Investing your hard earned money is one of the best steps that you can take for yourself. It will not only help you in near term but will also make sure that future is protected too. There are some best fixed income investments options available in the market for an investor to invest his hard earned money prudently.
These best fixed income investments options would include different asset classes like equity,fixed income, gold, real estate, peer to peer lending etc. Most of the asset classes work on the principle of risk and return. If you want to have a higher return then you must be willing to take more risk.
When it comes to returns from the best fixed income investments, equities have performed better than other asset classes. But, investing in equities is considered to be a risky option and is only advised for investors with more than average risk appetite. Whereas, peer to peer lending have given more returns compared to equities in the past and with less risk attached to it. Let us look at returns given by different investment options in past with a time horizon from 5 to 10 years. This will show you why peer to peer lending is one of the best fixed income investments option for a serious investor –
- Equities – Over a time horizon of 5 years, equities have given a return of 11% to a serious investor and if we extend time horizon to 10 years the, this return shoot up to 17% on average. These returns are overall returns from market and may vary from one sector to other.
- Bank fixed deposits – Bank fixed deposits returns have stayed between 5-6% over the past 5 to 20 years. Bank fixed deposit rates are affected by interest rates fluctuation in the market. Returns from fixed deposits are not even able to beat inflation at any point of time.
- Gold – Gold have provided returns of 9% in the past 5 years. Returns from gold have varied from 8% to 12% over the past 20 years. Currently, gold is not considered as a good investment option by experts and it is losing its shine compared to other investment options like peer to peer lending.
- Real estate – Once, real estate investment were considered as a great investment option by most of the investors. But, in recent times real eastate too has lost its sheen. Historically, real estate has provided a return of 8% over the past 5 years.
- Peer to peer lending –It is one of the most attractive investment options available to investors. Peer to peer lending platforms are based on concept of social lending. Social lending involves group of lenders lending to a common borrower. Peer to peer lending is already quite popular across North America, Europe and China. It is gaining fast traction in India too with more than 30 peer to peer lending institutions have already started their operations. This number is going to increase in future too with upcoming RBI guidelines regarding regulations of this sector. These platforms have provided returns of 18% to 25% to a serious investor. Moreover, returns from this investment don’t get effected change in interested rates or other investment classes as it is uncorrelated to them.