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Types of investments in India and Why Investing is Important & Where to Invest?

Why investments? 

In today’s world, just earning money is not enough. To earn the money, you work hard 9-10 hours/day. But this money is may not enough to live a comfortable lifestyle and fulfill your dreams. So you need to make your money work hard for you as well. That’s why investing is important. You should invest that money smartly in Mutual Fund schemes and NPS to get good returns out of it.

Types of Investment options in India

In India, there is a number of investment options available for investors. Every individual wants to earn more money with the least amount of risk. Some investing options are traditional which has been used across generations; While some are relatively new, that has become popular in recent years. Here are the best and smart investing options available in India.

Mutual Fund

In the last few years, Mutual Funds have gained popularity among Indian Investors.  There are different types of Mutual Fund schemes available in the market with different features and opportunities. Some of the common and popular Mutual Funds are such as Equity MF, Balance MF, Debt MF, and Hybrid MF. These Mutual Funds give investors diversify investment options with a good amount of returns. Equity MF invests mainly in Stocks; Debt MF invests in Bonds & Securities; Balance MF invest in both stocks and bonds. Whereas Hybrid funds give you the option of start and stop investing as per your convenience. Mutual Funds gives you an option to redeem your investment at any time except Tax-saving MF.

National Pension System (NPS)

National Pension System has emerged as a new tax saving investment option for Indian investors. For investors, NPS enables systematic savings till Retirement and give you a higher return than PPF & EPF. Some of the offered plans of NPS invest in equities as well. The all maturity corpus from NPS is not tax-free. A part of it used to purchase an annuity that will give the investor a regular pension.

3. Where should you invest your money?

Since there are many investment vehicles are available in the market. It is normal for an investor to get confused on which one to choose, where to invest and how to invest? So first an investor needs to understand what are his investment goals and objectives. Then choose the right scheme that fulfills the needs of the investor. Making a wrong decision on investment may lead you to financial loss. Here are some of the factors that will help you to invest your money smartly:

Age

Typically, younger investors have fewer responsibilities and a longer time horizon. When you have a long working life in front of you, you can invest in vehicles with a long-term view and also keep increasing your investment amount with an increase in your income. This is why equity-oriented investments like equity mutual funds would be a better option for young investors, as compared to something like fixed deposits. But on the other hand, older investors can opt for safer avenues like FDs.

Goal

Investment goals can be either short-term or long-term. For a short-term goal, you should opt for a safer investment and use the return-generating potential of equities for long-term goals. Goals can also be negotiable and non-negotiable. For non-negotiable goals like children’s education or down payment for a house, guaranteed-return investments would be a good choice. But if the goal is negotiable, which means that it can be pushed back by a few months, then investing in equity mutual funds or stocks can be beneficial. Plus, if these investments do really well, then you can even meet the goal before time.

Profile

Another thing to think about when choosing an investment option is your own profile. Factors like how much you are earning and how many financial dependants you have are also critical. A young investor with a lot of time on hand may not be able to take equity-related risks if he also has the responsibility to take care of his family. Similarly, someone older with no dependents and a steady source of income can choose to invest in equities to earn higher returns.

This is why it is said that when it comes to investing opportunity, one size doesn’t fit all. Investments not only have to be chosen carefully but also planned properly to get the most out of them.

4. How should plan your investments?

Planning for your investment? The first step is to choose the right investment option that fits your profile and fulfill your needs. Here are some points to consider before planning your investment:

– After doing an adequate amount of research choose your investment option wisely.
– Don’t easily trust in those schemes that promise a high return in a short-term period.
– Check your portfolio periodically
– Consider tax imposition on returns you earn from your investments
– Don’t invest if you don’t understand the scheme features and schemes
– Keep your investment simple. Happy Investing.

 

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