The investment made today is the asset created for tomorrow. When we talk about investments, there is no guidebook available for indisputable success. Investment is a combination of art and extensive research and it is important to develop a refined knowledge for it before starting this journey towards investing.
Let us discuss how one should invest their money wisely and some of the best ways to invest money and get good returns in the future.
Why invest?
Investment is considered as an extra source of income that funds your retirement or helps you at the time of financial crisis. It is wise to invest your money as per the investment options available keeping in mind your needs and requirements. From low-risk to high, from short-term to long, all kinds of investment plans are available in the market.
Things to Keep in Mind Before Investing
Here are some of the important points an investor should keep in mind before making any kind of investment for their personal future growth.
Understand Your Financial Goal
An individual has many dreams and aspirations in life for themselves and their family. For instance, some dream of owning a house, while some may dream of buying a luxurious car. Some may want to move abroad, while others may aspire to give their child the best of education. Dreams vary from one individual to another and so will their ultimate financial goals.
It is very important for an investor to understand their financial goals and start creating a corpus depending on their needs and requirements.
Know Your Time Horizon
There are short-term goals, mid-term goals, and long-term goals in an investor’s life. It is important to understand the time required to fulfill a particular goal so that the investments can be made accordingly.
If the investor is clear about the time horizon required, it becomes easy and helps determine where the money should be invested.
Come in Terms with Your Risk-Taking Appetite
While going for any kind of investment, it is very important to understand your own risk tolerance and not be influenced by the market or agents. For instance, mutual funds are subjected to more risk when compared to Fixed Deposits but so are the returns and losses. Taking more risk than you can afford in the financial market can lead to hefty losses leading to unbearable debts.
Carry Out an Intensive Research
The investment market is deeply rooted and an investor, if willing to attain profits, needs to study the market before investing their hard-earned money. Products that suit your profile the best in all senses should be chosen for investments.
Best Ways to Invest and Get Good Returns
Options to invest mainly depend upon the financial objective of the investor. Here are some of the best investment options an investor can put their bets on, keeping their financial objective in mind.
Mutual Funds
Mutual funds are a pool of accumulated amounts by various investors. It is basically an investment vehicle that accumulates an individual’s money and invests it in multiple stocks, bonds, etc. of other companies to generate good returns. One of the top growing investment options, mutual funds are gaining popularity amongst first-time investors as well as market experts.
Equity Mutual funds can be bifurcated based on market capitalization. There are 3 types:
Small cap
Mid cap
Large cap
Public Provident Fund
The Public Provident Fund (PPF) is one of the safest and most popular investment methods that offer a dual benefit of savings as well as tax savings. This government-backed plan comes with a tenure of 15 years but the withdrawals can be made after the 7th year of purchase. The best part about the Public Provident Fund Scheme is that it offers a tax exemption of Rs. 1,50,000. Under Section 80C of the Income Tax Act, 1961.
National Pension Scheme
One of the most renowned schemes launched by the Government of India for all its residents so that they have a safe and secure financial future even after retirement is the National Pension System or National Pension Scheme. NPS offers retirement benefits to all the sectors of society, be it unorganized or organized.
As per the rules, any Indian resident between the age of 18 years to 65 years can open an NPS account. An individual can opt for an eNPS account which can be opened with their Aadhar Card or Pan Card information. One of the specialized divisions of the PFRDA (Pension Fund Regulatory and Development Authority), National Pension Scheme is launched to financially safeguard the lives of Indian citizens after their retirement.
Shifted from only the public sector to every Indian citizen residing in India in the year 2009, the main objective of this scheme is to provide financial support to every citizen of India post-retirement age. It is a highly beneficial scheme as it offers financial security to the investor and their family with minimal investment amount.
Fixed Deposit
One of the safest options when it comes to investment, Fixed Deposits relatively offer higher interest when compared to most saving investments. The Rate of Interest (ROI) varies from one lender to another. As per DICGC (Deposit Insurance and Credit Guarantee Corporation), all the investors in FD are insured up to a maximum amount of Rs. 5,00,000 for both interest and principal amount. The amount can be deposited yearly, half-yearly, quarterly, or monthly, as per the convenience of the investor. Â
Senior Citizen Savings Scheme (SCSS)
Senior Citizen Savings Scheme is a:
Government-backed scheme
Especially launched to provide financial aid to Indian citizens above 60 years of age
It is a 5-year investment plan
The account can be operated from the post office or any other designated bank
An assured interest rate of 7.4% per annum is offered under the scheme
Can be extended further for 3 years after the maturity
The maximum amount to be invested is Rs. 15 lakh
Can be opened individually or with spouse ages below 60 years
The deposits once made are non-transferable
Withdrawals can be made only after the completion of 1 year of the purchase along with penalties
To Wrap It Up!
A very famous American economist Benjamin Graham once said, “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”
An investor needs to analyze the market thoroughly before making any kind of investment.
˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.
Past 10 Years' annualised returns as on 01-07-2025
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
Generate wealth Earn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^ On premiums (under 80C) and on maturity (under 10(10D))
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