Investments options are pivotal in the world of today because earning money is not ample. You work hard for the income you earn and that might not be best for you to have a comfortable lifestyle or fulfill your objective and dreams.You have to make your money work hard for you also and that is why you have to make an investment. You need to invest the money to get nice returns out of it.
What type of investment can I do in India?
The investors in India have many investment options to opt from. There are some conventional investments that have been used across generations and some newer options that have become highly popular in the recent years. There are some best investment options accessible in India.
Stocks are called company shares and are the best investment vehicle in India. When you purchase a stock of the company, you have to purchase the ownership in that company that enables you to participate in the growth of the company. Stocks are provided by companies which are listed on the stock exchanges and may be purchased by any investor. Stocks are best for long-term investments.
To invest in the stock should not be equated to trading in the stock market and this is a speculative activity.
Mutual Funds have been there for some time and they have got popularity in the recent times. These are vehicles for investment that pool the money of several investors and invest it in a way to earn maximum returns.
Also Check: Share Market for The Beginners
Various kinds of mutual funds are invested in different securities. Equity mutual funds invest in stocks and equity related instruments. The debt mutual funds invest in bonds and papers. There are also hybrid mutual funds that invest in equity and also debt. Mutual funds are flexible investment vehicles in which you may start and stop investing according to your inconvenience. You can redeem investments from the mutual funds anytime also.
These are investment vehicles that are for a specific time period. Fix deposits provide capital protection and guaranteed returns. They are ideal for conservative investors who have the risk. Fixed deposits are provided by banks and for various time periods. Fixed deposit interest rates change according to the economic conditions and are decided by the banks.
Fixed deposits are locked in investments and investors are allowed to get loans or overdraft facilities against them. There is a tax saving variant of fixed deposit which has a lock-in period of five years.
An RD or Recurring deposit is a fixed tenure investment that enables the investors to place in a specific amount every month for the particular period of time. RDs are facilitated by the banks and post offices. The interest rates are mentioned by the institution offering it. An RD enables the investor to invest a meager amount each month to develop a corpus in a specified period of time. RDs provide capital protection and guaranteed returns.
Public Provident Fund
It is a long-term tax saving investment vehicle that has a lock-in period of 15 years. The investments made in PPF can be used to earn a tax break. The PPF rate is decided by the Indian government in every quarter. PPF enables loans and partial withdrawals after some conditions have been met.
Employee Provident Fund
It is another retirement-oriented investment vehicle that earns a tax break under Section 80C. EPF deductions are a part of the monthly salary. EPF rates are decided by the Indian government every quarter.
National Pension System
The National Pension System is a new tax saving investment option. The investors in NPS stay locked in till retirement and can earn higher returns than PPF or EPF. The NPS provides the plan options that invest in equities also. The maturity corpus from the NPS is not tax-free and a part of it needs to be used to buy the annuity that will provide the investor with a regular pension.
There are several kinds of investment vehicles and it is usual for an investor to get overwhelmed. A person who is new to investing would not know where to invest their money. To make the incorrect investment option can lead to financial losses.
Also Check: Post Office Scheme
The objectives of investment can be short term or long term. You have to choose a safe investment and utilize the return generating the potential of equities for long-term objectives. Objectives can be short term or long term. You have to choose a safe investment and utilize the return generating the potential of equities for long-term goals.
Goals can be negotiable and non-negotiable. The guaranteed return investments can be a nice choice for non-negotiable goals such as education of the children or down payment. The goal is negotiable and it can be pushed back by a few months. It proves beneficial in investing in equity mutual funds or stocks. In case these investments do well, then you may meet the objective before time.
The first and foremost step in planning your investments is to find out how the correct investment suits your requirements and profile. There are some aspects to bear in mind when planning your investments.
You have to opt for the investment in a careful manner after doing adequate research.
You need to review your stock and mutual fund investments in a periodic manner.
You need to take into consideration the tax implications on returns you get from your investments.
You have to keep the things easy and avoid complex investments that you do not know.
Top Investment plan in India
Investment plans are financial products that give the opportunity to generate wealth for future. These plans are of two types, Unit Linked Insurance plans, and traditional endowment plans. An endowment plan offers lower and safer returns.
Investment plans under 80c
Section 80 C is the most used section for claiming income tax deductions. This section enables a deduction of Rs. 150,000 and cannot be used by salaried persons and can be used by all the categories of taxpayers irrespective of the source from which they earn their income.
The deduction of Rs. 150,000 can be claimed for investment in a single instrument or for investment in many instruments.