In today’s world just earning money is not enough. With changing times, having an eye for investment opportunities has become equally crucial. Moreover, the rise in living expenses has further enhanced the importance of having investments. Apart from providing long-term financial security, the money generated from your investments can help you fulfill your dreams and goals. Therefore, you must always invest your money smartly to get good returns out of it. However, before making an investment you should always assess the risk factor associated with it.
Generally, investment plans that offer higher returns have greater risk associated with them. Thus, choosing a mix of high-risk and low-risk investments can protect your wealth as well as earn profits.
One of the oldest and safest investment instruments are fixed deposits. Fixed deposits are offered by banks for different time periods. The interest rates on fixed deposits are decided by the banks and they keep fluctuating according to the economic conditions. As a result of the decline in the interest rates over the years, fixed deposits no longer offer high returns. However, since fixed deposits offer complete capital protection, they are most suitable for investors who wish to stay away from risks.
For people who wish to invest with the aim of getting higher returns, there are other safe investment options. Some of them are mentioned below:
Mutual funds have gained massive popularity in the last few years. These are flexible investment tools, in which you can begin and stop investing according to your convenience. Mutual funds offer optimum returns, much more than fixed deposits. Additionally, you can redeem investments from mutual funds at any time. There are different types of mutual funds, let’s have a quick look at them:
Debt Mutual Funds
Debt mutual funds generate returns when you invest your money in fixed income securities, such as corporate and government bonds.
Equity Mutual Funds
Equity mutual funds invest in stocks of the companies. The returns from equity mutual funds are directly proportional to market performance. This increases the risk associated with them.
Hybrid Mutual Funds
Hybrid mutual funds invest in both equity and debt.
Public Provident Funds
The Public Provident Fund (PPF) is a long-term tax-saving investment option as it has a lock-in period of 15 years. However, PPF also allows loans and partial withdrawals after certain conditions have been met. The amount withdrawn at the end of the 15-year period is completely tax-free in the hands of the investor.
Unit Linked Insurance Plans (ULIP)
ULIP is a modern and one of the best investment options. Apart from providing the option to invest in any number of qualified investments such as stocks, bonds or mutual funds, ULIPs also offer the security of life cover. This dual benefit of ULIP plan gives it an edge over other investment options. ULIPs are designed to help you achieve your life goals by saving for them well in advance. Lastly, under section 80c of the Income Tax Act, you can avail tax benefits by investing in ULIP.
Now that you are aware of different investment options as well as the importance of investments, make sure you invest your hard-earned money wisely by choosing the right investment plan for yourself.