De-mystifying the investment segments

As the human civilization has progressed, people have made the life complicated. It is reflected in every aspect of human behaviour – the way we dress, the way we eat, the way we talk, the way we do anything conceivable. It is also reflected in the investment advice and highly complicated ways have been developed in the best of the universities to tell us about the investments we make of the surplus of over our expenses, that is, savings.

Let us try de-mystifying the whole thing. There are only four ways, yes only four ways, in which you, me and anyone can invest:

You can lend money, that is, you create debts: simplest example is a bank deposit. It earns a fixed interest and is relatively safe unless you go for unreasonably high rate of interest and invest in unknown and dubious financial companies.

You may invest in real estate: land, building, and flats. Earlier in life you do this, better it would be. You should surly take housing loan to invest in a house or a flat. This way you are buying a house or a flat at the present time, whereas you re-pay over a period of time. By the time, you complete payment (say over next 10 to 20 years), the price of the house or the flat would have sufficiently increased to add to your net worth!

You may invest in bullion (gold, silver) and other precious metals. People say this is highly unproductive. However, it is a long term investment and is made to outlast generations.

You can buy a part of an enterprise: investing in shares of companies. This is easier said than done, and requires a little experience. One simple rule is to go for companies that are expected to outlast our life, that is, the companies which shall survive for decades and decades. It may look plainly silly to many, but after every bull market, you will find that people end holding shares of companies which simply vanish!

In case, you have much more than the average person, or you are so inclined, you may invest in antiques, paintings, and such stuff.

There are only four broad segments in which you may invest, and you must always care that you balance your investments in all these segments. Investment advisers or rather seller of investment products come to you with fascinating stories about the type of investments plan, but they ultimately can invest in only the above four segments. As such, please take all the investment advice with a pinch of salt, and do decide to keep a reasonable balance in all your investments.