The promise of high returns can lure most of the investors towards it, but the high-risk factor clubbed with them can land your investment into trouble. Such investments involve high risks as they do not provide assured returns.
If you do not wish to risk your savings into such unassured investment plans, then it’s better that you avoid them. The high-risk investment plan is suggested to those big investors who are wealthy and could afford to take high risks. However, such Investment Plans are now being pushed towards small investors also.
Here are some investment plans which can give you high returns but carry high risk, and will be a great option for high-risk appetite investors.
5 best investment plans for high-risk appetite investors
- Foreign stocks
Many investors are not aware that the RBI permits individuals to invest up to a certain limit in the foreign stock market in a financial year. You can invest in foreign equities in the same way as you purchase stocks of any Indian company. Because of the high risk involved in such investments, only a few investors use this investment option.
The high risk involved in equity investment is a known fact, but investing in foreign equity makes it riskier than investing in domestic equity. The biggest risk that comes in the way is the exchange rate. If the currency of the country in which you have invested depreciates against the rupee, your investment will land up in the loss. In return, you will get lesser than invested amount once the foreign currency is converted in the rupee.
- Forex trading
Just like stocks, forex trading also is a game of speculation. Profit of one trader is the loss of another, so you need to be extra careful while investing. The market situations keep on changing and hence the risk is 10-12 times higher.
The forex market is affected by various factors, and it is difficult to keep track of each factor every time. These investment plans are considered as sophisticated instruments carrying high risk. So, invest in them only if you have complete awareness of the financial changes and currency market.
- Corporate FD
Corporate fixed deposits provide high-interest rates, which makes them favorable in the eyes of corporate investors. These deposits offer higher rates as they are riskier than a normal Fixed Deposit. A corporate fixed deposit provides no guarantee of return on the invested amount.
The return on investment and the payment of the interest completely depend on the financial status of the issuer. The rating on the deposit will determine the interest rate of the Corporate FD. Normally, the interest will be low if the rating is not good.
- Commodity investment
There are numerous commodities that an individual can consider for trading like metals, namely aluminum, nickel, copper, and other expensive metals like gold and silver.
To trade in these commodities, you need to have a separate Demat account. Trading in commodities is a risky investment, but they provide high returns if invested under the proper guidance of experts.
- Stock future and options
The investors who are patient enough to wait for earning assured profits can invest in equity, but the impatient ones should choose to invest in equity derivatives. The chances of getting profit from future and option stock are five times more than the equity.
The futures contract makes you agree to buy or sell shares at a fixed price on a future date whereas options do not put you under any obligation of ascertaining any price or future date.
The futures market shows you five times more potential returns, but the risk involved in this investment is equally high. There can be chances that you lose more than your invested sum. Investing in options is comparatively less risky as the losses are covered by the premium you pay.
The Bottom Line
Now, as you are aware of the various investment plans and the risk associated with them, you must evaluate the return on investment you will be getting from them. You should also make a comparative study of the return and risk involved in every plan before investing.