The reason why most people suggest investing as early as possible in your life is because investmentsgive you the much-needed financial security.
When it comes to investments, there are many plans in the market for short-term and long-term needs. But the main agenda of investing your hard-earned money is to make it work for you. Let us discuss various investment options that can help you in maximising earning potential for the big goals in your life:
- Public Provident Fund (PPF)
This option of PPF is at the top of the list because it is considered the safest and secure investment options for a long term. The investment is completely excluded from the tax cap. The investment plan is for 15 years, and it can be extended to another 5 years if you desire. There are loan options against your PPF or Public Provident Fund account.
- Mutual Funds
Using mutual funds to invest in the stock market is the safest way to benefit from the market. Mutual fund investments are for those who desire high returns with some additional risk. Here, your funds are invested in bonds or equities, or a mix of both. So, the returns are based on the performance of these commodities.
- Unit Link Insurance Plans (ULIPs)
Today, most investors know what a ULIP plan is, and they consider it as one of the top investment plans providing good returns along with insurance protection. In ULIPs, your money is invested in funds of your choice, be it debt, equity or balanced funds. Investment in ULIPs can cater to your many life goals like buying house, car, children’s education or even their marriage.
Moreover, ULIPs come with many features like switching facility, top-up facility, etc. which can be an added advantage when investing in big goals is the aim.
ULIP Taxation
Also, the taxation of ULIPs is one of the most lenient under current income tax act. For example, you can claim a deduction under section 80C for all your premium invested in the ULIP, and the maturity value (including any partial withdrawals) received from the plan after the 5-year lock-in is exempt from tax.
- Real Estate Investment
If you look at one of the fastest growing sectors in any corner of the world, then it would be real estate that includes huge projects like commercial buildings, manufacturing units, hospitality, housing and many more. As per investmentexperts, buying a plot of land is always the best decision when it comes to investment. There is no risk involved because the price of the plot increases within just 6 months time. There are many success stories of individuals starting from a very low budget and becoming millionaires by investing in real estate.
- Investment in Gold
Investment in gold has witnessed a dramatic surge in the last 5 years and research has shown that India alone has around 25,000 tons of gold mostly in the form of jewellery. Gold jewellery is still a very popular form of investment for many Indians.
Gold can get handsome returns, in the long run. However, you must diversify your portfolio to keep it useful for your short-term needs. Many studies have also pointed out that gold is the best hedge that can save an investor from a probable market collapse.
- Company Fixed Deposits
There are many corporate companies that accept investment in the form of deposits for a fixed period that earns set rate of interest, and this is called company fixed deposits. These funds are then mobilised by the companies under the Companies Act 58A. However, these investments are not secured, which means there are no options to recover the capital investment if the company defaults. This is the reason investment on company fixed deposits are considered as a very risky affair.
- Initial Public Offerings
The initial public offering or IPOs are the route for private companies and corporation to raise equity capital from retail investors. IPOs investments are a usually high-risk-high-return deal. Thus, retail investors should be cautious while investing in IPOs.
Experts even advise for investing in the stock once it has listed on the exchange, to avoid the risk of paying a very high premium under IPO.
- Invest in Bonds
A bond is a debt instrument issued by the government-run companies or corporations to raise money in the market. The investor, in this case, will earn a fixed rate of interest every year till the maturity date. Once the bond is matured, the principal amount is returned to the investor. These bonds are secured and can be traded between different investors.
Above mentioned are some of the best investment plans that can give you an extra cushion when you are facing financial crunch or need emergency funds.
