In the last 12 years of my investment career I have met people who were at very different stages in their life but were looking for an answer to this very question! It does not have a very straight forward answer to be honest but in this post I will attempt to at least draw a roadmap for finding the correct answer to it.
Each individual will find a different combination of investments which will work for them. When we talk about personal investments "one size fits all" theory just never works. So the first step is to be clear about what is it that you are looking for? Are you looking to "SAVE" or you expect "GROWTH".
Understanding the difference between the two is also very important. If I get little technical here; everyone should have a basic understanding of inflation and inflation adjusted returns. When your objective is to save money you are looking to maintain the current purchasing power after accounting for inflation. For example you currently have INR 100/- inflation is say 6% you would want your investments to be at a value of at least INR 106 /- or slightly more than that. (Assuming one year time frame.) Also you will have a bias towards wealth preserving assets like Gold, Debt etc.
If you are looking for growth then your options are Stocks! Picking the right companies will lead to wealth creation as opposed to just preservation. "There is no free lunch" specially when it comes to the stock markets. "NO RISK NO RETURN"
Now lets break this down further! what is risk? it's the uncertainty of an outcome. As investors when we bear "risk" we get compensated for it in the form of "returns". With this the most probable next question is how much risk is appropriate for an individual? The answer to this question will have to account for each person's unique circumstances and individualistic traits.
I suggest all my clients to do a little bit of risk profiling before finalising an investment option. Having a thorough understanding about yourself and about the available investment options will add to a lot of mental peace. This inherent risk of stock market investments can be very effectively managed by choosing the right instruments.
After defining a clear goal; understanding of your own behaviour patterns; having a very clear and basic understanding about different assets and asset classes one can now choose the best fit.
I hope this thought process will help investors make an informed choice!