Wealth creation is a slow and steady process that requires planning, strategizing, regular savings and investing in the correct financial tools based on your goals. As wealth creation takes time and cannot be generated overnight it is prudent to start investing early on in life. Another thumb rule for investments as per financial experts is that one should always invest in multiple tools to mitigate risks. So investing in high-performance market-linked instruments is as important as investing in fixed income stable instruments.
Given below is a list of various investment options that you can consider while planning to grow your savings.
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- Fixed Deposit
In India, Fixed Deposits are offered by banks, post offices and NBFCs. Usually, sound instruments tend to earn lower returns as compared to marked dependent tools. However, some options ensure high FD rates along with the security of capital. The FD interest rates offered by NBFCs are generally higher than the post office and bank FDs. Making it an ideal investment tool for risk-averse investors who wish to earn high returns. Choosing a non-cumulative option while investing in fixed deposits can help investors generate a regular monthly income stream as well. By choosing a regular payout frequency you can get periodic payouts which are particularly useful for senior citizens post-retirement. Investors can earn up to 8.05% p.a. on their investments. Many financiers offer additional benefits to senior citizens.
- Senior Citizen Savings Scheme
The Senior Citizen Savings Scheme is a unique investment scheme for citizens aged above 60 years. This investment plan is advisable for investors looking for a low-risk and high-return investment tool. By investing in this plan you can fund your regular expenses post-retirement with the proceedings you get from this plan post maturity. Banks and post offices both offer the Senior Citizen Saving Scheme. Investors can earn up to 9% p.a. on their investments.
- Recurring Deposit
Recurring Deposits (RD) is a monthly investment plan that offers you the ease to invest a small amount each month and grow money effortlessly. You can start an RD with just Rs. 100. This makes for a perfect tool for young employees who have just started working. In India, recurring deposits are offered by banks and NBFCs. The tenures range from 6 months to 10 years. You can get up to 3.50% – 5.50% p.a. on their deposits. Senior citizens get an additional advantage of up to 0.80% p.a. on all their deposits.
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- Mutual Funds
Mutual funds are collective investments where thousands of investors invest in a company’s stocks or bonds. By doing this you can earn the maximum possible returns. The fund is managed by a professional fund manager. Every individual who invests owns several units, which is a share of the holdings of the fund. The income generated from this investment is then disseminated respectively between the investors after deducting certain expenses, post calculating the scheme’s Net Asset Value or NAV.
The risk factor depends on the type of stocks or bonds you choose to invest in. This investment option is good for those with all risk appetites. You can enjoy the flexible tenors and convenience of this tool. Also, since this is a market-linked tool you can earn generous amounts when the market sentiment is right. However, since mutual funds are market performance-linked investment tools you also face the potential risks of capital loss. However to mitigate such risks it is advisable to invest for longer.
It is crucial to check the safety ratings of the tool before investing along with the applicable interest rates to ensure your money is in safe hands and grows well over time. After going through all this information you can now make an investment decision to grow your wealth confidently.
