Introduction To Investment Strategies
Financial independence is a necessary factor in today’s time. It is really important to acquire the necessary education and work to earn money. A person is considered wise if they don’t spend all their monthly salary, but they are not considered smart if the saved money is just kept in a bank. It is equally important to invest the money that is earned today in the correct way so that it can yield higher returns and safeguard life after retirement or during times when you decide to quit your job. With so much awareness in today’s times, one should be smart enough to invest money wisely according to their needs and requirements.
Today, I am going to share with you the means and risk factors of investing your money. Choose which one is best for you and start investing.
- Public Provident Fund (PPF)- It is the safest way to invest as it is backed by the Government of India. The amount you invest, up to Rs. 1,50,000, is deductible from your taxable income. The interest you earn is non-taxable, and the maturity amount you receive after 15 years is also tax-exempt. It is sure to help you remain independent after retirement.
Tenure- The only drawback to it is that the lock-in period is 15 years.
- Employees’ Provident Fund (EPF)- It is regarded as a compulsory contribution fund for salaried employees. Contributions from both the employee and the employer add up, and the interest earned is completely tax-free. One doesn’t have to pay a lump sum amount; rather, money from both the employee and employer is deducted every month. It is a long-term and safe investment option.
Tenure- Until retirement or switching jobs.
- Mutual Funds- Mutual funds are managed by professional asset managers who have years of experience in the financial markets. These experts help individuals earn profits. They are highly liquid investments, meaning that investors can easily buy and sell their units at any time. These are long-term investments and offer tax benefits to investors. One needs to show patience to attain returns while investing in mutual funds. They definitely help to beat inflation.
Tenure- Depends on the individual’s choice.
- Stock market investment- It has relatively higher liquidity, which means it is easier to buy and sell stocks due to the presence of multiple buyers and sellers in the market. One needs to understand the market in detail to achieve higher returns. One of the benefits of investing in the stock market is that one can gain higher returns in a short period of time.
- Real estate- It is beneficial to invest in real estate if one has a lump sum amount. Property rates always show an increasing trend, especially in the long term. One can rent out the purchased property, and the rental income can be used to repay the home loan if taken. Additionally, the property can be sold in the long term to gain significant profits.
- Fixed deposits– Fixed deposits are one of the most popular investment options in India. In this type of investment, a certain amount is locked for a fixed period of time, offering returns at much higher rates. All banks offer fixed deposits. There is no risk, as interest is provided automatically once the tenure is completed. The drawback is that the funds get locked and cannot be used according to individual needs.
Tenure- The tenure is flexible and depends on the individual’s choice.
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