Top 10 Investment Ideas
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MUTUAL FUNDS
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GOVERNMENT BONDS
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FD
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NPS
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PF
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SAVING A/C
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STOCKS
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CERTIFICATE OF DEPOSITE
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POST OFFICE SAVING SCHEME
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REAL STATE
1. MUTUAL FUNDS
What are mutual funds?
A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio. Investors buy shares in mutual funds. Each share represents an investor’s part ownership in the fund and the income it generates.
Why do people buy mutual funds?
Mutual funds are a popular choice among investors because they generally offer the following features:
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Professional Management. The fund managers do the research for you. They select the securities and monitor the performance.
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Liquidity. Mutual fund investors can easily redeem their shares at any time, for the current net asset value (NAV) plus any redemption fees.
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Affordability. Most mutual funds set a relatively low dollar amount for initial investment and subsequent purchases.
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Diversification or “Don’t put all your eggs in one basket.” Mutual funds typically invest in a range of companies and industries. This helps to lower your risk if one company fails.
What types of mutual funds are there?
Most mutual funds fall into one of four main categories – money market funds, bond funds, stock funds, and target date funds. Each type has different features, risks, and rewards.
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Money market funds have relatively low risks. By law, they can invest only in certain high-quality, short-term investments issued by U.S. corporations, and federal, state and local governments.
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Bond funds have higher risks than money market funds because they typically aim to produce higher returns. Because there are many different types of bonds, the risks and rewards of bond funds can vary dramatically.
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Stock funds invest in corporate stocks. Not all stock funds are the same. Some examples are:
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Growth funds focus on stocks that may not pay a regular dividend but have potential for above-average financial gains.
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Income funds invest in stocks that pay regular dividends.
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Index funds track a particular market index such as the Standard & Poor’s 500 Index.
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Sector funds specialize in a particular industry segment.
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Target Date Funds hold a mix of stocks, bonds, and other investments. Over time, the mix gradually shifts according to the fund’s strategy. Target date funds, sometimes known as lifecycle funds, are designed for individuals with particular retirement dates in mind.
What are the benefits and risks of mutual funds?
Mutual funds offer professional investment management and potential diversification. They also offer three ways to earn money:
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Dividend Payments. A fund may earn income from dividends on stock or interest on bonds. The fund then pays the shareholders nearly all the income, less expenses.
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Capital Gains Distributions. The price of the securities in a fund may increase. When a fund sells a security that has increased in price, the fund has a capital gain. At the end of the year, the fund distributes these capital gains, minus any capital losses, to investors.
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Increased NAV. If the market value of a fund’s portfolio increases, after deducting expenses, then the value of the fund and its shares increases. The higher NAV reflects the higher value of your investment.
All funds carry some level of risk. With mutual funds, you may lose some or all of the money you invest because the securities held by a fund can go down in value. Dividends or interest payments may also change as market conditions change.
A fund’s past performance is not as important as you might think because past performance does not predict future returns. But past performance can tell you how volatile or stable a fund has been over a period of time. The more volatile the fund, the higher the investment risk.
2. Government Bonds
A government bond is a debt instrument issued by the Central and State Governments of India. Issuance of such bonds occur when the issuing body (Central or State governments) faces a liquidity crisis and requires funds for the purpose of infrastructure development.
Government Bonds India, fall under the broad category of government securities (G-Sec) and are primarily long term investment tools issued for periods ranging from 5 to 40 years. It can be issued by both Central and State governments of India. Government bonds issued by State Governments are also called State Development Loans (SDLs).
There are multiple variants of bonds issued by GOI and State Governments which cater to the various investment objectives of investors. The Government Bond interest rates, also called a coupon, can either be fixed or floating and disbursed on a semi-annual basis. In most cases, GOI issues bonds at a fixed coupon rate in the market.
Types of Government Bonds in India?
The multiple variants of Government bonds are discussed below –
Fixed-rate bonds
Government bonds of this nature come with a fixed rate of interest which remains constant throughout the tenure of investment irrespective of fluctuating market rates.
Bonds with Call or Put Option
The distinguishing feature of this type of bonds is the issuer enjoys the right to buy-back such bonds (call option) or the investor can exercise its right to sell (put option) them to such issuer. This transaction shall only take place on a date of interest disbursal.
Advantages of Investing in Government Bonds?
Sovereign Guarantee
Government Bonds enjoy a premium status with respect to the stability of funds and promise of assured returns. As G-Secs are a form of a formal declaration of Government’s debt obligation, it implies the issuing governmental body’s liability to repay as per the stipulated terms.
Inflation-adjusted
Balances held in Inflation-Indexed Bonds are adjusted against increasing average price level. Other than that, the principal amount invested in Capital Indexed Bonds is also adjusted against inflation. This feature provides an edge to investors as they are less susceptible to be financially undermined as investing in such funds increase the real value of the deposited funds.
Regular source of income
As per RBI regulations, interest earnings accrued on Government Bonds are supposed to be disbursed every six months to such debt holders. It provides investors with an opportunity to earn regular income by investing their idle funds.
Disadvantages of Investing in Government Bonds?
Low Income
Other than 7.75% GOI Savings Bond, interest earnings on other types of bonds are relatively lower.
Loss of relevancy
As Government Bonds are long-term investment options with maturity tenure ranging from 5 – 40 years, it can lose relevancy over time. It means such bonds value loses relevance in the face of inflation, barring IIBs and Capital Indexed Bonds.
3. Fixed Deposit
A fixed deposit refers to an investment scheme that banks and non-banking financing companies provide. FDs offer greater returns on the principal invested when compared to the returns generated from a regular savings account.
Fixed deposits have a fixed tenure, hence the name. Depending on a consumer’s investment portfolio, the FD investment period can either be short-term or long-term. The interest rates on fixed deposits vary from one company or bank to another.
Fixed deposit investors need to remember, however, that they cannot withdraw money before maturity without financial repercussions. In emergencies, early withdrawal is possible after the payment of penalties.
Who Offers FD?
As stated, fixed deposit investments are offered by banks, post-offices, and other non-banking financial companies. In India, investors have countless options to open fixed deposit accounts. However, they must compare the interest rates, the reputation of the company, and other factors before depositing their funds.
You can approach any of the banks or NBFCs in the country to open a fixed deposit account. Individuals lacking bank accounts can also avail of fixed deposit investments through post office accounts.
Types of FDs Available
There are several fixed deposit types that investors need to know about before investing. Without such knowledge, you may end up picking up plans not suitable to your investment objectives. Listed below are some of the common options open to prospective investors.
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Corporate fixed deposits
These are fixed deposit schemes that are held by companies, other than banks. Also known as company FDs, investing in such instruments, may, in some cases, lead to higher returns.
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Tax-saving fixed deposit
If the primary goal of an investment is to save taxes, investors can take advantage of tax-saving FDs. However, the maximum deposit for such plans is limited to Rs. 1.5 Lakh per year. The lock-in period for this type of FD is 5 years.
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Standard fixed deposits
Standard plans are basic investment schemes where you invest a fixed amount with a financial institution. After the fixed maturity period expires, you are eligible to receive the principal amount, along with the interest earnings from the scheme.
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Senior citizen fixed deposit
Individuals aged over 60 years are also eligible to invest in fixed deposit instruments. However, most plans geared to this age group offer flexible tenure options. Additionally, senior citizen investors are eligible for higher interest rates on their investments compared to the standard schemes.
Eligibility Criteria for fixed Deposit Investment
The following list of individuals is eligible to open a fixed deposit account in India –
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Indian resident
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NRI
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Individuals or joint investors (2 or more individuals)
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Senior citizens
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Minors
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Sole proprietorship
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Societies or clubs
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Companies
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Partnership firms
4. NPS
The National Pension System is a defined-contribution pension system in India regulated by the Pension Fund Regulatory and Development Authority which is under the jurisdiction of the Ministry of Finance of the Government of India.
What is NPS and how it works?
NPS is an easily accessible, low cost, tax-efficient, flexible and portable retirement savings account. Under NPS, the individual contributes to his retirement account and his employer can also co- contribute for the social security/welfare of the individual.
Is NPS a good investment?
Overall, NPS stands out as a smart investment choice, offering tax benefits, and flexibility for a secure financial future. As it is managed by the PFRDA, a government undertaking, it ensures that it provides a reliable path for individuals looking to save for retirement.
What is the maturity period of NPS?
60 years of age
NPS matures when the subscriber turns 60 years of age. Meaning, Vineeth will able to contribute for the next 36 years towards the scheme and expects a return on investment (ROI) of 9% per annum.
Is NPS tax free?
Amount invested in purchase of Annuity, is fully exempt from tax. However, annuity income that you receive in the subsequent years will be subject to income tax. Tax benefit on lump sum withdrawal: Upto 60% of the total corpus withdrawn in lump sum is exempt from tax.
Which is better PF or NPS?
With EPF you cannot dictate where your money will be invested. Over 85% of it goes into debt instruments. But NPS allows you to decide on your allocation between equities, government bonds and corporate bonds. This allows you to earn higher returns through a higher equity allocation.
Is NPS monthly or yearly?
Subscriber has the option to make the contribution at any frequency – monthly, quarterly, half yearly or yearly. Is there any minimum annual contribution requirements under NPS? Yes, A subscriber has to contribute a minimum annual contribution of Rs. 1000/- for his/her Tier I account in a financial year.
What is Tier 1 and 2 in NPS?
There are two types of NPS accounts – Tier I and Tier II. While NPS Tier I is well-suited for retirement planning, Tier II NPS accounts act as a voluntary savings account. Tier I NPS investment is a long-term one and the amount cannot be withdrawn until retirement.
Which bank gives highest interest rate on NPS?
Interest Rates of NPS for Tier 1 Accounts
Pension Fund Companies |
Returns of 1 year (in %) |
Returns of 5 years (in %) |
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UTI Retirement Solutions |
8.77% |
11.85% |
LIC Pension Fund |
8.13% |
10.22% |
Aditya Birla Pension Fund |
7.12% |
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SBI Pension Fund |
9.73% |
11.38% |
What is the lock in period for NPS?
Tax-free partial withdrawals in NPS are allowed after a 3-year lock-in period up to a maximum of 25% of the total amount invested in individual capacity. Please note: Individual subscribers will only be allowed a maximum of three withdrawals during the entire tenure of subscription.
5. Provident Fund
What is PF in salary and its benefits?
Provident Fund (PF) is a retirement benefits scheme for salaried professionals designed to provide them with enough funds after retirement. It is a combined contribution from employees and employers that is deducted from the employee’s monthly salary and deposited in their PF account.
What are the benefits of PF scheme?
The Employees’ Provident Fund Organization (EPFO) permits partial withdrawals under specific circumstances. These include situations like a medical emergency, repayment of a home loan, construction or purchase of a new house, renovation of an existing house, and funding the wedding expenses of children or oneself.
Benefits of Employee Pension Scheme
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It offers a fixed income after retirement at the age of 58 years or after early retirement at 50 years.
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It provides a monthly pension to the members who have become disabled totally/permanently, even after not being able to serve the pensionable service period.
What are advantages and disadvantages of PF?
In conclusion, EPF is a low-risk, long-term savings scheme that provides guaranteed returns and tax benefits. While EPF has its drawbacks, such as Pros and Cons of EPF, early withdrawal penalties, and a lock-in period, it is a good investment option for those looking for long-term savings and financial security.
Can I withdraw my PF?
EPF Withdrawal Rules 2024
An individual is not permitted to withdraw PF funds, partially or fully, until the time he/she is employed. One can withdraw up to 75% of the funds if he/she is unemployed for at least 1 month and the balance amount if they are unemployed for 2 months or more.
Who is eligible for PF benefits?
Employees in organizations covered under the EPF Act, with a basic salary up to Rs. 15,000 per month, are eligible for Provident Fund.
Is PF mandatory for salary?
EPF contributions are mandatory in certain instances. If the employer is a covered establishment and the employee’s monthly pay is less than Rs 15,000, then the individual would be required to contribute to PF compulsorily.
What is the difference between PF and EPF?
PF is the popular name for EPF or Employees’ Provident Fund. It is a government-established savings scheme for employees of the organised sector. The EPF interest rate is declared every year by the EPFO (Employees Provident Fund Organisation) which is a statutory body under the Employees’ Provident Fund Act, 1956.
What is savings account and its benefits?
6. SAVING A/C
Unlike a current account, a savings bank earns interest.The balance earned in a Savings Account helps to improve the individual’s income. Some banks offer higher interest rates for maintaining a higher balance, while some offer sweep in facility which helps earn higher interest income.
A savings account is an interest-bearing deposit account held at a bank or other financial institution. Though these accounts typically pay only a modest interest rate, their safety and reliability make them a good option for parking cash that you want available for short-term needs.
Savings accounts may have some limitations on how often you can withdraw funds, but generally offer exceptional flexibility that’s ideal for building an emergency fund, saving for a short-term goal like buying a car or going on vacation, or simply sweeping surplus cash you don’t need in your checking account so it can earn a little intrest.
Pros
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Fast and easy to set up, and to move money to and from.
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Can be conveniently linked to your primary checking account.
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Up to your full balance can be withdrawn at any time.
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Up to $250,000 is federally insured against bank failure.
Cons
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Pays less interest than you can earn with certificates of deposit, Treasury bills, or investments.
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Easy access can make withdrawals tempting.
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Some savings accounts require minimum balances.
7. STOCKS
What is the best thing to invest in stocks?
Dividend stocks
Dividend stocks are popular among older investors because they produce a regular income, and the best stocks grow that dividend over time, so you can earn more than you would with the fixed payout of a bond. Real estate investment trusts (REITs) are one popular form of dividend stock.
What are 3 good stocks to invest in?
Want to Get Richer? Here Are the 3 Best Stocks to Buy Now and Hold Forever
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Pfizer’s regrouping at the moment, but it is poised to shine again.
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UnitedHealth Group is a healthcare juggernaut with more success ahead.
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Abbott Labs should continue its proven formula of slowly making shareholders wealthy.
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Stocks to Buy Today
STOCK
ACTION TRADE PRICE IDFCFIRSTB BUY 80.50 VOLTAS BUY 1100 REDINGTON BUY 199 TAJGVK BUY 347 Which stock will boom in 2024?
Strategic Investments: Unveiling the Top 5 Stocks for 2024
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List of top 5 Stocks for 2024.
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HDFC Bank Ltd. Company Overview. Key Growth Factors. …
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Wipro Ltd. Company Overview. Key Growth Factors. …
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Titan Company Ltd. Company Overview. …
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Hindustan Unilever Ltd. Company Overview. …
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IRCTC Ltd. Company Overview. …
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The Bottom Line.
7. CERTIFICATE OF DEPOSITE
A Certificate of Deposit or CD is a fixed-income financial tool that is governed by the Reserve Bank of India and is issued in a dematerialized form. It is a type of agreement made between the depositors and the banks, wherein the bank pays an interest on your investment.
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What are the Details of a Certificate of Deposit?
A certificate of deposit, or CD, is a type of savings account offered by banks and credit unions. You generally agree to keep your money in the CD without taking a withdrawal for a specified length of time. Withdrawing money early means paying a penalty fee to the bank.
What is the use of certificate of deposit?
A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years, and in exchange, the issuing bank pays interest. When you cash in or redeem your CD, you receive the money you originally invested plus any interest.
What is the maximum CD amount?
Generally, banks and credit unions don’t limit the amount you can deposit into a CD. However, it’s crucial to understand that the F0DIC (Federal Deposit Insurance Corporation) only insures up to $250,000 per depositor, per insured bank, for each account ownership category.
What is certificate of deposit and its features?
Certificate of Deposit or CD is a fixed-income financial instrument governed under the Reserve Bank and India (RBI) issued in a dematerialized form. The amount at payout is assured from the beginning. A CD can be issued by any All-India Financial Institution or Scheduled Commercial Bank.
What is the CD rate in India?
5.67% APY – State Bank of India CD Rate – 1 Year CD
9. POST OFFICE SAVING SCHEME
Account can be opened with minimum initial deposit Rs. 250. (ii) Minimum deposit in a FY is Rs. 250 and maximum deposit can be made up to Rs. 1.50 lakh (in multiple of Rs.50) in a FY in lumpsum or in multiple installments. (iii) Deposit can be made maximum up to completion of 15 years from the date of opening.
Interest payable, Rates, Periodicity etc. Minimum Amount for opening of account and maximum balance that can be retained 4.0% per annum on individual / joint accounts Minimum INR 500/- for opening What are the benefits of post office savings account?
It offers an interest rate of 4 per cent and the minimum deposit amount is ₹500, and the minimum withdrawal amount is ₹50 only. Both adults and minors can open a savings bank account. There is also a tax exemption for up to ₹10,000, and there is no maximum investment limit.
Which is best saving scheme in post office?
Comparison of Interest Rates of Various Post Office Savings Schemes
Scheme
Interest Rate (Applicable from 01/04/2023)
National Savings Certificates (NSC)
7.7% p.a. (Compounded annually)
Kisan Vikas Patra (KVP)
7.5% p.a. (Compounded annually)
Sukanya Samriddhi Accounts
8% p.a. (Compounded annually)
How much is 5000 per month in RD for 5 years?Post Office RD calculation for Rs 5000/month contribution
Calculation shows that a monthly contribution of Rs 5000 towards the Post Office RD scheme will result in a corpus of Rs 3.52 lakh in 5 years. If you extend the account by another 5 years, the total corpus will be Rs 8.32 lakh in 10 years.
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What is the interest of 1 lakh in post office?
1-year post office FD
If you invest Rs 1 lakh in Post Office FD for a year, then you will be given interest at the rate of 6.9 per cent. In such a situation, after one year, you will get an interest of Rs 7,081, and your total return will be Rs 1,07,081 will be returned after one year.
10. REAL ESTATE
What is real estate in investment?
Investment real estate is real estate that generates income or is otherwise intended for investment purposes rather than as a primary residence.
What are the 5 rules in real estate investing?
5 Golden Rules For Building Your Investment Property Portfolio
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Pay under market value with add value potential (if possible) …
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Look for properties with good yields and cash flow. …
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Buy property for investment in other states. …
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Outsource where practical. …
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Consider “rent-vesting”; renting while buying investment property.
What are the 3 most important factors in real estate?
Home prices and home sales (overall and in your desired market)
New construction. Property inventory. Mortgage rates.
What are the 5 types of real estate?
The main categories are:
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Land.
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Residential.
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Commercial.
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Industrial.
What is the 1 rule of investing?
Rule 1: Never Lose Money
But, in fact, events can transpire that can cause an investor to forget this rule.
What are the three pillars of real estate?
When analyzing an investment, the focus needs to be on the Three Pillars of Real Estate: Market Cycle, what part of the cycle is your market Debt: What type of debt are you going to secure for your investment.Exit Strategy: Is this a short term or long term hold?
Why real estate is booming?
As more people migrate to cities in search of better job opportunities and a higher standard of living, the demand for residential properties continues to rise. This demographic shift has fueled the growth in housing prices, particularly in urban areas with robust economic activity.
What is the 15 15 15 rule?
The mutual fund 15x15x15 rule simply put means invest INR 15000 every month for 15 years in a stock that can offer an interest rate of 15% on an annual basis, then your investment will amount to INR 1,00,26,601/- after 15 years.
What is the 70% rule investing?
Basically, the rule says real estate investors should pay no more than 70% of a property’s after-repair value (ARV) minus the cost of the repairs necessary to renovate the home. The ARV of a property is the amount a home could sell for after flippers renovate it.
Why real estate prices are so high?