Building wealth is important for each one of us. Imagine not being able to marry off your child the way you dreamt. Or not being able to afford your child’s education.
Doesn’t sound good, right?
This is where investment comes into the picture. Investment is not only important to safeguard the future of your children but also to live a happy life. No matter how much you earn, a primary source of income is not enough.
What’s best in this scenario?
You don’t need to work hard but also act smart! And investing your money in the smartest decision you can make to lead a comfortable life and fulfil your goals. Plus, money kept idle in a locker is nothing but a lost opportunity.
It’s time to grow your wealth by knowing where to invest money. Let’s begin!
Key Takeaways
- Investing money in the early years can provide a financial net for the future.
- It’s important to know where to invest to earn high returns.
- You can invest money in direct equity, NPS, EPF, PPF, fixed deposit and recurring deposit.
- Make sure to invest in different investment instruments to cut down the risk.
Why Should You Invest?
Before you enter the vicious cycle of giving into your habits, falling short of money, and ending up in debt, it is important to think of the future. When we compare ourselves to the older generations, things have changed drastically.
Our parents believed in taking things slow, but we are eager to become early achievers. The dream of having a car in the 20s, a house in the 30s and travelling around the globe before turning 40 has completely changed the financial dynamics. To fulfil these dreams, you need money.
Before we talk about where to invest money to achieve your dreams, take a look at some reasons why you should invest.
Grow Your Wealth
If you know where to invest money in India, you can easily grow your wealth. Instruments like a certificate of deposit, stock or bonds offer good returns in the long run. This helps in building your wealth over time.
Save for Retirement
There’s nothing wrong if you believe in living in the present. However, that doesn’t mean you should not safeguard your golden years.
If you do not have a financial cushion for post-retirement years, you may have to downgrade your standard of living. This is why it’s best to invest in several instruments according to your risk tolerance and use the returns during your golden years.
Earn Good Returns
To grow your money, you must put it in a place where it can yield returns. The higher return you get, the more money you’ll make. Investment instruments offer the chance to get higher returns than a savings account.
Where to Invest Money in India?
Now that you know why to invest money, the next thing to focus on is where to invest. You can choose a suitable investment vehicle from numerous options available to grow your wealth over time.
Look at the top investment options.
Direct Equity – Stocks
Individual equity stocks listed or unlisted on the stock exchange is known as direct equity – stocks. When you invest in direct equity, you earn capital gains or dividends. Plus, you also get partial ownership of that company.
However, you must have enough time and market knowledge to make the most out of your investment in direct equity.
For investing in direct equity, you also need to have a demat account and a bank account. Also, you need to have a high-risk appetite if you want to benefit from stocks.
Mutual Funds
If you look for where to invest, you’ll surely get mutual funds as an option. Mutual funds are gaining popularity among investors and for all the right reasons.
Mutual funds pool investments from numerous investors and institutions with a similar objective. A fund manager takes care of the pool of investment, so you don’t need to spend a lot of time.
Remember, returns are not guaranteed with mutual funds as it depends on the market movement.
Fixed Deposit
If you are looking where to invest money in India, let us tell you that three things are very common here – street food, festivals and your parents urging you to invest in FDs.
A fixed deposit is a traditional form of investment and part of every investor’s portfolio. Wondering why it’s a common investment instrument?
A fixed deposit is a safe investment vehicle as market fluctuations do not affect the interest rate you receive. If you don’t have any appetite for risk and want decent returns, FD is a great option.
However, FD comes with a fixed lock-in period. This means that you cannot withdraw money before the maturity period.
Recurring Deposit
Like a fixed deposit, a recurring deposit is another fixed tenure investment option allowing investors to invest a fixed amount every month.
A recurring deposit helps you earn a fixed interest rate and build a corpus over time. When investing in a recurring deposit, you must compare the interest rates across banks to get the best possible returns.
Public Provident Fund
If you are on the lookout for a long-term tax saving investment option, Public Provident Fund is a great option to consider.
Public Provident Fund is offered by the Government of India. The interest rate offered by the Public Provident Fund gets revised on a quarterly basis. The corpus you withdraw at the end of 15 years is tax-free.
Employee Provident Fund
Another retirement scheme for salaried individuals is the employee provident fund. It helps you save tax as per section 80C of Income Tax.
An EPF deduction is a percentage of an employee’s monthly salary, and the amount is matched by the employer.
National Pension Scheme
The National Pension Scheme is a relatively new saving instrument. Investors who invest in NPS will stay locked in until retirement and can earn high returns.
Tips for Investment
Investment is just like cricket. You need discipline, focus, planning and determination to win. Just like a cricket match where the victory depends on the number of sessions won, getting good returns on investment depends on winning small battles throughout the journey.
To help you win those, here are a few tips.
Know Your Financial Goals
Before investing your money in long-term investment instruments, you must have a holistic view of your financial goals.
Make a list of your goals to estimate the amount required to achieve them.
Start Investing Early
If you begin investing early, you can benefit from the power of compounding. It helps you accumulate a large corpus by multiplying the wealth.
Being an early investor comes with certain perks!
Steer Clear of Market Noise
When you enter the market, you’re bound to hear a lot of opinions. Suddenly, everyone around you will act as an expert.
But if you’re investing your money for the long term, you should ignore noises as they can distract you from achieving your goals. Instead of listening to people who claim to be investment experts, consult an actual financial planner to get genuine advice.
Diversify Your Portfolio
Individuality always takes you to new heights, but there are times when you need to make a collective effort to win.
The same rule applies to investment too. You must diversify your portfolio by investing in different investment instruments, such as bonds, equities, EPF, etc.
Did You Know?
By offering 9.5 average annualized returns, mutual funds outperform other investment instruments as of 2020.
Word to Remember
Stock Exchange
An exchange where traders and stockbrokers can buy and sell securities, such as bonds and stocks.
Conclusion
Now that you know where to invest, you must start sooner than later. The earlier you begin and the longer you stay invested, the better returns you get.
But before investing your hard-earned funds, it’s important to know about the different types of investment options available. Also, consider your risk appetite and financial goals beforehand.
Invest your money today and take a step towards building a better future for yourself.
FAQs
When it comes to investment, the sooner you start, the better it is. This is because investing early allows you to benefit from the power of compounding.
You can invest your money into several investment instruments. Some of the best instruments to grow your wealth in stocks, mutual funds, fixed deposits, employee provident fund and National Pension Scheme.
One of the best investment instruments to get good returns is direct equity. It outperforms other investment vehicles. However, it comes with a risk as returns depend on market fluctuations.
