Investments are a crucial part of our life because the money that we earn is not enough to lead a life in today’s world. Most people work hard to earn some money and save some of the money. Even though you save some money, it is not enough for you to lead a comfortable or luxurious lifestyle. The money that you saved may not be enough to fulfil your big dreams such as buying a new home, buying a car, etc. To earn more money, you have to work much more hard, which is not possible for you, as there is a limit to do work. So, people have understood the importance of investment here. Some of your saved money can be used to invest in good stocks to get good returns or profits out of it.
Types of Investments In India
Investing in India provides major benefits. People in India have many investment options. Some of them are traditional types of investments and others are extremely newer in India. Such newer options are much popular nowadays, and people have many options to choose from. Coming to the types of investment in India, they are explained below.
One of the best investment types in India lies in the Stock market. This famous investment vehicle is also known as company shares. Here, interested people buy a stock from a particular company and gain ownership of that company. So, the investor becomes a member of the company’s growth. One can see the various companies’ stocks listed on stock exchanges publicly. So, any investor can buy stocks from any company. This type of investment is a long-term investment, and one can invest in stocks smartly to get good returns.
Mutual Funds are popular investment vehicles where many investors invest their money that becomes a pool of money. Now, the investors have to wait for optimum returns, as the fund manager takes care of money to invest in good stocks or other securities. Some basic types are equity funds, bond funds, money market funds, and hybrid funds.
Fixed Deposits are another type in which investors have to wait for a certain pre-defined period to take back their money and profit. This type offers complete protection to your money, and investors can stay away from higher risks. Banks offer fixed deposit options to their customers for investing their money based on a certain period. Most people consider this option to be one of the safest investments in India.
Recurring Deposit (RD) is somewhat similar to a fixed deposit, but with a difference that investors have to invest a specific amount every month for a certain pre-defined period. Banks and post offices offer this option to customers. They will define the interest rate to their customers. This investment also offers good capital protection to their customers.
Public Provident Fund
The Public Provident Fund (PPF) is another investment vehicle where the lock-in period is around 15 years. This investment is much helpful to earn a good tax break. The Government of India decides the PPF rate, and the amount that you are going to withdraw at the end of the 15-years is tax-free. So the investor is free from tax tension.
Employee Provident Fund
The Employee Provident Fund (EPF) is a popular investment vehicle where the workers earn a good amount during the retirement period. Under Section 80C, this investment vehicle works. The EPF deductions are made based on the earner’s monthly salary, and the deductions are usually a part of the earner’s salary. The Government of India decides these EPF deduction rates based on the earner’s salary.
National Pension System
The National Pension System (NPS) is another great investment option in India. Government employees can earn higher returns after their retirement period. Employees earn better returns than PPF or EPF, and they get it monthly like a salary after retirement.
Where Should You Invest Your Money?
People who are new to investment can learn the investment basics India related concepts to invest their money smartly. Let us discuss some factors where to invest your money.
Youngsters should choose investment as an earning option. As younger investors have a long working life, they can make long-term investments. But for older investors, investment in stocks and similar stuff may not be a good option. They can opt for safer investments like FDs.
People can opt for either short-term or long-term goals. Coming to the short-term goal, one should prefer a safer investment that provides a good return. Goals can be either negotiable or non-negotiable. Some non-negotiable goals like children’s education, buying a house, etc. need guaranteed investments like FD, etc. For the negotiable goals, an investment required in stocks, mutual funds, etc. for people.