Investments are made by individuals to ensure the betterment of upcoming future. Mostly, these investments are made with a goal of earning returns. Investing wisely can attain financial objectives and safeguard life for present and future.
There are several ways by which investments can be made. But, an investor must consider all the factors before selecting the right investment option.
Top 10 best ways to invest money
1. Direct equity
The first thing that an investor must plan is whether they want a short-term investment or a long-term investment. One of the best ways to invest money for long-term goals is direct equity investing. It is about a company’s equity shares, which connect an investor to the company’s ownership in legal terms.
The investor even gains the right to participate in corporate meetings and influence corporate decisions by purchasing shares of a corporation. But, while investing has a tremendous potential to grow money over time, it also has a considerable risk factor.
Further, choosing the right stock is certainly difficult provided there are more than 5000 stocks listed on the stock exchanges.
2. Equity mutual funds
Equity mutual funds are a subcategory of mutual funds that invest primarily in equity stocks. Mutual funds is one of the best ways to invest money and provides the benefit of investing in stock markets indirectly through the competence of professional managers.
An investor can choose among equities mutual funds, debt mutual funds, balanced funds, and other similar vehicles. Income Distribution Cumulative Withdrawal, or IDCW, is the term used to describe the distribution of income of a mutual fund scheme. This income may include dividends paid by stocks as well as capital gains earned from selling underlying stocks from the portfolio of the scheme.
3. Real estate
It is undoubtedly among the best ways to invest money for Indians. Nevertheless, while property investments have generated remarkable profits in the past, it has its own set of risks and restrictions. By making a real estate investment for a tenure of 5 years, an investor can put in their extra money to work. Real estate prices are also more stable and predictable due to the longer pricing cycle compared to other assets with shorter pricing cycles.
Yet, this option carries a number of dangers, one of which is the possibility that it won’t be sold quickly. Additionally, if the investor needs to sell the house quickly, the investor has to offer a steep discount. If the investor faces a financial obligation, he/she may have to sell a larger chunk or the entire property, as it is difficult to liquidate property in small pieces.
Since the ancient times, gold hasn’t lost its charm as an inflation-beating investment strategy. Previously, purchasing gold in physical form had been the only option. It had restrictions, such as additional manufacturing or designing fees or storage costs. But, now an investor can purchase digital gold using Mutual Funds, ETFs or Sovereign Gold Bonds in order to get around these restrictions.
5. Public Provident Fund
For those seeking to engage in extremely safe investment options, the government has one of the best ways to invest money in the form of small savings. The option of PPF offers investors with guaranteed returns and no volatility. However, the overall returns are lesser than those of market-linked investments like NPS, mutual funds, and equities.
A PPF fund reaches maturity after 15 years. After five years from the date the account opening, partial withdrawals are permitted. Investment choices including Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS), the Sukanya Samriddhi Scheme, and the Kisan Vikas Patra are examples of small savings plans for the long term.
6. National Savings Certificate
The NSC or National Savings Certificate is a government backed fixed investment scheme and is among the best ways to invest money. It can be bought from Indian Public banks, private banks and all post offices. An investment amount of INR 1000 is compulsory. However, this amount can be paid in installments, in multiples of 100 in a financial year.
The interest for this shall be paid at the end of the maturity date ,i.e., 5 years. Also, a premature withdrawal is possible if the certificate holder passes away. Since this investment option is backed by the Government of India, the risks associated with this option is very low.
7. RBI bonds
One of the best ways to invest money is by investing in the RBI Bonds. For the purpose of generating funds for the development of various government projects, the Reserve Bank of India, or RBI, issues bonds to the general public. There is a set time-period for these bonds. The interest rates syncs with the total amount every six months.
The rate of interest for this certificate is 7.75% per annum (according to Floating rate Savings Bond, 2020 scheme). The investors are also provided with a certificate of Holding as a proof of their investment.
8. National Pension Scheme
The NPS investment option is a good way to invest money and is designed for those investors who want to put their money in a pension fund that is supervised by the government and invest in diversified stock market portfolios that include shares, corporate bonds, and government bonds. The pension wealth that is collected at the end of such investments divided into two parts.
While a lumpsum is given to the investor, the later is used to purchase life annuity and is one of the best ways to invest money. Further, this investment section is available after the end of the scheme cycle. Once the investor reaches the age of 60, it can withdraw a total of 60% of the balance while the remaining 40% has to be used for a pension plan as per the investor’s choice. If the investor wants a pre-mature, the total accumulated amount has to be less than or equal to ₹2.5 lakhs.
9. Post Office Monthly Income Scheme
Want to know how to safely invest money? Try investing in the POMIS. The Post Office Monthly Income Scheme, by its suggested name, is an option that supports regular savings and is administered by the Indian post offices. This option is government supported and allows users to save each month. A Post-office MIS account can be opened easily by any Indian citizen for as low as ₹ 1000.
The option of opening a joint account is available under this scheme and the interest can be received monthly. The maturity of this certificate is 5 years from the time the scheme was activated.
10. Bank Fixed Deposits
This is the most popular investment option in India. Citizens of every age (except minors) are found to have invested a part of their income in Fixed Deposits.
Bank fixed deposits provide financial stability and a secure tool that enables investors to generate excellent profits on an excess of funds. This is one of the best option to invest money as these funds can be renewed easily and also provide overdraft facility.
Open a free demat account with SMIFS and start investing in stocks and mutual funds. We provide customized brokerage plan to our clients along with the facility of Free Call-N-Trade services.
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