Know the Best Investment Plans for a Secure Future

Key Takeaways

• Investment plans are an essential way of planning for a stable and comfortable financial future. 
• There are many factors to consider when choosing the best investment options. These include your risk appetite, income, the scheme’s investment period, the minimum investment amount, tax benefits, and how liquid your investment will be.
• The best saving scheme for you will also depend on your income profile: your income, your age, your goals, and your willingness to take risks.
• You can choose from several investment options, such as short-term investments that are highly liquid, medium- and long-term investment plans with moderate to high returns, and highly risky but highly profitable investment plans.
• There is no such thing as a one size fits all best saving scheme. The best investment options for you will be tailored to your needs and goals and must be thoroughly researched. 

Exploring the Best Investment Options to Build Wealth

Investing early, carefully, and consistently is an essential long-term strategy for building wealth. While saving money has its place in financial plans, investment has the potential for much higher returns, especially over a prolonged period. However, given the diverse and extensive range of investment options, finding the best fit for your specific goals and risk appetites can be challenging. 

Good investment plans for you will depend on specific criteria related to the investment options you are choosing and your long-term goals: are you trying to save for a house? Higher education? Retirement? Are you looking to take risks in the short term for high returns? 

This article will explore the best investment options for you based on your goals and risk appetites.

Your Investment Checklist: Understanding the Factors to Consider for a Good Investment Plan

You will have to consider and assess several criteria to find the best investment options for you, including how flexible the plan is, whether there’s a lock-in period, what sort of tax exemptions and saving opportunities it offers you, whether there is a minimum investment amount, and so on. Some of the most vital considerations include: 

Return on investment

Simply put, this refers to the profits made on your investment. How much will you stand to make from the investment scheme you have chosen?

Risk

Even with the best investment schemes, the higher the risk of losing money, the higher the potential of making high returns. How much money are you willing to risk losing to turn a profit?

Investment period or term

All investment options, from the best tax saving plans to mutual fund investments, have durations associated with them. Some investment plans allow you to invest and withdraw whenever you like, while others maintain strict lock-in periods. Investment options can be short term, medium term, or long term.

Liquidity

Liquidity refers to how quickly your investments can be turned into cash. A savings account is liquid; a retirement plan or real estate investment is not.

Tax benefits

Some of the best Indian investment plans come with tax benefits or savings schemes. This can mean many things: for some investment schemes, you can claim savings and avoid paying tax, while other investments are not taxable, which means all the returns from them are exempt from government taxation.

Volatility

Closely related to risk and returns on investments, volatility refers to the rise and fall of market prices in economies. Some markets are highly volatile, which means they experience frequent and often high fluctuations.

As the old saying goes, however, you win some, you lose some. By prioritising some of these factors, you will naturally have to compromise on others. For instance, if you’re aiming for quick and high returns, you’ll likely have to compromise on stability. Similarly, if you’re looking to invest in long term options, you will have to give up on the liquidity of your assets.

Other than considering these external factors, it is also worth thinking about your investor profile in terms of your age, goals, income, etc. It is worth remembering that there is no one size fits all solutions when it comes to good investment plans. The best investment options for you will ultimately be tailored to your needs, goals, and desire to take risks.

Because You Deserve the Best: Benefits of Best Investment Scheme You Should Know About

Short term, high liquidity investments

In these investment plans, you have complete freedom to invest when you want and withdraw whenever you like. By high liquidity investments, we mean these investments can easily be converted into cash. Usually, these investments will not be very volatile, and the risk will be low. Consequently, they offer a great place to park your money for short term needs and easy access.

Short term investments can be made in your savings account, super saver investment plans, and liquid mutual funds. 

Investment options for specific goals

Are you trying to save for higher education? Maybe you are planning a lavish wedding in the somewhat distant future with the love of your life or want to build your dream home. Perhaps you want to travel the world in eighty days! These investment plans allow you to plan for medium to long-term goals such as home ownership, education, marriage, etc. 

Because they are designed for long-term goals, they need time to grow and have restrictions on when you can exit them. Not following these terms usually results in a penalty levied on your money. 

Goal-based investment options include PPFs (Public Provident Fund), guaranteed savings plans offered by banks, fixed deposits, and sometimes even equity and debt-based mutual funds. 

Investment plans for retirement

Who doesn’t dream of the day they won’t have to work for money anymore? A financially independent and comfortable retirement is a long-term goal for many, especially with the freedom and control it gives you on your time. Plans specifically designed for retirement work like goal-based retirement plans, but their lock-ins are even stricter. They only become accessible when you retire. 

Examples of retirement plans include Employee Provident Funds, pension plans, India’s Senior Citizen Savings Scheme, and even some life insurance policies. 

High risk/return investment plans

These investment options are good for people willing to take high risks for high rewards. High risk/high return investments are usually very volatile, though, and should be engaged with research and great caution.

High risk/high return investments would include trading in equity, either directly through the stock market or indirectly through equity mutual funds. Although these investments will undoubtedly be volatile and carry a high risk to return ratio, they are one of the best investment options to create investment adjusted wealth in the long term. 

This might be a good investment plan for you if you understand how markets work and have a high-risk appetite. However, as the famous saying goes, don’t put all your eggs in one basket. While equity investments are an exciting and promising investment option to explore, do consider other, less risky avenues too. 

Did You Know?

According to an SBI report, the number of individual investors in the market increased by a whopping 142 lakh in 2021. 

Why Should You Invest: Understanding the Best Investment Options?

Investments are essential to financial planning and building wealth over the long term. Although saving certainly has its benefits, good investment plans allow you to earn returns on your money. Investment plans are one of the most reliable ways to achieve your financial goals and build a financially stable future. By investing consistently and carefully, you allow yourself to have a cushion to rely on at difficult times. 

The best investment schemes also allow you to grapple with inflation. Inflation refers to the rise in the prices of goods and services over time. Simply put, inflation means what you could once buy with Rs. 10; you now need to spend Rs. 20 to obtain. You know those stories our parents tell us? “In our time, this thing used to cost much less.” Inflation is why a plate of street food costs thrice as much now as it did ten years ago. 

Unfortunately, we have no control over inflation. The only way to plan for future inflation is to ensure that your assets grow alongside the rising prices. With income levels rising at a much lower rate than prices, the only reliable way to keep up with inflation is to research and contribute to the best investment options you can access and work with.

Word to Remember

Inflation.

Inflation is defined as the rate at which prices rise over time. It is usually a wide measure of price increases or increases in the cost of living in a country.

Conclusion

Finding the best investment options for you might seem daunting, with the wealth of information out there. However, if you spend a little time charting out your financial needs and goals and do your research thoroughly, investments can be a thrilling and very rewarding way of planning for your future. Ultimately, careful financial planning and a disciplined and well thought out investment strategy will allow you to accomplish all your financial goals with much greater ease, be it travelling the world or building your dream home.

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