Thursday, August 25, 2016

Fixed Income Instruments

Instruments like bonds, securities that yield fixed or periodic income come under this category. These offer steady growth of principal. The security will be high and the right option for those who has low risk tolerance. One can invest in debt mutual funds to invest in a diversified debt securities. About the cons, one can get the returns after a long period where money is kind of locked.

Equity:

Investing in equities, stocks of companies, yield higher returns over long periods. You can invest in equities directly or through equity mutual funds. They are easy to liquidate. Also, it has the potential to beat the inflation. Whereas investing in equity requires a very strong expertise, as little knowledge of it may end you up in high losses. Equity prices are prone to wide fluctuations leading to losses, forcing the investor to sell at the wrong time. Also, slumps in equity market may last for a long period.

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