What is investment?
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Investment is a wealth-creation strategy that is sure to offer profits in the long run. Whether you are planning to buy a dream house or need financial help to deal with any health emergency, you can use the wealth generated from the investment to fulfill all your needs. Generally, speaking of investment, it is simply used to appreciate your wealth in the future. For instance, if you are earning 50k per month and you keep 10k for investment, then the fraction you keep for investment can be used for wealth creation.
Types of Investment
Based on the risk factor, there can be different types of investment such as the following:
- Low-risk Investments: As the name itself implies, low-risk investment plans are those that are less affected by market fluctuations. Thus, these options are safe and are preferred by those investors who have a low risk-bearing ability. Some of the low-risk investment options are PPF, Senior Citizen Saving Scheme, National Pension Scheme, etc.
- Medium-risk Investments: Medium-risk investments involve a certain risk and are preferred by those who want greater returns. Some of the medium-risk investment options include ULIP and a few others.
- High-risk Investments: High risk investment options are those that involve a great risk. It is preferred by only those who are capable of withstanding the risk as subject to market fluctuations. As the return depends on market fluctuations, so there is no fixed income as is provided under low-risk investment options. Mutual funds, stocks are some of the best examples of high-risk investment options.
Factors To Consider While Buying Best Investment Scheme
Listed below are some of the factors in order to buy the best investment scheme:
- Income: First and foremost, you should keep your income in mind before buying any investment tool. Your income helps you analyze which investment scheme you can afford to buy as per your budget.
- Market risk: Before investing, you need to consider the market risk as there are certain investment schemes that get largely affected by market fluctuations. You should also invest in a plan as per your risk tolerance. It is always a better idea to buy an investment tool that has a low-risk appetite.
- Your Future Goals: You should also keep in mind your future goals so that you can invest in a long-term or short-term investment plan. Once you analyse what your future needs are, it will become so much easier to pick the right investment plan.
- Performance of the plan: Before investing in any plan, it is important that you evaluate the plan's performance in the past few years. Doing so will help you understand what will be the return in the future.
Benefits Of Investment
There are ample reasons why you should invest. Some of the benefits of investment are as follows:
- One of the top benefits of investing is to let your money grow. Once you plan to invest, then your hard-earned money will only appreciate with the passing of time.
- You can also protect your wealth by investing in gold, fixed bonds, and more. Moreover, you can also achieve your future goals with investment tools.
- With investment, you can also get a steady source of income. Some of the investment options such as PPF, NPS, even provide regular income after your retirement.
- You can also enjoy tax savings with investment options such as ULIP, NPS, and many more. As per Section 80C of the Income Tax Act, many investment options are exempted from tax liability. A maximum of Rs. 1,50,000 is free from tax liability.
Best Time To Invest
There is no right time to invest, however, it is a fact that the sooner you start investing, the better returns you will get. So, you should make it a priority to start investing a small amount of your income as soon as you have started earning. Moreover, when you are young, the load of responsibility is lesser and thus it becomes easier for you to invest without any worries. Thus, invest in the desired investment option and start securing your future in a promising manner.
Popular Investment Options
Listed below are some of the popular investment options:
- Unit Linked Investment Plan or ULIP
- National Pension Scheme or NPS
- Public Provident Fund or PPF
- Gold investments
- Senior Citizen Savings Scheme or SCSS
- Bank Fixed Deposits
- Mutual Funds
- Post Office Monthly Income Scheme
Take Away
Now, that you have understood the different aspects of investment, it will become easier for you to start investing. You can also get in touch with us at InsuranceDekho to learn more about the popular investment schemes.
