Financial Investment Plans

 

Financial Investment Plans

2020/11/15

When you invest, ask yourself, when do I want my money back? If the answer is less than seven years, invest in debt (like bank deposits and debt mutual funds). If the answer is more than seven years, invest in equity (like stocks and equity mutual funds). Here are some smart financial plans you can choose to invest in depending on your needs and income

Diversified Equity Mutual Funds

A diversified equity mutual fund scores over other investments because:
a) You don’t need to research and analyse to pick stocks
b) It gives better returns than bank deposits or debt mutual funds
c) It promises better returns than gold
d) You don’t need a special skill set or dedicated time to make your investment work for you. All you got to do is invest a little money every month through the systematic investment plan (SIP).

It’s got a price tag that gets better with age. As tempting as it is, gold jewellery is not a great investment. The price you pay is only 70 per cent for the price of gold, and up to 30 per cent for the design and making. So get gold coins and bars instead, their price is 100 per cent for the gold. You can get these at banks and jewellery shops. If you’d rather not be weighed down by the actual stuff, get gold exchange traded funds (ETFs). Make sure you put only about 5 to 10 pre cent of your money in gold.

Bank Deposit, Debt Mutual Funds, Provident Fund

It’s got the low-risk factor. If you want to invest for less than five years, choose bank deposits or debt mutual funds. Bank deposits ensure fixed returns, but these are taxed. Debt mutual funds invest in a mix of low-risk government bonds and corporate bonds. For a no-risk option, pick the PPF (public provident fund).

The Stock Market

Stock market has got long term appeal. You can pick stocks of companies whose products you buy. That way, you give to the company by buying their products and you get from the company by way of dividends and growth. Stocks of good companies can beat all other investments if you are a long-term investor (at least five to seven years). The dividends are tax-free and so are the profits if you sell your shares after a year.

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