be volatile.
In a country like India, where gold jewelry can be seen worn by women of all strata of society, investing in gold can be seen as a long-term feasible investment It can be easily passed down to future generations as well in the form of heirlooms and can be used easily for finances if times call for it.
- Real Estate
Real estate assets to invest in can provide stable long-term returns through rental income and property appreciation. However, real estate also requires significant upfront investment and ongoing maintenance costs.
Real Estate investment can be done in 4 ways – through land, industrial, commercial, and residential. Though it is important to keep in mind that investing in real estate depends on a lot of factors and even good investments sink if the market is not right.
FAQs: How To Choose The Best Assets To Invest In?
How is solar energy one of the best assets to invest in?
Most of India has a lot of sun exposure throughout the year which is why solar energy is one of the most used renewable energy in India. India is nowhere near realising its full potential in terms of solar energy usage. The solar energy sector has a lot of scope for growth, which is why solar energy assets may be the best assets to invest in now.
SustVest is a platform where you can find upcoming solar projects and EV infra. You can start investing in solar projects with as low as INR 5000 of investment. This asset based income will help you generate a monthly fixed income, with an annual IRR of up to 15%.
How can one choose the best assets to invest in?
There are certain factors to consider before choosing the best assets to invest in. These factors are:
- Risk factor
- Is it generating steady income?
- Growth prospects
- Tax deductions
Investing in assets is the new way of earning monetary benefits or in a simple way earning money from money. There are a few things one should definitely keep in mind before investing. In this article, we have discussed how to choose the best assets to invest in and make a secondary income.
Investing in renewable energy appears to be the next big thing. If you’re interested, check out SustVest and the sustainable investing services they offer.
Founder of Sustvest
Hardik completed his B.Tech from BITS Pilani. Keeping the current global scenario, the growth of renewable energy in mind, and people looking for investment opportunities in mind he founded SustVest ( formerly, Solar Grid X ) in 2018. This venture led him to achieve the ‘Emerging Fintech Talent of the Year in MENA region ‘ in October 2019.