While earning wealth is important, it is just as important to find means to grow, save and maintain it. One of the most convenient means to achieve these goals is by investing in the right investment instruments according to your specific financial needs. That is why according to the Standard Chartered Emerging Affluent Study 2018, more than two-thirds of emerging affluent Indians are making the most of investment products and achieving their financial goals.
If you too would like to know which investment products are the fit for your financial goals and portfolio, here are some of the most popular investment products in India that you should consider:
Investing in equity essentially translates to investing in the value of a company by purchasing shares of that company in the stock market. These shares are typically traded by investors on a stock exchange through a brokerage firm. Investing directly in equity takes its own share of research, but is a common, well-rewarding option for investors focused on wealth creation. Since equity investments are market-linked, they contain a certain level of risk since market movements fluctuate over time. However, the high returns associated with the right investments make it a lucrative investment option for investors with slightly higher risk appetites.
One of the most popular investment instruments in the country today are mutual funds. They are investment funds that pool money from various investors to purchase securities, such as stocks and debt. Mutual fund investments have the advantage of being collectively managed by a professional fund manager to earn the highest possible returns. Mutual funds are a common investment option since they offer variety as well as flexibility to the investor. There are thousands of mutual fund schemes one can choose from, in accordance with one’s risk appetite and choice of duration of investment. They also come in a variety of debt, equity, mixed and hybrid schemes based on your preference of investment portfolio.
National Pension Scheme:
The National Pension System, or NPS is a voluntary, long-term retirement pension plan backed by the government of India. Among the various investment options available in the market, NPS falls under the lucrative category of EEE (Exempt, Exempt, Exempt). This means that the entire retirement corpus accumulated in your NPS account can escape tax at maturity and the withdrawal of your entire pension amount will be tax-free.The National Pension Scheme acts as an effective tax-saving instrument and as a portion of your contributions are invested in equities, offers decent returns as well. All in all, it is an ideal investment for risk-averse investors looking to accumulate ample savings and receive a regular pension post retirement, particularly in the private sector.
Public Provident Fund:
The Public Provident Fund or PPF is a popular savings-cum-tax-saving instrument in India introduced in 1968 and backed by the Indian government. It offers an attractive rate of interest and taxes are not required to be paid on the returns that are generated from the interest rates.The PPF is an ideal investment options for investors looking for risk-free and assured returns since like the NPS, the PPF also enjoys an EEE tax status. It also offers immense flexibility to the investor since you can start investing for as little as Rs. 500 and after 15 years, extend your tenure in blocks of 5 years. It also offers funding options such as partial withdrawal as well as loans against your PPF account.
Fixed deposits are financial instruments provided by banks or NBFCs and provide investors with a higher rate of interest than a regular savings account, until the given maturity date. They are a classic and time-tested investment option that have been recommended across generations.For decades, fixed deposits have been chosen by Indian families due to their convenience, guaranteed returns and high interest rates. They also offer flexibility since tenures for FD investments can range from as short as 7 days to as long as 10 years.
For the keen investor, there is a wide assortment of investment options available in the market. For instance, investors seeking stable long-term returns can invest in the fixed deposit of their choice. Meanwhile, investors with high risk appetites can develop their trade strategies and invest directly in the equity market. The key is to determine one’s financial goals as well as other specifics such as your risk appetite, duration of investment and purpose of investment. Once these are settled, choosing the appropriate investment option becomes easier and more effective for your investment strategy.