Indian economy is currently in its best phase. The country has finally a stable government. Almost all the developed nations are questing to invest in our country. Stock markets are at their peak. With so much happening around, it seems to be the best time to invest money. However, the big question here is that where to invest money in India safely and get good returns. In this article, I am going to talk about some investment options that can get give good returns over a period of time.
However, before you proceed to read about investment options, a quick check list to ensure that you are ready for the investment –
Do you have enough money for present?
Yes saving for the future is important but future has no sense unless your present is secured. You cannot ignore your present requirements in order to save money for future. Paying yourself comes first and savings follow. Don’t make too many compromises to save money. Live a decent life and if you are left with money after that saving is a good option.
Most investment options come with a lock-in period. It is not possible to break them or withdraw money during the lock-in period. Therefore, before you invest money, it is important that you save some money aside as emergency funds. In case of unforeseen emergencies such as medical or other related needs, emergency funds comes real handy
Pay all your debts
You cannot invest money until you are completely debt free. And it does not make sense. After all you are not going to get as much interest in investment as you will have to pay against debt. Therefore, pay off all your debt before planning any investment.
I am ready for Investment. What’s Next?
So you have clear all your debts and set some money aside for emergencies and you are all set to invest money for your future. Great! Read on to know about some good and some amazing investment options that can give you a return better than banks. Here, we are assuming that you are looking for investment options that can help you grow your money. And you are ready to take some (calculated) risk in order to get good returns rather than following the no-risk but low ROI methods such as savings accounts and CDs
Stock markets allow you to make a contribution to the capital of any company listed on the stock exchange. You can buy a company’s equity by purchasing their share certificates. The value of those shares will increase or decrease based on the financial performance of the company. So, if the company you bought equity in is making profits, you would be earning your share of profits too.
Wondering if it still makes sense to invest in stock market when the market is already in its peak? The answer is yes. You can still invest in stock market and get good returns. However, now you have to be a bit extra careful while selecting the stock to invest in. You should select stock with low beta value that means a stock that shows little fluctuation with fluctuation in market. This way the risk is low and chances of getting returns still persists.
A mutual fund is a professionally managed investment scheme that invests your money into a collection of investment options, majorly, equities and bonds. Because this diversifies your investment, it is often much safer than individual shares bought from the stock market. Mutual funds also save you from the hassle of managing your investment portfolio at your own because they are managed by highly skilled finance professionals.
Some mutual fund companies allow investment with small deposits. So before investing in mutual funds you have to look for mutual funds with low minimum purchase requirement. However, in such cases you generally need to link your bank account with the investment plan whereby a fixed amount is deducted automatically from your account every month. By investing as little as 1000 a month, you can slowly build up a good stock portfolio.
Non Convertible Debentures (NCD)
Non convertible debentures allow you to lend your money to companies and earn interest in return. They cannot be converted into equity but are redeemable at any time.
Many people are apprehensive about investing money in NCDs and FDs of companies owing to the fear of losing money. However, taking a calculated risk and investing money in NCDs that have a reliable track record of giving good returns can surely help grow your money. There are some NCDs, which are secured in nature and contain lesser risk as compared to others.
IPO (Initial Public Offering) is an offering that a company makes in order to sell its stock to public. At the time of IPO, often the prices are low and if company is already performing well, chances of making significant profits are higher than the usual stock purchases.
Given the current state of Indian economy, IPO is one of the hottest options for investment in India currently. It is the medium of investment that has given a return of more than 60% in one year. If you don’t mind taking a bit of risk, you can go for investing in IPOs
A Systematic Investment Plan or SIP is a smart yet easy investment option where you agree to invest a certain pre-determined amount at regular intervals. Both amount and time interval (weekly, monthly, quarterly) can be decided as per your convenience. The amount you determine is auto-debited from your account and is investment in a (specific) mutual fund scheme.
Every time money is debited from you account, new and additional units of the scheme are purchased and added to your mutual fund account. SIP not only helps in getting good returns but it is also helpful in instilling the habit of savings and planning for your future. The power of compound interest and rupee-cost averaging ensures that you get good return on every penny you invest
Tax Saving Options
While you are already taking advantage of tax savings under section 80-C, you can see good growth in your money by investing in other tax savings options as well. Investment options such as PPF, NSC, ELSS Mutual Funds, tax saving FD schemes, etc can not only help you grow your money with equity’s growth method but will also provide you significant tax benefits.
Real estate is always a great investment option. No other sector shows as much as return in investment as real estate does. If you have a good amount to invest in, invest in real estate. The key to get good returns is to spend some time researching and finding about properties whose prices are expected to increase fast within a stipulated time period. However, remember buying and selling properties is not as fast and easy as other investment options. It demands time and patience.
Also, investment in real estate does not make much sense if you have to take loan for more than 50% of the property price. If that is the case, you will end up paying more as bank interest than the actual profit you will earn.