Put the money you earn to work for you. Invest smartly with discipline and say hello to an easier retirement.
In a world of hyper-targeted marketing, it is really tough not to spend money on things that you don’t need. Although we earn so that we can give shape to our aspirations and wants, there are a few important things that need to be kept in mind when it comes to money. Our spending patterns and financial planning hold the key to a more secure future.
A Credit Card may be a fantastic way of reaping various benefits, but irresponsible usage could lead to disaster. Using a cheaper phone may seem like a boring option in the present, but in the long run, it could be one of the wisest money decisions of your life. You get tax benefits for contributing to most of the following plans!
The purpose of this post will be to explain the various paths that one can choose to secure their future. Yes, investing in equity is a very good way to make your money work for you. However, there are some other instruments that have the goodness of compounding and are less risky. One of the major components of sound financial planning is diversification, and so here are five plans that will help you do that.
1) Public Provident Fund
Since its introduction in 1968, the Public Provident Fund (PPF) has helped Indians turn their small savings into investments and receive a return on that investment. To put it another way, it’s an investment vehicle that allows one to create a retirement fund. Not just that, it also enables you to save money on taxes each year.It is a long-term investment option that offers attractive returns. The interest earned and the returns are not taxable. Compared to other instruments, it is a low-risk instrument, and investing in a PPF scheme bolsters your financial security. These schemes are government-backed, and the investments aren’t linked to the market.
Additional Reading: EPF Vs PPF: Which Is Better?
2) National Pension System
This is another excellent investment instrument. The National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme that allows Indians to make systematic deposits throughout their working lives. Like PPF, deposits made to your NPS account also carry tax benefits. This investment system is extremely valuable for people who work in the private sector and require a steady pension after retirement.
Additional Reading: Top Seven Simple Tips For Early Retirement
3) Mutual Funds
Mutual funds are perhaps one of the most attractive options when it comes to making investments. The returns are consistent, money can be withdrawn at almost any point and some of them carry tax benefits too. To put it simply, it is an investment channel that consists of different financial instruments. From stocks to bonds, mutual funds cover everything. Not just that, one can either take the SIP route or the lump-sum route to make the investments.The flexibility of being able to diversify investments into different channels is the major strength of mutual funds. This also makes it a less riskier investment channel. So, if you’re starting from scratch, mutual funds could be a good place to start.
Additional Reading: A 5-Step Approach To Deciding Your Financial Goals
This could very well be defined as the fun side of investing. Of course, investing your money is a serious thing, but trading brings in a fun element. The risks are high, but the returns are high too! But if you play smart, you could bag good returns. One must thoroughly research and analyse their potential investments.The high returns and the accessibility to the market through internet brokers have made investing an extremely popular investing channel. The Indian equity market just broke into the top five countries’ list in terms of market cap. Our total market cap stands at $3.21 trillion, higher than the UK, Saudi Arabia and Canada.
Additional Reading: Personal Finance 101: Save More Money Without Even Realising It
5) Term Insurance
This is one of the more practical investment plans. Life is uncertain, and it just makes sense to secure all fronts. Everything within and outside of our control. Term insurance plans provide financial cover for your family at extremely affordable premiums. The younger you are, the cheaper your premium amount will be.
They carry tax benefits too. The amount is paid out to the nominee in the event of the death of the person insured. Planning vacations or building a home could be the best present for your loved ones. Personal Loans and Home Loans have made those easier too. However, term insurance secures another crucial front that is not in our reach.
Regularly checking our credit report is another important tool for managing our finances. A good Credit Score signifies good financial health. It’s also free when you check via BankBazaar!