Recently I read article which gave good indicator to measure investments options. It is- tax, risk, liquidity and ofcourse ROI(return on investment). Article outlined the usual good indicators, some interesting point worth a mention:
- Risk- Aim should be managing risk and not evading risk. since Investing and risk go hand in hand. not investing is also a risk. also peer(product/offering) comparison is good indicator of risk involved.
- Liquidation- should keep about 4-6 months of average monthly expenses in savings account or short term FD or Floating Rate/Liquid Funds. This, in most situations, should be sufficient to meet any emergency.
- Tax- different tax applies for different investment options and ofcourse tax has impact on return.
- Return- peer product comparison might highlight risk. Expectation should be according to current market conditions.