What investment plan is good for me? Are mutual funds your cup of tea? Should I open a Fixed deposit account? Should I invest in Mutual funds?
If these types of questions are lingering in your mind then keep on reading. This article will help you to get all your answers.
People become very confused when it comes down to choose the best investment plan for your savings. Investments in mutual funds are a viable option. However, there are many investment tools that can be used for the investments (depending on the kind of investments you want).
You can invest in multiple places. This not only ensures the safety of your savings but also help you gain more market return.
If you are thinking of investing in any kind of product, then you need to know the process and the future standings of the investment plan.
There are two types of investment, financial and non-financial investment. The financial investment includes mutual funds, bank deposits, fixed deposits, etc. the non-financial investments are investing in commodities (Gold, Silver, Real estate, etc).
Best Investment Options
Before finalizing into a particular type of investment, you must go through all the exhaustive research on all the plans. Then choose one plan that will suit you the best.
Note down all the possible aspects of the plan. Its risk and return. Remember that the risk and the return are directly proportional to each other. The higher the risk, the higher will be the return.
Whenever we talk about investments, the first plan that comes to our mind is mutual funds. Mutual funds gain their popularity for their higher returns. This higher return comes with long term investments.
Mutual funds are a market-related investment. It invests in various financial instruments like debts, stocks, money market, equity funds, etc. and the returns depend on the performance of these financial instruments.
Mutual funds can best investment plan if don properly. Mutual funds are of three different types:
Equity funds are the market linked securities that invent in the share of the market. Around 65% of the investment in the mutual funds is doe in the equity funds. In this fund, the returns are higher and so the risk.
Debt funds include government securities, corporate bonds, treasury bills, etc. these funds are low risk-based with a steady return of investments.
Hybrid funds invest in more than one type of investment securities. It invests in both bonds and shares markets parallelly. This is why they named as hybrid funds.
These funds are stable in nature and dynamic at the same time. So, these funds are ideal for beginners.
Public Provident Fund
If you are a safe bird, then the public provident funds can be your best cup of tea. It is one of the safest funds out there. This investment plan can be started by opening an account in a bank or a post office. Here, the capital can be locked down for a time period of 15 years. The best part of the PPF (public provident fund) is that it is tax-free and can offer you good compound interest.
Bank Fixed Deposits
A fixed deposit is considered one of the most popular options. Having a fixed deposit in a reputable bank can give you a sense of security of your money with a decent ROI. The interest of these FD accounts can be paid monthly, quarterly and annually.
FD accounts also provide the facility of cumulative interest. You can avail if you want to. What happens in this cumulative interest that your monthly interest adds up into your principal value to become a new principal value. The money you will get at the time of maturity. And if you wish not to have a cumulative interest, then the interest will be paid to you.
National Pension System
It is a scheme run by the government, that allows you to invest in equity and debt. The final pension amounts depend on the investment you have made.
Real estate is has become one of the best investment plans with a high return of investment. The prospects in this sector are hospitality, commercial, housing, manufacturing, retail, etc.
Gold ETF is becoming popular nowadays. People are investing in them without worrying about the risk. These funds are traded on the National Stock Exchange (NSE) and can be bought and sold just like any other company stock.
While market-linked instruments are volatile in terms of risk, they tend to offer higher amounts of returns as well. Hence, the choice of financial instruments for the purpose of making investments should be made only after gaining complete information about the product and the market.
Unit Linked Insurance Plan
Unlike the insurant plan, this Unit linked insurance plan (ULIP) offer both insurance and investment option under the same integrated plan.
A small part of the premium goes to the insurance policy, and the rest is used for investment purposes. This is more like hybrid funds that allow both (aggressive and conservative) kinds of investors.
Traditional insurance plans can offer up to 4% to 6% of the returns, but this ULIP can offer you double digits offer.
The fixed deposit has always been a stable plan for a middle-class family. And why it should not be, it has provided many families a new way of planning for their retirement.
A fixed deposit has both short-term plans and as well as long-term plans. A short-term plan is not worth a penny as the profit is very less. If you are really interested in the fixed deposit make sure to do long-term investment.
A long-term plan can help you to reap the best out of your investment.
Choosing the best investment plan can be very tricky at times. Without the right amount of knowledge, you are likely to invest in the wrong investment plan.
You do not have to worry; this article will surely help you to understand the nature of every investment plan.
investment plan – DepositPhotos