To build wealth,you should invest your money in the right financial instrument. Because, if you don’t make the right investment decision at the right time, then you surely are missing out on opportunities to increase your earning potential. However, not every investment guarantees substantial returns. But if you invest wisely, the potential to gain wealth is much higher than not investing at all. So, if you are someone looking out for a safe investment option, here are some of the best investment options in 2018.
Public Provident Fund (PPF):
PPF is one of the popular investment schemes which offers fund protection and guaranteed returns that are fully exempted from tax. The minimum amount you can invest in a fiscal year is Rs.500 and the maximum is Rs.1,50,000. You can avail loans between the 3rd year and 6th year of the investment. The rate of interest in PPF accounts in pretty high compared to fixed deposits and recurring deposits; currently, it is 8% per annum. All PPF accounts are managed by the government of India.
Mutual funds are another form of investment that generates higher income over a period of time. It’s a common pool of money where multiple investors invest in equities, bonds, and other market instruments. As an investor, you can buy mutual fund units in any particular scheme and these units can be cashed based on the fund’s Net Asset Value (NAV). Mutual fund schemes other than close-ended and ELSS schemes do not have a minimum investment period.
Equities are the chief source of funding for any company that allows voting rights and claims to investors on assets. In equities, the shares are expressed in terms of face value, issue price, market value, etc. If you invest in equities, you have high chances of making a return which is twice or thrice as high as your capital. But at the same time, the risk factor associated to equities is high as well.
Buying and reselling land and buildings is often considered a safe bet by investors in India. It’s a great investment option that is certain to gain value with time. You can use real estate as a part of your overall wealth building strategy if you have a fairly good sum to invest in. But when you buy property with the sole purpose of investing, make sure you consider all the related charges and the way you rent it out or resell.
Gold ETFs offer greater transparency and it is well suited for beginners and small investors. ETFs are considered better than traditional forms for gold investment chiefly because of the following reasons:
- You need not worry about adulteration or impurities
- It’s held in electronic format
- You can track your investments real time
- Offers great liquidity
Post Office Schemes:
If you are looking for an investment avenue with short locking period, then post office schemes are the best option to go for. The monthly income scheme of the Indian postal service is considered one of the safest options to park your funds as it offers higher returns without any form of risk. It offers returns in the form of fixed monthly income, at the rate of 8.5% per annum.
ULIP is a financial instrument which facilitates investments in equities and bonds while offering protection at the same time. It an integrated plan in which one portion of the investments are apportioned towards stocks and bonds as chosen by the individual and the remaining is maintained as a life insurance cover. Just like mutual funds, ULIPs too have a risk element attached to it. However, the risk is higher in equity investments than debt investments.
Initial Public Offerings (IPO):
Initial Public Offerings, also known as stock market launch are types of offerings by newly launched companies where they invite public to buy their shares without listing on stock exchange. Since it is the first time the company is opening investments to public, it is known as initial public offering. Companies initially issue their shares at a low rate, but when they get listed on Stock Exchange the prices go up. So, if you have a knack for investments, then IPO is worth your money.
|Type of Scheme||Maximum Investment Amount||Minimum Investment Amount||Maturity|
|Public Provident Fund||Rs.1.5 lakh per year||Rs.500||15 years|
|Mutual Fund||No maximum limit||Rs.500 and above||Lock in period is applicable only to close-ended funds|
|Equity Shares||No maximum limit||Decided by the company||Not applicable|
|Real Estate||No maximum limit||No minimum limit||Not applicable|
|Gold ETF||No maximum limit||Variable||Not applicable|
|Post Office Schemes||Rs.4.5 lakh||Rs.1,500||5 years|
|ULIP||No maximum limit||Rs.1 lakh||45 years|
|Bonds||No maximum limit||Variable||Variable|