Types of Investments: What You Can Buy

Maya has done what the last lesson asked: six months of essentials set aside, health cover in place, no costly debt. The rest of her savings can now go to work. Her bank's app keeps offering her a deposit; her friends talk only about shares.

Lending means handing money to a borrower (a bank, a company, a government) who promises interest, a fee for using your money, and your money back on a set date. Owning means buying a piece of something: a business, a metal, a building. Nobody promises anything; you earn from what it makes and from what the next buyer pays.

One bank offers both deals: ICICI Bank: show the note on One bank, two kinds of money, one of India's largest banks (not the one Maya uses). Say ₹1 lakh goes to it on 28 October 2026, as an illustration on real prices, and follow it two ways, one at a time.

Lend it. As a one-year fixed deposit (money lent to a bank for a fixed time at a fixed rate), it earns 6.25% a year. Interest is added every quarter, so the bank promises ₹106398 back a year later, before tax. The amount is written down on the day you lend.

Own it. Spent on shares, the same ₹1 lakh buys 72 at that day's NSE close of ₹1377.60 (₹99187.20, before costs), and nothing is promised back. The bank's board pays owners a dividend (a share of the profit) only when it chooses: for FY26, its financial year from April 2025 to March 2026, it proposed ₹12 a share for the owners on its register on 3 August 2026. If it paid ₹12 again next year, 72 shares would receive ₹864; nothing obliges it to. Everything else depends on the price the next buyer pays. In the year before, the same 72 shares were worth as little as ₹85507 at the lowest price they touched (2 April 2026) and as much as ₹106560 at the highest (20 July 2026). Where they will be a year on, nobody can say.

Now picture every investment on one shelf with two boards: lend (deposits, bonds, government securities) and own (shares, gold, units of REITs and InvITs). Each group on it (deposits and bonds, shares, gold, property and road trusts) is an asset class: show the note on Asset class: a family of investments that work the same way, carry the same kind of risk and follow the same rules.

Two things are built from the shelf rather than sitting on it: a basket of its items (mutual funds and ETFs, chapter 8) and a contract about their prices (futures and options, chapter 7). A SIP is not on the shelf at all; it is a way of paying into a fund in instalments, which the next lesson explains.

Like the label on the back of a food packet, every product gets the same four lines, so any two can be compared. How does it pay you (its return)? What can go wrong (its risk)? How fast can you get your money out, and at what price (its liquidity)? What does it cost? A small line underneath names who watches over it. Try the first line on ICICI Bank's two deals before reading on: which one could tell you on 28 October what it would pay you a year later? Only the deposit. Chapters 2 to 5 fill one label each.

How it pays: a dividend, only when the board decides to pay one (ICICI Bank's board proposed ₹12 a share for FY26 with its results on 18 April 2026, for the owners on its register on 3 August, and put it to its shareholders' vote at the yearly meeting); and the price at which you can sell to the next buyer (what moves share prices). Nobody promises either. A lender who holds a loan to its end gets the agreed interest and no more; an owner's piece has no such ceiling, and no floor above zero.

What can go wrong: the price can fall far and stay down (Zomato's road in why the stock market exists), and the company can fail. Against rising prices a share has one defence a loan lacks: a business can sometimes raise its own prices too, though nothing makes it.

How fast you can get out: any trading day, at the price buyers offer then; in India the money arrives the next trading day (clearing and settlement). But only while the exchange lets the share trade: in Jet Airways, the case below, trading has been suspended: show the note on Suspended since 8 November 2024.

What it costs: brokerage and taxes on each trade, a depository charge when you sell, and tax on any gain (brokerage, charges and taxes). Watched by: SEBI, India's market regulator, and the exchanges.

Who is paid first: when a company is liquidated (closed, with everything it owns sold to pay what it owes), India's Insolvency and Bankruptcy Code sets the order. The costs of the process come first; then workers' dues and lenders holding security (assets pledged to them); then other employees, other lenders, the government and the company's other creditors; then preference shareholders; and ordinary shareholders last. Owners get only what is left.

On 7 November 2024 India's Supreme Court ordered Jet Airways, once one of the country's large airlines, to be liquidated, because the plan to revive it had not been carried out. The next day trading in its shares was suspended on the exchanges. Its assets are sold for its lenders first; its shareholders stand at the back of the line, holding shares they cannot sell on the exchange. On 31 March 2026, almost seventeen months after the order, the company's latest filing on NSE still listed 148793 shareholders, 144245 of them small individual holders.

A bank. ICICI Bank's one-year deposit pays 6.25% a year, on its rate card of 3 October 2026 and again on its card of 29 October. India's deposit insurer, the Deposit Insurance and Credit Guarantee Corporation (DICGC), covers up to ₹5 lakh per depositor in each bank, principal and interest together. Deposits with NBFCs (finance companies that are not banks) are not insured, and nor are bonds, funds or shares. A savings account is a deposit too, one you can reach any day at a lower rate.

The government. A Treasury bill is a short loan to the government with no separate interest payment: it works like a ₹100 voucher sold for less. In the RBI's auction of 28 October 2026, a 364-day bill sold at ₹93.75 for every ₹100 it will repay. The ₹6.25 difference is the interest: earned on ₹93.75 over 364 days, it works out to 6.69% a year. Think of Maya selling ₹100 burger vouchers for ₹94, to be used in a year: every buyer would in effect be lending her ₹94. The comparison stops at the point that matters most: a voucher is only as good as the restaurant that must honour it, and every loan is only as good as its borrower.

Longer government securities (G-secs) pay interest every six months until they end. Individuals can bid through RBI Retail Direct, open since 12 November 2021. India's small-savings schemes, such as the Public Provident Fund (PPF), also lend to the government, at a rate set every quarter: 7.1% for October to December 2026.

A company. A bond (in India often called a debenture) is a loan to a company at a fixed rate. Its interest is only as good as the company; it is not insured.

What can go wrong has three names. Credit risk: the borrower cannot pay (insured deposits are covered to ₹5 lakh per bank; bonds are not). Interest-rate risk: rates move, and the price of an older bond moves the other way. When new loans pay more, nobody pays full price for an old one paying less; when rates fall, the old one is worth more. It matters only if you sell before the end. And prices can rise faster than your interest (what inflation takes).

On 7 October 2026 the RBI raised its repo rate (the rate at which it lends to banks) to 5.50%, its first rise since February 2023. Three weeks later, ICICI Bank's new rate card of 29 October paid 6.60% on new deposits of three to ten years, up from 6.50% on its card of 3 October (6.55%, up from 6.45%, for two to three years), while its one-year rate stayed at 6.25%. Someone who locked a five-year deposit at 6.50% before the change keeps 6.50% for all five years, while new lenders get 6.60%. With a bond, the same kind of rise shows up as a lower price for anyone who sells before the end.

How fast you can get out: a deposit can be broken early, with interest cut; a bill or G-sec is held to the end or sold on through Retail Direct; PPF money is locked in for 15 years, with withdrawals allowed from the seventh year. What it costs: usually nothing to buy; the interest is usually taxed as income (PPF's is an exception under India's rules). Watched by: the RBI for banks and government securities; SEBI for listed company bonds.

For US readers: bank deposits there are insured to at least $250000 at each insured bank, and US Treasury bills work the same way, sold below their face value and repaid at it.

The record cuts both ways. On the RBI's yearly averages for Mumbai, gold's price fell for three years after FY13 (April 2012 to March 2013) and did not average higher until 2018-19. The rises are real too: from ₹48723 for ten grams in FY21 to about ₹1.18 lakh in FY26, and in FY26 alone the average rose 56%. And it slips within a year: the RBI's own figure for the market price of one gram of pure gold (an average over three working days, which it uses to repay gold bonds early) was ₹15254 on 20 April 2026 and ₹14159 on 28 October 2026, about 7% lower. Whether gold beats rising prices depends on the years you pick; the last lesson shows how to compare any return with inflation.

Ways to hold one gram. Jewellery: the price includes the jeweller's making charges, which you do not get back when you sell; purity is shown by a hallmark. Coins and bars: kept at home or in a locker, and sold back at a dealer's buying price. Gold ETFs and gold funds: units of a fund that holds gold (chapter 8). Sovereign gold bonds: show the note on Sovereign gold bond: government bonds priced in grams of gold that also paid interest; the first, sold at ₹2684 a gram in November 2015 with 2.75% a year, were repaid at ₹6132 on 30 November 2023. None has been issued since February 2024; older ones still trade on the exchanges.

Ten grams of that first bond cost ₹26840 in November 2015, paid ₹738.10 of interest a year in two halves (₹5904.80 over eight years) and returned ₹61320 on 30 November 2023. The interest came from the government's promise, not from the metal: when gold paid its owner anything while they waited, it was because the gold had been turned into a loan, here a loan to the government wearing a gold price.

One thing sold as gold sits outside: "digital gold" on apps. SEBI said on 8 November 2025 that such products are outside its rules and its investor protection.

Its label: it pays by price only (gold bonds also paid interest). It can stall or fall for years, and jewellery loses its making charges. How fast you can get out depends on the wrapper: ETF units on any trading day, gold bonds on set dates or on the exchange, jewellery at a jeweller's price, coins and bars at a dealer's. Costs: making charges, storage, or a fund's yearly fee. Watched by: SEBI for gold ETFs; the RBI issues gold bonds for the government; no market regulator for "digital gold".

Every month, before anything else, Maya pays the rent for her restaurant. What would it take to be on the side that receives it?

A REIT (real estate investment trust) owns mostly finished buildings that earn rent (at least 80% of its value), such as offices and malls, splits itself into units: show the note on Unit, lists them on the exchange, and must pay out at least 90% of its distributable cash (what is left of the rent after costs and interest). An InvIT (infrastructure investment trust) does the same with roads, power lines or towers that earn tolls and fees. Units trade in lots of one. Buying a flat or a shop yourself is owning property too: one large sum in one building, and one buyer to find for the whole of it when you sell.

Airtel Center is Airtel's registered office in Gurugram: 0.7 million sq ft, fully let as of 30 June 2026. Airtel rents it. Since June 2024, Brookfield India REIT: show the note on Brookfield India REIT has owned half of the company that owns the building, so part of Airtel's rent flows through the trust to its unitholders. One unit closed at ₹307.87 on NSE on 28 October 2026; for April to June 2026 the trust paid ₹5.60 a unit. Say someone held 100 units: on 28 October they were worth ₹30787, and the payout on them for April to June was ₹560.

The first ones: IRB InvIT Fund sold India's first InvIT units at ₹102 in May 2017; Embassy Office Parks sold the first REIT units at ₹300 and listed on 1 April 2019.

What can go wrong: units fall like shares. The highest price Brookfield India REIT's unit touched in the past year was ₹375.69 (27 February 2026); it closed at ₹307.87 on 28 October 2026, about 18% lower. Empty offices, fewer cars on a toll road and higher interest rates all cut what a trust can pay; rents and tolls can rise with prices, or not.

A payout is not all profit. Part of a trust's payout can be unitholders' own money coming back. NSE's record of IRB InvIT's July 2026 payout of ₹1.625 a unit lists ₹1 as interest and ₹0.625 as "return of capital". Money handed back leaves the trust smaller, which is one reason its unit, sold at ₹102 in 2017, closed at ₹61.33 on 28 October 2026. Judge a trust by its price and its payouts together, and read what each payout is made of.

Its label: it pays rent or tolls passed on, and the unit's price. Units fall, payouts shrink, and part of a payout can be your own capital back. You can sell on any trading day, in lots of one. Costs: brokerage, and tax on parts of the payout. Watched by SEBI. For US readers: many REITs trade on US stock exchanges too.

Pick one question, and every kind on the shelf answers it from its own chapter. Switch the question and they regroup. No kind comes first on every question. Try it: the figure opens on what can go wrong. Switch to how fast out and look at who sells on any trading day: shares and trust units, the same kinds that sit under "the price falls". Fast to sell still means selling at that day's price.

How it pays: a deposit, a government bill and a company bond pay agreed interest (ICICI Bank's 6.25% for one year; 6.69% a year on the 364-day bill of 28 October 2026). Shares pay dividends when the board chooses, such as ICICI Bank's ₹12 for FY26, and have a price; REIT and InvIT units pass on rent or tolls, and have a price; gold has only its price.

What can go wrong: a borrower can fail to pay (a bank, beyond the ₹5 lakh insured; a company bond, not insured at all); a price can fall (Jet Airways' shares; gold from FY13 to FY19; Brookfield India REIT's unit, ₹375.69 at its highest on 27 February 2026 and ₹307.87 on 28 October); and prices can outrun what a loan pays. A government bond held to its end is repaid; sold early after a rate rise, it fetches less.

How fast you can get out: shares and trust units on any trading day, at that day's price, while they trade; a deposit any day, with interest cut if early; bills, G-secs and company bonds at their end, or sooner only if a buyer is there; gold, depending on its wrapper. What it costs: nothing to open a deposit or buy a bill; brokerage and taxes on shares, trust units and listed bonds; making charges, storage or a fund's fee on gold. Who watches: the RBI for banks and government securities; SEBI for listed shares, bonds, trusts and gold ETFs.

Outside the fence: "digital gold" on apps, which SEBI says sits outside its protection; crypto, which no deposit insurer covers, in India or the US; and offers of high fixed returns from strangers (how to stay safe).

What the labels do not tell you: which of these fit Maya's goals and their deadlines, and how several kinds held together behave. That is asset allocation.

A derivative is a contract whose value comes from the price of something else. In a futures contract both sides agree today on a price for a trade on a later date (the expiry); every trading day until then the day's gain or loss is settled between them, so the buyer gains what the seller loses, or the reverse. In an option, the buyer pays a fee (the premium) for the right, not the duty, to buy (a call) or sell (a put) at a set price until expiry; the seller takes the duty and keeps the fee.

The size: NSE trades Nifty 50 contracts in lots of 65 units of the index. At the index's close of 22698.85 on 28 October 2026, one contract stood for about ₹14.75 lakh: show the note on One contract, for readers outside India (65 × 22698.85). SEBI's rule aims for ₹15 to 20 lakh a contract on the day lots are reviewed; with the index lower now than when the lot was set, a contract is a little under that. One contract stands for nearly one and a half times all of Maya's ₹10 lakh of savings. A 1% move in the index is about ₹14754 on one contract, gained by one side and lost by the other.

A futures buyer or seller, and an option seller, put down only a deposit, called margin, so their gains and losses can be far larger than the money they put in (margin and leverage); an option buyer pays the premium in full and can lose all of it. The contracts have real uses: a company or a fund can fix a price ahead of time.

The evidence, in one line: SEBI's study of 20 August 2026 found that 87.7% of individual traders in equity futures and options made a net loss in FY26 (April 2025 to March 2026). Trading against investing shows the whole study, and the Options course teaches the contracts.

Set a share and a contract on the same label. A share pays dividends and its price; a contract pays only the other side's loss, before costs. A share can fall, or its company fail; a contract can lose more than was put down for futures buyers and sellers and option sellers, and the whole premium for option buyers. A share can be sold on any trading day; a contract on any trading day until expiry, and then it ends. Both cost brokerage and taxes on every trade, at their own rates, and both are watched by SEBI and the exchanges.

A mutual fund pools money from many people; a fund manager buys a basket with it; each person owns units, equal slices of the basket. An ETF (exchange-traded fund) is a fund whose units trade on the stock exchange like shares.

What is inside decides the risk. A fund is named for what it holds: in SEBI's groups, revised on 26 February 2026, an equity fund holds mostly shares, a debt fund mostly bonds and bills, and a hybrid fund a mix. A gold ETF holds gold; an index fund holds the shares of the index it copies. A debt fund can fall when rates rise, for chapter 3's reason.

So a basket's label is its contents' label plus one line: the fund's yearly cost, its expense ratio. How fast you can get out: ETF units on any trading day; other funds buy your units back, and in India must pay within three working days. Watched by SEBI. What a fund holds inside, what it costs and how to pay in, at once or by SIP, is the next lesson.

Putting the shelf together: almost everything you can buy lends your money or buys a piece of something. Lenders are promised interest and stand near the front of the line; owners are promised nothing, stand at the back, and share whatever the business becomes. Gold pays only its price, trusts pass on rent or tolls, a contract is an agreement between two people about a price, and a fund is a basket of the shelf's own items with a yearly cost. Ask the same four questions of each.