InvestorQ : What can be a good investment for 2021?
Indrajeet Kashyap made post

What can be a good investment for 2021?

Swapnil Sarang answered.
5 months ago
Well, you cannot define a good investment. A good investment is what helps in increasing one’s wealth and channelizing their money in the right direction and varies from person to person. Choosing the right investment can be a difficult task if you lack professional knowledge for the same. However, with some key considerations below you can begin to choose your suitable investment option:

Risk Profile: Before making any investment, you need to decide that what is your risk profile, this means, how much risk are you willing to take against the return expected. If your risk profile is high you can choose equity investment, otherwise, debt funds, mutual funds can be a good option for you.

Return Expectations: Since you have decided the risk profile, you need to decide how much return do you want for bearing that much risk. Return is the key factor of any investment. For example, if you have a high-risk profile and are willing to invest in equity, you expect that the return would be higher. Since the return is the reward for taking the risk, your returns will majorly depend on risk-taking capacity.

Investment Objective: The first question that comes to your mind should be: Why do I want to make this investment? The answer can vary from person to person like for child education, house, retirement benefits, long-due vacation, etc. This will help you decide at what rate your investment should increase and therefore, which investment could be best suited for you.

Taxation: If you fall in a higher tax bracket, you will need some investment for claiming deductions under the income-tax act. So, to decide whether or not you want a tax-efficient investment can play a major role in deciding the nature of the investment.

Duration: The investment objective comes with a duration. So, while deciding your investment option, you need to consider your desired duration and investment’s duration as well. For example, you want to invest for 10 years to build your own house, however, the investment option that you are seeking has a duration of 9, 15, 13, 11 years. In this case, you could either choose the investment option for 9 years or 11 years and manage it accordingly.

Now, coming to the investment option for 2021. After the massive fall out in 2020 due to the pandemic, investors are looking for options that would help them cover for both the years. You can use the above key-takes to decide what kind of investment will best suit you and choose from the emerging and developing sectors' stocks to place your money.