Investment is the best way to remain financially stable and prepped for emergencies. There are two ways investments work for you. The first option is investing your money to earn interest income like in FDs, RDs or investing in assets whose value increases with time like real estate. The second option is availing insurance to protect life and assets. Let’s discuss some of the popular investment options in India:
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This is one of the most popular investment options as it fetches much higher returns than most others. However, stocks are extremely volatile and their prices fluctuate on a regular basis. Investing in stocks requires sound knowledge on the stock markets. Investment in stocks can be rewarding if you stay invested for the long term.
Investments in equity mutual funds are quite popular in India. These schemes mainly invest most of your money in stocks. Equity mutual funds have high earning potential, but are risky. You can also invest in debt mutual funds which are less volatile and offer steady returns. ELSS is a type of equity diversified fund which offers tax benefits. It has a 3 year lock in and is known to give high returns with time.
Real estate sector is growing at an exponential rate in most cities. Investment in real estate can fetch you good returns in the form of rent or selling at a profit. It is one of the best investment options as property rates tend to rise faster in cities and metros. You can also increase your returns by investing in real estate for the long term and selling it at a profit.
SEE ALSO: Basics of Financial Planning
Corporate fixed deposits work in a similar way to bank fixed deposits. These fixed deposits offer a higher rate of interest and allow you earn higher returns. However, corporate deposits don’t enjoy sovereign guarantee. Always invest in corporate FDs with high credit ratings. (AAA rated corporate FDs).
Bank fixed deposit is one of the best investment avenues for senior citizens and risk-averse investors. A bank fixed deposit enjoys sovereign guarantee on both principal and interest.
Banks offer several options on fixed deposit like cumulative fixed deposit, regular fixed deposit, tax saver FD and flexi FD which you (an investor can choose) as per financial goals.
Recurring deposit is an alternative investment to FDs, for those who cannot invest a lump sum at once. The Recurring deposit allows you build a corpus, by depositing a fixed amount regularly (each month) over a pre-specified time period. Recurring deposits are offered by both banks and post office. The tenure of RDs can range from 12 months to 5 years.
Post office saving scheme refers to the monthly income scheme offered by the post office. This scheme offers capital protection along with monthly income (interest income) and is a highly reliable investment. Currently, the rate of interest offered on post office savings scheme is 7.7% and the interest is paid on a monthly basis. The senior citizens are offered a higher interest rate, making it an ideal and low-risk income generating avenue.
Public provident fund or PPF is a safe and low-risk investment avenue. PPF has a lock-in period of 15 years and can be availed by all groups of people as the minimum monthly investment amount is just Rs 500. Currently, the rate of interest offered on PPF account is 8% a year which is compounded annually. PPF enjoys the EEE benefit.
SEE ALSO: Types Of Investment Plans
Term insurance is pure risk cover. Term insurance is affordable and fits in the budget. There is no survival benefit on term life plans. However, term life plans are an effective tax saving instrument and the policy can be enhanced with riders.
Health insurance helps enjoy a stress-free life even in a medical emergency. You can afford costly hospitalization as you don’t spent out of pocket. Availing health insurance requires regular payment of premiums across the term of the policy. Health insurance can be availed online for both self and family.
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