So, while choosing an investment avenue, you have to match your own risk profile with the risks accompanying the product before investing. There are some investments that carry high risk but have the potential to generate high inflation-adjusted returns than other asset classes in the long term while some investments come with low-risk and therefore lower returns.
Here are the best ways to invest money –
Source – pagedesignpro.com
Investing in stocks may not be everyone’s cup of tea as it’s a volatile asset class and there is no assurance of returns. Also, It is difficult to pick the right stock as well as the timing your entry and exit is not easy either. The only silver lining is that over long periods, equity has been able to deliver higher than inflation-adjusted returns compared to all other asset classes.
Equity Mutual Funds
Source – investcorrectly.in
Equity mutual funds largely invest in equity stocks. As per the current Securities and Exchange Board of India (SEBI), Mutual Fund Regulations, an equity mutual fund scheme must invest at least 65 percent of its assets in equities and equity-related instruments. An equity fund can be actively managed or passively managed.
Debt Mutual Funds
Source – dnaindia.com
Debt funds are a good option for investors who want stable returns. They are less volatile and, hence, less risky compared to equity funds. Debt mutual funds mainly invest in fixed-interest generating securities like corporate bonds, government securities, treasury bills, commercial paper, and other money market instruments.
National Pension System
Source – beu.in
One of the most popular investments made by Indians is in the National Pension System. The National Pension System (NPS) is a long-term retirement – focused investment product managed by the Pension Fund Regulatory and Development Authority (PFRDA). The minimum annual (April-March) contribution for an NPS Tier-1 account to remain active has been reduced from Rs 6,000 to Rs 1,000. It is a mix of equity, fixed deposits, corporate bonds, liquid funds and government funds, among others. Based on your risk appetite, you can decide how much of your money can be invested in equities through NPS.
Public Provident Fund
Source – iservefinancial.com
Public Provident Fund has quintessentially been the choice of investment by salaried citizens in the country. Since the PPF has a long tenure of 15 years, the impact of compounding of tax-free interest is huge, especially in the later years. Further, since the interest earned and the principal invested is backed by a sovereign guarantee, it makes it a safe investment. If you are not up for investing in stocks or going through the terms of mutual fund schemes, keep your money in PPF.
Source – imbank.com
I bet everyone has heard this. An Indian household always has an FD or two to help them on a rainy day. Under the deposit insurance and credit guarantee corporation (DICGC) rules, each depositor in a bank is insured up to a maximum of Rs 1 lakh for both principal and interest amount. As per the need, one may opt for monthly, quarterly, half-yearly, yearly or cumulative interest option in them. The interest rate earned is added to one’s income and is taxed as per one’s income slab.