Market-Linked or Fixed Instruments-A comparison

Market-linked instruments offer the advantages of higher returns over a period of time and as such are ideal for high risk category of investors. Market-linked instruments are subject to market risks and fluctuations. These days more investors are looking for ways to access market opportunities while managing their risks. Maximum ambitious investors who want to earn lot of returns in minimal duration invest in market-linked instruments. These market-linked instruments may be equity-linked, debt-linked or a combination of both (also known as hybrid instruments). Generally ambitious investors like to invest in equity related instruments because such instruments offer quicker and higher returns. However because of the risk involved these kinds of investments are not suitable for people looking to towards safe investments. The market linked investment may be either a short term or long term, depending on the financial goals of the investors. Long term investments may offer some degree of risk-leverage but this leverage, being dependent on a fund's performance, cannot offer the kind of safety that is offered by fixed interest instruments.

While choosing an investment plan, one of the most important things to remember is to have a diverse portfolio that allows you sufficient coverage together with the growth options. A diverse investment portfolio means having a mixture of securities and funds that allow certain degree of market leverage. Fixed instrument plans do not offer market leverage because by their very nature, they focus on fund security, avoiding market risks and not on growth of funds. Fixed interest and non-market linked plan does not offer any flexibility of investment, thereby capping the possible returns over a period of time.

Fixed instrument investment is a safe investment for investors. It is refers to an investment strategy or style that is intended to provide an investor with relatively fixed and stable returns. Fixed investment instruments may be one of the following:

1. Bonds (Government, municipal, company bonds)
2. Debentures
3. Bank Fixed Deposit (FD)
4. Commercial Papers (unsecured debts)

As a potential investor, you may often wonder whether sticking to the idea of traditional savings plans is a good choice or whether you should opt for planned risks. The best option is to have a balanced investment portfolio that yields optimum returns over a period of time. Having such a kind of portfolio enables you to understand your financial requirements in better manner and also, serves to protect your financial interest.

HDFC Life presents HDFC Click 2 Invest ULIP - an online plan that offers market-linked returns over a period of time and allows your funds to grow in a healthy manner. For details, click on the mentioned link: https://www.hdfclife.com/savings-plans /click-2-invest-ulip-plan.