Financial Investment in Emerging Funds
Financial Investment in Emerging Funds
Financial investment is the next step to perfect financial planning. After calculating the surplus cash in your hand, you can think of financial investment in emerging funds according to your risk appetite and time frame. Majority of investors still consider investments in bank FDs, post office schemes, and insurance as the only option to park surplus funds . However, with greater awareness, the investors are realizing the importance of instruments that can beat inflation and generate positive compounding impact over a certain time frame. The fact is that you have to be aware of the real rate of returns rather than nominal rate of returns while choosing your investments. Before you invest, the things which are important to set are investment horizon, risk appetite, and an overall financial goal. A goal-based investment is better because it will help you to select the right financial asset for you. Here is a systematic guideline about where and how to invest in different financial instruments matching your risk return profile. We have organized investment schemes on the basis of their risk factors and accessibility.
Risk-Free Financial Investment
Investments in Banks, post office savings schemes, and few insurance schemes are almost risk-free; hence it is still the most popular medium of investment for the masses in India. But, these instruments rarely offer positive real rate of returns. Hence, they act as capital accumulation tool rather than capital appreciation tool. These instruments should be considered by people looking for capital preservation only. You can choose to invest in these instruments through public of private sector banks, post offices and Independent financial advisors or distributors.
Investment with Moderate to High risk-return profile
This is the trending way of investment mostly to the younger generation who wish to invest for a long time for making their desired financial goal possible. Mutual Fund investment is the most popular model for its flexible plans and higher return. Though Mutual Fund investment is subject to market risk, sincere observation, and study of the market would help you attain the desired goal with investments in mutual funds. Mutual Funds are open-ended and professionally managed funds that invest in the stocks of bigger companies with the accumulated principles from individual investors across the nation. As the return of your investments depends on the market, you have to bear the risk factors too. On the contrary, this gives you a high return comparatively in investments in secured funds in banks. A systematic investment plan (SIP) is offered by mutual funds to attract middle-class investors. Through this plan, an investor can invest a very small amount monthly like recurring deposits in banks. The other types of investments are investments in gold and real estate through different financial agencies even through your mobile wallets. Considering the risk factors, the investors are advised to set their goal for longer terms in such investments to get the benefits of these funds.
Financial Investment for Tax Benefits
At the end of a financial year, saving tax becomes a matter. Those who invest systematically in different high return tax savings funds, won’t have to worry about their tax. There are many tax-saving funds in the present Indian market that would help you to grow your money and save your tax simultaneously. We are guiding you about a few funds which can help you better to save your tax under section 80C. ELSS or commonly known as tax saver mutual funds can be a better option for those who wish to save tax and have a high return on their investments. In all such investments in ELSS, 12-15% expected annual return is possible depending on the market condition. Tax saver Fixed Deposits in banks and post offices may be an alternative option for those, who don’t want to take market risk. Such fixed deposits have a lock-in period for at least five years and return you 6-7.5% added amount of your investment annually. Among the tax benefit savings schemes, Public Provident Fund (PPF) is the most popular for its comparatively higher return and security. You can invest in this government fund by opening an account in post offices or banks. This has a lockin period of 6-15 years and it returns 7.9% of your capital annually. You can save up to 1.5 lakh annually to get tax benefit U/S 80C.
