3 Financial Investments That You Must Avoid | Save Yourself From These Investments !
Investing is a way to protect and produce income, but also a way to lose it. As much as many people would like there to be some magical way to accumulate wealth in a short period of time, it simply does not exist. This may lead people to believe that the opposite must hold true too; that there is no way to lose substantial amounts of money in a short period of time, right? Unfortunately, if investors aren’t careful, it can be very easy to put our hard earned money at risk. So this article delight identify categories of 3 Financial Investments That You Must Avoid !!
3 Financial Investments That You Must Avoid !!
Regular Mutual Funds
Mutual funds are a valuable tool to grow your capital wisely. But try to avoid Regular mutual fund that are bought through third-party agents like brokers, distributors, or advisors. The third-party agents charge a certain fee to the fund house for selling their mutual funds. Instead go through Direct mutual funds that do not need investors to pay commissions, in contrast to regular mutual funds that do and easily available at various online platforms like Coin . The TER differences between direct plans and conventional plans might be anywhere between 0.5% and 2%. The returns of regular and direct plans are directly impacted by this. So the direct plan provides a greater CAGR return than the regular plan . If you compare the results of mutual fund direct vs. regular plans over a lengthy period of investing, the direct plans can result in a significant difference in your investment’s returns.
Want to know more about Regular vs Direct MFs , visit https://scripbox.com/mf/regular-vs-direct-mutual-funds/
Penny Stocks
Penny stocks are similar in nature to regular stocks in the sense that they represent ownership of an organization. The main distinction between penny stocks and regular stocks is that they are traded at extremely low prices, often less than one dollar. And, hence the name. Offering shares at such low prices often attracts investors by marketing the fact that with a small investment, they can own tens of thousands of shares. Companies offering shares at extremely low prices are often newer, smaller companies. Those look to attract capital from uninformed and uneducated investors.
With little information available regarding a company’s’ financials, it becomes harder to understand whether the stock will go up or down. The last of the major downsides with owning penny stocks is the near impossibility of getting your money back. Basically,  if you’ve bought penny stocks and wish to sell them , you may have a hard time finding somebody to buy them !
Fixed Deposits
There is no doubt that bank fixed deposits (FDs) are considered safe in that you will most likely get your money back. But did you know that bank FDs can negatively affect your savings over the long term? Even though fixed deposits have a lot of advantages like absolute rate of return and no risks, the interest rates do not move in line with inflation. This means, you are effectively losing money every year you invest your money in a FD. Fixed deposits are not at all liquid and cannot be converted into cash easily. Banks charge penalty to the depositors who withdraw their fixed deposits prematurely. This penalty is in the form of a reduced rate of interest.
Also, compared with equity mutual funds, long-term returns are taxed at 10% for holding period more than 1 year, on gains more than Rs 1 lakh. FD interest is taxable at your current tax slab. The higher your income, the lower your FD return will be.
Final Takeaway | 3 Financial Investments That You Must Avoid
When it comes to investing, there are a lot of baskets to choose from. Every now and then, you’re going to have other opportunities come your way that seem more exciting. Unfortunately, most of them are really going to be dead ends. It’s important to understand all your options before you actually invest your money and start to build your portfolio. Since every type of investment has its upside and downside. Knowing above 3 Financial Investments That You Must Avoid helps you to identify the risks associated with those investing.
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