The best zero risk option in the world would be to keep all the cash at your home and lock it up in a safe. But inspite of we go and put our money in the banks. Most of us would not have thought what if banks get bankrupt. Although the RBI has strict guidlines in place for this not to occur, this low risk is still present. But we still put our money safely in the banks savings account Why?
In many banks, deposits over one lakh are not guaranteed. Again there is RBI watching this. But still we go for FD. Why?
Gold has been volatile yet indian households buy crazy amount of gold. Why?
The reason in simple. If money sits idle it loses its value because of inflation. So we take risk and invest to match inflation.
Instruments like equities are used to create wealth in the long run. At the same time market volatility could destroy wealth in the short term. So its important to identify your goal and put money required only for the long term in Equities
