Whether you are newly starting out at a job or you’ve slowly eased into a settled career, planning your finances is no cakewalk. Amidst the hectic schedules of our demanding jobs and the frantic frenzy of city life, we often procrastinate on putting in place smart investment plans.
With growing awareness in recent times, Millennials and Gen Z are increasingly looking to put money into sound long-term investments that will yield huge dividends in the future.
So how should you invest your hard-earned money? What investment schemes should you consider to help your money grow consistently over time? While investment tips are aplenty, smart investment tips will ensure your money does the work for you, even while you sleep.
Here are some smart investment tips to keep in mind to see your money grow
1. Build a Diverse Portfolio
To begin your investing journey one of the first tips to keep in mind is to diversify your portfolio. How do you do that? By putting in your money in various assets or security. They could be mutual funds, gold, bonds etc. Investing across multiple asset classes keeps your money risk-free and allows you to get good returns in the future.
Make sure you don’t invest all your money in a single investment tool as you may end up incurring huge losses in case your investment tanks. The main idea behind building a diverse portfolio is to keep your investments safe even if one of the investments fails to deliver you your expected returns.
2. Equity Funds
Equity fund also known as stock fund is a mutual fund that invests in stocks/equities. Having equity in a company (private or public) means your ownership in the firm. Having stock ownership in a firm lets you be part of the growth of the firm over time, by letting you own a small section of the company, thereby helping your money grow.
There are many types of equity funds – large cap, mid-cap, focused, diversified equity funds and so on.
3. Systematic Investment Plan (SIP)
A Systematic Investment Plan (SIP) lets you invest in mutual funds periodically – monthly, quarterly or annually. Rather than investing a huge chunk of money all at one go, a SIP helps your money grow over time with fixed periodic investments at regular intervals. The beauty about SIPs is it lets you start with as small an amount as Rs.500 per month. SIPs also remain safe from market volatility and therefore one of the best tools to invest your money.
SIPs also build a disciplined investing habit for new or young investors who are just starting out and wish to find a secure, safe way to invest their money.
Also Read: Types of Investments In India
4. Public Provident Fund
Public Provident Fund (PPF) is a long-term investment scheme that lets you earn great returns on your invested amount at an attractive rate of interest. The most attractive feature about PPF is that the interest earned and returns are not taxed.
Providing a safe investment and tax-saving option, PPF is one of the safest investment options for people who wish to reap handsome returns in the future. PPF has a lock-in period of 15 years and you must make deposits into your PPF account at least once per year for 15 years.
PPF was first introduced in 1968 to offer people a safe investment option and a way to make significant returns on it. With a minimum investment of Rs.500 and a maximum of Rs.1.5 lakhs for one year (either a lump sum or divided through the months), if you are looking for a safe and smart investment option, consider opening a PPF account.
5. ELSS (Equity Linked Saving Scheme)
Equity Linked Saving Scheme (ELSS) is a type of mutual fund that invests in the stock market or equity schemes. Unlike PPFs which have a lock-in period of 15 years, the lock-in period for ELSS is only three years, thereby giving investors higher returns. If you wish to get maximum returns out of your investments, you should ideally hold them for a more extended period of time.
ELSS is an attractive investment option if you are a new or first-time investor. Although they carry higher risk, it is usually over short term. Besides, if you wish to hold it longer, the risk is lesser. Investing in ELSS also gives you a first-hand experience in equity investing. You can start investing in ELSS through monthly SIPs.
For sound financial health, consider these smart investment tips explained above.
Whether you are a young first-time investor or in your middle age, making financial plans is never easy. Whether you wish to earn short-term profits or planning for long-term security, it is always advisable to start early.
Once you start your investment journey, ensure you invest regularly and consistently. Track your investments and monitor their performances. Diversify your portfolio and never put all your eggs in one basket.
Diversifying allows you the comfort to keep your investments safe in case one of them doesn’t do well. Make sure you don’t rush for higher returns because your investments should be planned out to meet varied financial goals at various stages of your life.
Smart investment means you consider low-risk options that will give you regular, steady and consistent returns over time.
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