Factors to be considerd in investment decision
Return
an investor should decide how much return he is expecting fr om his investment alternative .If he is expecting fixed returns periodically he can choose fixed income securities like debentures or bonds ,preference shares or fixed deposits either with banks or post office .if he is expecting fixed return in the long run he can choose provident fund or ppf or deep discounted bonds ,indira vikas patras etc.if an investor is expecting a variable return (more than the fixed return ) he can choose equity shares, real estate ,mutual funds precious metals (gods, silver.. etc)
RISK
If an investor is risk averse , he can invest in bank deposits , government securities ,life insurance provident fund,ppf debentures (with high credit rating)etc.if an investor is a risk taker , he can choose the equity shares,precious metals,realestate and mutual funds,etc..risk and return will go together.lower risk will lead to lowetr return .higher risk will lead to higher return . but in practice higher risk may always not guarantee higher return..liquidity
liquidituy
It means how easily an investment is converted into cash . for example cash is the most liquid asset.The following are some liquid investment alternative gold ,bank deposits (saving account), open ended mutual funds and equiy share etc .. real estate is having moderate liquidity,insurance ,provident fund ,ppf indira vika patras and fixed deposit are liquid investment alternatives
Tax shelter
an investor can avail tax exemptions by investing in the government securities pf ,ppf indira vikas patras insurance and selected mutual funds
Marketablity
it means transferability(easy to sell) of an investment alternatives .fixed deposits, pf.ppf insurance are not transferable. an investor who had invested in the above alternatives can reap the benefits after maturity period .equity shares ,precious metals ,realestate are transferable investment alternatives.