The simplest way of starting investing is through a professional manager in mutual funds. Investment plans come in all sizes and shapes; you may invest, as the avenues are many.
Best Long-term Investment Plans
Financial goals for 7-10 years are long-term goals, and a few are:
- Equity mutual funds– It allows to reduce risk and diversify invested capital. The mutual funds invest to diversify investments across multiple stocks in different sizes from different sectors.
- Real estate– The investments in real estate are promising and come with their risks. It may include property selling quickly or selling for a huge discount, causing a loss. Investing in Real estate mutual funds is one of the money market mutual funds.
- Gold– Gold does not give the highest returns among long-term investments. However, it is an effective hedge against equity fluctuation or inflation.
- Small saving schemes– The Indian government has numerous small saving schemes such as Public Provident Fund. It offers steady returns, may be relatively low and beats the inflation effects.
- NPS– A long-term investment is the National Pension system focusing on retirement funds. It combines equities, and corporate and government bonds.
- ULIPs– A ULIP is an insurance plan presenting a combination of life insurance and investment. A good investment in equity or bonds helps garner returns, and the rest is for insurance cover.
Best Medium Term Investment Plans
Medium-term goals are 3-5 years away. Medium-term goals are a good saving type as cash management accounts. It is appropriate for your wedding, house renovation, downpayment, etc. Medium-term investment options beat inflation by a decent margin. Some investment options are:
- National Savings Certificates (NSC) – It is a post office saving for a 5-year FD. Earn 6.8% interest annually and the amount is receivable at maturity only. NSC is the safer option for investment.
- Post Office Time Deposit– Post offices, as if banks offer FDs. This is an investment option to deposit money for the short and medium-term. They offer better returns, and without any additional risk, these schemes are safe to run by the Indian government.
- Debt Funds for Medium Term– The debt fund categories depend on picking the appropriate debt fund. Banking& PSU Fund, Short Duration Fund, and Corporate Bond Fund are debt mutual fund categories fitting as medium-term goals. They are the money market accounts.
- Hybrid Funds- The investment in mutual funds is a popular combination of asset classes. The Hybrid Funds invest in Real estate or Gold. The benefit is to enjoy the potential of equity and stability in one fund.
Best Short-Term Investment Options
The short-term investment plans rely on two aspects:
- Minimize the risk to invested capital
- Your investments should be accessible easily
Bank Fixed Deposits (FDs) – it is a popular investment option assuring returns. The FDs are the safest options as there are no negative earning returns to erode your wealth. Withdrawing before maturity has a penalty to pay.
Debt Funds For Short-Term- The 3 debt fund categories are money market mutual fund, liquid fund, and ultra-short duration fund. These are low-risk products and are better for FDs.
Planning to invest includes concentration on easy accessibility and risk minimization investments. They are crucial factors to bear in mind with investment plans. A deposit to a certain amount assures returns of maturity on the principal investment and it is on maturity you receive it.