List the various investment options for rural family? give details of any 1 option n merits n demerits also?

No different than an urban family -

Fixed investments:

CD's, bank accounts

Variable investments:

stocks, bonds, gold, real estate.

Merits of fixed - guaranteed returns
demerits of fixed - lower than many variable

variable investments can return more, but there is greater risk of losing principal - fixed investments can't lose principal.

no,no

My grandfather was a rural farmer and always swore by HH bonds. You can earn 6% interest per year, far higher than most savings accounts.

Most rural farm families that I know keep adding to their land holdings at every chance they get. In my opinion that is not a real good option, but I am not a farmer. There is a problem with putting all of your investments into one asset. For example, back to back poor havests can very well bankrupt you.

The very safest investment is T-bills. They are short term government debt. You can purchase them directly from the government. 6 month T-bills currently pay about 5.1%. And that money is free from state and local taxes. That is not to be ignored in high tax localities. I am including a link.

Now they are safe but they do not pay a very good return. Historically a better return has been obtained from a diversified portfolio of stocks. The key here is difersified. In diversity there is some safety. But there is also risk. The U S government also issues long term bonds that are adjusted for inflation. They are set to pay the inflation rate plus 2%. They are called Tips. There is a problem with tips however. That is the tax treatment. The inflation adjuster is not paid until maturity, but is taxed in the year in which it is set. Not something that would cause someone to wish to buy them except for an IRA account. .

It is generally agreed among investors that a good way for a small investor to create a diversified porfolio is through the purchase of mutual funds. But there is a problem with that. 70% of mutual funds underperform the market in general. There are good ones but you have to work to find them. They do not jump into your lap. To address this problem the industry has developed something called index funds. These funds are designed to mirror the performance of the stocks in the sector of the market they represent and there are hundreds of them. They have another advantage. They have a strategy of buy and hold so there is no year end captial gains distribution as there is in typical mutual funds. So they are very tax efficient whereas mutual funds may not be.

A nice diversified portfolio of some T-bills and 5 different index ETF's would present one with a good diversified portfolio. These should include funds that invest in U S stocks and foreign stocks including China and including oil. Over a period of 10 years this portfolio should yield a return of 10%+ with a decent amount of safety.

I am also including a link to ETF's.