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If you are a salaried professional or an entrepreneur, you can fulfil the financial goals of yourself and your family. Investing in your future is something you can do for yourself once you’ve taken care of all your necessities. It cannot be stressed enough how important it is to know how to invest money wisely. Several investment options are available to you, depending on your investment goals, liquidity requirements, investment term, and risk tolerance.
Listed below are seven ways to invest in India
Fixed Deposits
Those who want to know how to invest money in a safe investment vehicle can consider investing in a Fixed Deposit scheme. It is safe to say that bank fixed deposits are one of the safest investments that provide moderate and stable returns. In addition, you can choose whether to earn interest on the principal or interest on the interest amount. You can earn interest half-yearly, quarterly, annually, or cumulatively depending on your requirements. Remember, however, that the interest you have accrued will be taxed as part of your income. It is also possible to calculate the FD maturity amount in advance using FD interest rates calculator tool available online.
Mutual Funds
There are many benefits to investing in mutual funds, including the advantage of being able to invest indirectly in the stock market using the expertise of professional fund managers. However, because equity mutual fund is predominantly invested in volatile equity stock, they have a risk factor. On the other hand, debt mutual funds schemes are suitable for investors looking for a steady return with a fixed rate. The performance of these funds is a lot less volatile than that of equity mutual funds, for example. Investing in debt mutual funds involves investing in various fixed-interest securities, including commercial paper, corporate bonds, treasury bills, government securities, and other instruments related to the money market.
Public Provident Fund
It is essential to note that Public Provident Funds is one of the best investment options and are government-backed schemes that offer guaranteed returns based on the applicable interest rates. The interest rate for the PPF is set by the government and may change every quarter according to the government’s decision. There is currently a 7.1% interest rate on PPFs, which will remain in effect until September 2022.
Direct Equity
A stock is an asset class with great risk and volatility. When choosing the right stock, you must know when to enter and exit the market. You can lose a significant amount of your capital if you are not careful and don’t know how to invest money in stocks. You can reduce this risk by diversifying across different sectors and market capitalizations. However, when it comes to the long-term performance of stocks compared to all other forms of assets, direct investment into stocks has produced better returns over the years than all other types of investments.
Government Schemes
The Senior Citizens’ Saving Scheme is a mandatory investment in your investment portfolio if you are over 60. The PMVVY has a tenure of 10 years. By investing in this scheme, senior citizens who are 60 years of age and older will earn an assured return of 7.4 percent per year for the remainder of their lives. It can be purchased from a post office or bank.
Non-financial Assets
Undoubtedly, investments such as gold or real estate will add value to your long-term investments as their price rises. In addition, a real estate investment can produce returns either in the form of capital appreciation or through rental income. Therefore, it is vital in determining the value of your property and the amount of rent you can earn from it that you take into account the property’s location.
Life Insurance Plans
Life insurance plans are an excellent investment for beginners who want to know how to invest money with a steady income stream. You can purchase a savings insurance plan that offers guaranteed returns and a life insurance policy.
Final Thoughts
Most people want to minimize their risk of losing their principal to maximize their investment returns. Unfortunately, a high-return combination does not exist. Risk and returns are directly proportional; the greater the risk, the greater the return. Therefore, it is essential to match your risk profile with the risks associated with your chosen product before investing in an investment plan. Generally, investment products are classified into two categories: financial assets and non-financial assets. Depending on the type of asset, it can be classified into market-linked or fixed-income assets, such as stocks and mutual funds, and market-linked products, such as Public Provident Funds or bank fixed deposits. A physical asset such as a piece of gold or a portion of real estate can be considered a non-financial asset.
