Finance

Learn Ten Smartest Way to Invest Money in India

Way to Invest Money in India

Making smart investments requires multiple-choice selections which can meet your unique present and future demands as well as satisfy your financial goals for the future. Though your personal circumstances and the earning situation will affect the decision you make at every step of life.

Whether you save for retirement, home or your child’s education, all you need is a smart and safe way that keep your money growing. Below mentioned are a few ways that might prove useful when you decide to grow your hard-earned income.

Invest Money through direct equity

Making investments in company stocks is not everyone’s cup of tea since the market is highly volatile and provides no guarantee on returns. Moreover, you may find it very difficult to understand which stocks should be picked for the long term and at what time exit is required. The silver line is that over a long time period, equity is one way that had delivered something higher than inflation-adjusted returns as compared to other asset classes.

The risk of losing a significant portion of the money invested is though higher unless you are able to opt for using a stop-loss method that helps in cost curtail. In stop-loss, you will be able to place an advance order to sell your offered stock at a certain price. This reduces risk to some extent. You can even choose to diversify across many sectors according to market capitalization study. To make direct investments in equity, you need to have a Demat account.

Invest money in equity mutual funds

Equity mutual funds come in various schemes through which you can invest money in the form of equity stocks. The best part of equity mutual fund is that you can manage it actively or passively as per desire. In actively traded account, the return you get for your money invested depends entirely on the fund manager appointed by you. The fund managers capability and market knowledge can be attributed to the gains you incur from the investments made. Equity funds which are managed passively are known as ETF or index and exchange-traded funds. These track the underlying index. The equity schemes are segregated as per market capitalization or the diversified sectors in which the fund is invested. They can also be segregated according to domestic or international stocks.

Invest money in debt mutual funds

Investing money in debt mutual funds is another smarter way to grow money which proves very comfortable for those investors who demands a steady return in future. These kinds of investments are comparatively less volatile and therefore are considered to be less risky than equity funds. To invest in debt mutual funds, you need to invest primarily in fixed-interest generating securities such as government securities, corporate bonds, treasury bills and other money market investments schemes. Though, it must be noted that these investments are not completely risk-free. Certain risk can be realised like credit risk and inter rate risks. Hence, you must make a close study about any risk before investing in any debt mutual fund.

Invest money in Initial Public Offerings (IPO)

An initial public offering is known as the stock market listing of a new company to invite the public to purchase the shares. The shares are made open to buy before they get listed on the stock exchange. Since the initial rates are usually made lower, investors tend to keep a close eye for promising and strong companies which are likely to get listed. Such companies must have stock value inflated over a certain time once they are listed. Point to be noted is such companies price may change as per market conditions according to the performance shown by the company, their management, future probabilities and various other factors. With appropriate firm, IPO can be considered as the lowest price offering and a good long-term investment option.

Invest money in the National Pension Scheme

The National Pension Scheme or NPS is a good retirement scheme which emphasises on investment products that are managed by the Pension Fund Regulatory and Development Authority. A minimum annual contribution of NPS is subject to government schemes. Basically, NPS is a mix of fixed deposit, equity, government funds and corporate bonds besides many others. You can decide how much money you want to invest according to your risk-taking ability.

Invest Money in Public Provident Fund

The Public Provident Fund or the PPF is another safe investment product due to which many smart investors rely upon it. The PPFs requires a long tenure around 15 years which affects the compound interest calculated and the principal invested is secured through a sovereign guarantee. This makes PPF a safe and reliable investment technique. It must be noted that PPF rates and interests are reviewed quarterly by the government.

Invest money in Bank Fixed Deposit

A bank fixed deposit or FD is another safer method to invest money safely and smartly in India. Every depositor gets insurance along with credit guarantee from the bank. After a pre-determined period, the investor receives both interest and principal amount. The bank interest rate is subject to change and hence must be studied before considering FDs for long term investment.

Invest in real estate

The house in which you live must not be taken as an investment as it is used for self-consumption. The second property which you purchase after you have one for a living can be deemed as your investment. One important factor that determines the value of your investment on a property is the location of the property besides how much rent it can earn. You can invest your money in real estate in two ways: rentals and capital appreciation. Though certain risks are associated with real estate too such as regulatory approvals and changes in market rates.

Invest in Unit Linked Insurance Plans

The Unit Linked Insurance Plan or ULIP is one of the best options which offers investments in the form of equities and bonds besides protection through insurance. In such plans, a part of the premium you invest is invested upon stocks and bonds decided by you. The rest of the amount is paid in favour of life insurance coverage. Like any other money investment plan, ULIP involves certain risks such as fluctuations measured in terms of Net Asset Value.

Invest money in gold and silver

Having ornaments made of gold and silver is not just a form of jewellery option but proves as an asset in the long run. Since a making charge is involved when you purchase any gold or silver ornament, you can opt for coins and small bars. Many bank and reliable institutions sell gold and silver coins which can be sold to them in future whenever you need money. Alternatively, you can buy gold and silver in paper, in the form of bonds which is comparatively more economical and cost-effective. Such investments can be made through a stock exchange also with gold and silver as an underlying asset. Smart investors invest in gold mutual funds and sovereign gold bonds.

How can you become a smart money investor?

Although various money investments schemes are readily available in the market which might fit into your future goals, you need to be very cautious before making investments. Since most of the investment’s schemes are subject to market change, you must read all the investment-related documents carefully and take advice from reputable institutions or good financial advisors.

The above-mentioned money investment schemes are most suitable for long-term investors as they provide fixed income. However, some of the plans are market-based and comprises some risks. I believe that you must invest money in both market-linked and fixed income schemes as both of them play an equally important part of wealth creation. For instance, market-linked schemes provide high return but are riskier than fixed income schemes. Therefore, to become a smart investor and grow money steadily, consider the best choices from both the world. Have an equally distributed portfolio comprising a mix of investments keeping taxation, time horizon and risks in mind.

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