With the rapidly increasing cost of living in today’s day and age, it is imperative to make a smart investment planning. As investment and saving goes hand in hand, with a smart investment planning one can not only maximize the return but can also create a financial cushion for future. With an extensive range of investments option available in the market, choosing the right investment plan can sometimes become bit confusing.Read more
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Many people want to make investment with a perspective of long term investment. However, while we make investments, our end objective should be to generate high returns with minimum a risk involved. With wide range of investment options available in the market, here we have discussed some smart investment options that can maximize the returns with minimum risk involved.
Unit linked insurance plan not only provides risk coverage to the individual but also works as a great investment opportunity. ULIP plan provides the dual benefit of insurance cum investment to an individual. Under this scheme a part of the money is kept for protection whereas the other half of the money is invested in equity linked instruments like debt, bonds, stocks, etc.
As ULIP plans are normally linked to the capital market it provides the flexibility to make smart investment either in debt funds and equity market depending completely on the risk appetite of an individual.
What make ULIP one of the best investment option are its transparent features, flexibility to choose between the different fund options available, rider benefits for extra protection and tax exemption under section 80C, 80D and 10(10D) of Income Tax Act 1961.
Endowment plans works best for those who wants to grow their fund along with protection. Endowment plans are basically a combination of protection cum insurance. These plans are widely preferred by those who want a lower setback, as along with life insurance coverage the plan also provides a saving component. Thus the dual benefit of saving cum protection has made endowment plans a favorite choice for long term investment.
The bonus offered under endowment plans helps to provide add-on benefit that an individual will receive in case of any eventuality. Moreover, the endowment plan also provides tax benefit on the maturity proceeds under section 10(10D) of income tax act 1961.
However, the shortcoming of these types of plan is that they cost you higher premium as compared to the other investment plans.
Annuities can be a great investment choice for investors who want to stabilize their portfolio over a long period of time. Annuity plans/schemes are insurance products that provide income and can be used as a part of retirement planning. Thus, as a smart investment option, the investors can use it as a long term investment to secure the life after retirement. However, prior making investment in annuity it is important to understand annuity thoroughly, as it is a complex financial instrument. There are different types of annuity plans available in the market like fixed annuity plans (where returns are fixed), variable annuity plans (Where returns are variable) and equity index annuity (where returns depend on the performance of the stock market).
Annuity plans are offered by the insurance company, where the insurer takes a lump-sum amount from the investor and provides a guaranteed return on the invested amount. Therefore, the investments made in annuity plans are a safe investment and help an individual to create a financial cushion over a long period of time.
In today’s day and age, mutual funds, mainly equity oriented mutual funds are considered as one of the lucrative investment options. With an array of fund options, investing style, themes’, inexpensive cost and tax-friendly norms mutual fund investment is truly a profitable product for wealth accumulation. This is a lucrative investment option even for the new investor who does not hold much knowledge about the market and create wealth in the long-term. In order to create corpus in a long-term and achieve a profitable return on investment an individual must continue to invest in MF in a disciplined way and should keep patience. Although the mutual fund investment involves a certain risk, with a lower expense ratio, MF investment is a moneymaker when it comes to multiplying wealth and creating a financial cushion in long-term.
In today’s scenario, most of the salaried individuals can access to employee stock option. However, not everyone considers it as a lucrative investment option. But, after the current changes in the stock market, it is mushrooming as the easiest and simplest investment instrument in terms of observing, investing, and redeeming. Employee stock plans are particularly designed to invest mainly in the sponsoring employer's stocks. Apart from working as a lucrative option of investment, the ESOPS also provides the advantage to the investors to save on tax. Under this investment option, the companies get the benefit of existing cash flow by allotting treasury shared or new shares to the ESOP.
Gold bonds are a great investment option. The major reason behind this is because gold bonds are a remunerative asset which offers the dual benefit of safety in investment along with fixed income as a part of bank FD. Thus, an individual can consistently gain profit even in case the gold price falls in the market and can create wealth over a longer tenure. While in the past few years the price of gold has not changed much, it is always there have not been major changes in the price of gold over the past few years, it is always contemplated as a safe haven of investment for investors even at the time when financial market observes a downfall. Moreover, once the price of gold increases in the market then the individual can avail the benefit of price appreciation along with the fixed interest.
If we want to choose an investment option with a perspective of long-term then real estate investment is one such option that one needs to consider. The location of the property is one of the prime factors determines the worth of the property. Moreover, one can also gain rental from the real estate property. Real estate Investment done can earn a profit in two ways i.e. by capital appreciation and rental. However, real estate investment offers less liquidity as compared to different asset classes.
Focused portfolios are funds which include relatively less variety of stocks. In focused funds, investors choose to invest in a fixed number of stocks in a limited number of sectors despite than investing in a diversified equity fund. Under focused portfolio, the investors choose to invest only in 10-15 stocks over a long-term period which results at generating higher returns on investment.
By keeping a focused investment approach, the investors can achieve up to 5-10% investment returns by investing in individual stock. Whereas, by investing in diverse stock one can only achieve the investment return of 1-2%
Focused portfolio investment options have a high-risk appetite and offer higher the returns on investment in case, if an individual wants to minimize the risk exposure, then it is recommended by the investment experts to invest in top quality stocks.
If you want to earn high interest on the amount invested in a risk-free way, then a high-interest savings account is a best option to invest in. These accounts are just saving accounts that offer more than average interest rate. So, if you want to save money in a long term and create a financial cushion, then high interest savings accounts are a great long term investment option. A high-interest savings account provides a competitive rate of interest without charging extra fees. Moreover, by just keeping the amount deposited in the account, you can earn interest on the deposited amount from time to time. However, while choosing an account, don’t forget to check the bank’s reputation for providing good customer service, online account management, easy access and easy deposits.
Any loan offered to a government or corporate entity is considered as a bond. There is no risk related with bonds and it also offers high liquidity. The principle amount has a fixed rate of interest yearly and is refunded by the borrowing entity after the maturity period completes. Individuals who want to expand their investment profile can easily choose for bonds as it is a great short term investment option.
If you want to achieve long-term goals like purchasing a house, saving corpus for any medical emergency in future then the best way to save money is by opening an investment account through a brokerage. Exchange traded funds and index funds are common options that provide the best value to the investors in minimum fees. Index funds aim to keep momentum with the market whereas; exchange-traded funds can be more flexible. However, before investing in ETFs and index funds the investors should do a proper research, as both the funds include securities that have higher risks.
Apart from ETFs and index funds, one can also invest in actively managed funds. Although, it includes higher risk and has more fees.
Having proper knowledge about different investment options helps the investors to make enhanced choices of investment. While choosing the smart investment option it is important to know that the investment option which suits other might not be beneficial for you. While every individual has their own financial goals, choosing the right investment option should be based on the investment horizon and investment goals of the individual.
Past 10 Year annualised returns as on 01-12-2023
^Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per 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
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