In today’s environment, making money from your principal income source is insufficient; you also need to make investments. People put a lot of effort into making money. Yet that may not be enough to live comfortably and accomplish their future financial objectives.
You must make your money work hard for you to achieve your goals. You need to invest to make your money work for you. A chance is wasted if cash sits in your bank account or a locker. To get returns on your investments, you should make wise financial decisions.
Why Should You Invest?
To reach your goals, investing is necessary. The only way to improve your future is to invest a significant part of your earnings in a disciplined manner. By investing, you are also building a corpus for a rainy day and saving money. Additionally, investing consistently pushes you to save money regularly, which will help you develop financial discipline over time.
Importance of Investing
Simply put, inflation is the rise in prices of goods and services. As a result, your purchasing power and money’s value get diminished. Inflation forces you to buy fewer things with the same amount of money.
The rate of inflation is out of your control. So if you want to remain unharmed by inflation, your money must grow to nullify the negative impact of inflation. However, money doesn’t expand on its own.
Your money must generate returns if it is to grow. You must invest if you want returns. Investments are therefore required to combat inflation. If there is an 8% annual inflation rate, you will need 8% more money than you have now to buy the same thing.
Earning returns that outpace inflation is crucial because if you don’t, your current savings may not be sufficient to cover future costs for goods and services.
Popular Investment Opportunities in India
Here are a few investment opportunities in India that you may find helpful:
Direct equity is one of the most popular investment opportunities. Purchasing stock in a firm entitles you to a portion of the firm’s business. By purchasing a company’s stock, you directly finance the company’s expansion and improvement.
You must have enough time and market understanding to gain profits from your equity investments. Otherwise, direct stock investing is just speculation.
Due to the adverse impact of numerous economic and commercial factors on equities, you must actively monitor your investments. Additionally, you must know that the returns are not ensured and be prepared to accept the risks involved. It is easy to get tempted to jump on to the next multibagger. However, knowledge, patience, and discipline give you much higher returns than any multibagger.
Since they have been around for a while, mutual funds have been becoming more and more liked by millennial. A mutual fund pools investments from different institutional and individual participants who share the same investment goal.
Mutual funds are universal financial products that let you start and stop investing whenever it’s convenient for you. Any person can consider investing in mutual funds.
Banks and other financial organisation provide the option of investing in fixed deposits, which allow you to deposit a hefty sum for a pre-determined time period and earn interest at a fixed rate. Fixed deposits, as opposed to mutual funds and stocks, provide total capital protection and returns.
Cautious investors, with low risk appetite, should choose fixed deposits. Interest rates on FDs vary depending on the state of the economy and are set by banks in line with the results of the RBI’s policy review.
Another fixed-term investment is the recurring deposit (RD), which enables investors to put up a fixed sum each month for a predetermined period at a fixed interest rate. RDs are available through banks.
The institution providing these options sets the interest rates. An RD enables investors to make little monthly investments to amass a corpus over a predetermined time frame. RDs provide total capital protection in addition to returns that are ensured. For risk-averse investors, RDs are advised, just like fixed deposits.
Public Provident Fund
Public Provident Fund (PPF) is an investment instrument that offers long-term tax savings. However, investors need to remain invested for a long period of 15 years.
The Indian government is the authority offering them, and the government will back your money. The Government of India adjusts the PPF interest rate on a quarterly basis.
After 15 years, the investor can withdraw the whole corpus completely tax-free.
National Pension System
The National Pension System is a relatively recent investment opportunity in India. It helps investors reduce their taxable income. Investors who subscribe to the NPS plan must remain invested until their retirement and can expect larger returns than those from PPF or EPF.
Peer-to-peer (P2P) lending platforms are decentralised platforms which offer an attractive investment option to individual investors. LenDenClub is one such platform. It offers returns on investors’ money up to 12%*. Money lenders can start their investment journey with the platform with small amounts and short time periods. Backed by artificial intelligence, the platform divides an investor’s money into a large number of blocks, some as small as ₹1. Each block goes into a separate loan, thus hyper-diversifying the investor’s risk. The platform offers Fractional Matchmaking Peer-to-Peer Plan (FMPP®), a high yield investment opportunity for individual investors.
Which Investment Option Should You Choose?
The following factors are what we advise you to consider while making financial decisions:
Young investors typically have more time to invest and fewer obligations. If you have a long career ahead of you, you can invest in vehicles with a long-term perspective and gradually increase your investment as your income grows.
Long-term or short-term investment goals are both possible. For a short-term goal, you should choose a safer investment. For a long-term goal, you should think about investments with high return-generating potential.
You should decide whether your demands are negotiable or non-negotiable. For example, -return investments are a wise choice for non-negotiable goals like a child’s education or a down payment for a house.
Your profile should be taken into account when selecting an investment option. The amount of money you make and the number of people who depend on you financially are essential factors as well. A young investor with plenty of time may be unable to accept equity-related risks, if they have to take care of their family.
How should You plan Your investments?
Finding suitable investment opportunities in India that meet your goals and profile is the first step in making an investing plan. When making investing strategies, bear the following in mind:
- Carefully select your investments after conducting sufficient research.
- Avoid falling for quick-money schemes that guarantee large returns in a short period.
- Regularly review your mutual fund and stock holdings.
- Consider tax consequences on the investment returns you receive.
- Maintain simplicity and stay away from complex assets that you are unfamiliar with.
You should begin making investments as soon as you can. Time is money when it comes to investments. The earlier you start and the longer you hold onto them, the greater the returns are on your assets.
Nowadays, there are many investment options available in India. Unlike a few years ago, when FDs and equities were the popular choices among people, various new-age investment options like P2P lending have emerged. The best part about these investments is that they have the ability to balance the risk and returns, which most investors find hard to achieve.
On top of that, online marketplaces like LenDenClub further simplify the process for investors. Let us see how –
- A family of more than 2 million people
- AI-powered Auto investment
- Allows diversification and reduces risk
- Screens borrower’s profile through 200+ data points to reduce the risk of default.
- Provides returns up to 10-12% p.a*.
- Market-risk free returns
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