What are the Various Investment Options? Choose the best one for you!
People invest for a lot of reasons. These could be anything, from saving money for higher education to saving up money for your children’s future.
Many people see investments as tools for their future financial endeavors. This is why so many people already have (say) a fixed deposit account even at the beginning of their careers. Of course, an FD is only one of the many investment options you can pick from.
Reaching retirement age is a milestone in a person’s life. After decades of being an active earning member of the society, it’s time to sit back and relax. You can rely on the funds you have saved over the years to live out the rest of your life in comfort.
Here are a few other investment options with their own pros and cons. A proper understanding of the investment market will make it easier for you to pick an investment or savings option that serves you the best
The Stock Market
Or stocks, as they are generally known as. The stock market is fluid and ever-changing, and is one of the most lucrative investment options. You would buy shares from a company’s stocks, thereby owning a part of the company.
Stocks depend largely on the company’s size, type, and performance throughout their tenure in the market. You must wait for stocks to rise in value before you can make a profit on them. That solely depends on the company’s performance. Therefore, there is a bit of risk involved with stocks. Exercise caution before you invest in stock markets.
This is the most common types of investment; almost everyone indulges in real estate. The positive to investing in real estate is that its value almost always increases with time. The real estate market is also more stable than the stock market, that it hardly fluctuates on a day-to-day basis.
The quickest way to earn from real estate is to resell it at a higher price. However, it might take longer than you expect to resell property. The costs of reselling and/or owning real estate all add up as well. You’ll need to watch out for these pitfalls when investing in real estate.
In this kind of investment, a group of investors come together and pool in their resources. Similar to buying and selling stocks, the head of the group decides what is to be bought or sold, and at what price.
Here the investor can choose the group they would like to be a part of. Some funds carry more risk than others. There is, however, potential for more profit than investing in the stock market. The investment is divided among a variety of stocks and bonds.
Savings Goals for Seniors
Security: After retirement, the focus is more on preserving the funds on hand and ensuring their security. This is not the age to take risks in volatile investments. Schemes for seniors are designed to provide sufficient interest rates, while ensuring security for the principal invested.
Liquidity: Getting older may also lead to health related issues. It is best to have emergency funds put aside for these in liquid instruments. These include bank deposits, even in savings accounts, to ensure instant access.
Tax Savings: Most savings schemes do not provide high returns. In addition, interest earnings on deposits are taxable. Look for tax-saving schemes and tax-free investments. These can reduce the impact of taxes on investment earnings.
Keeping up with Inflation: Improved health care and increasing life expectancy are good news. However, this also means that you should think long-term when planning your retirement funds. While you can put aside a large chunk in secure schemes, make a few investments in growth-oriented schemes.
This ensures that your money keeps growing. You can then live the lifestyle you are accustomed to 15 or 20 years into the future.
Schemes for Elders
Seniors should mix good savings schemes with a few balanced investment schemes.
Senior Citizens Savings Scheme (SCSS)
This scheme ensures that funds saved over several years stay safe, while earning good interest on the principal. The minimum investment is Rs. 1000 and the maximum is Rs. 15 lakhs under this scheme. It pays an interest of 8.5%, and the interest is computed on a quarterly basis. You can choose to withdraw the interest to create a regular income stream. Alternatively, you can reinvest if you have other sources of income.
The tenure is five years, so this is comparatively a liquid scheme. If needed, the scheme can be extended for another three years.
Varishtha Bhima Yojana
This scheme, to be offered by LIC, is for a tenure of 10 years. The interest on this savings scheme is 8%, The interest rate will be kept steady to ensure an assured pension scheme for retired people. This is another good option for seniors.
Senior Citizens FD
Banks and NBFCs offer special rate of interest on fixed deposits for senior citizens that pay a bit higher rate of interest than the regular FDs. Usually, the rate is 0.25 to 0.5% higher than normal fixed deposit interest rates. As fixed deposits will anyway be a part of a senior’s savings portfolio, these are good schemes to choose.
Income funds and Balanced Mutual Fund schemes are also good choices. These give your investment a chance to experience capital growth, to beat inflation. You can also create SIPs where they can invest small amounts regularly in Mutual Funds without risking a huge chunk of money at once. Post Office Monthly Income Scheme is another option to create a regular income source.
Once you retire, you’ll need to check the amount accumulated through investments and savings during your employment. Knowing this, you can plan post-retirement investments according to your needs and risk appetite.
The Best Investment Option for You
All of these investment options serve the ultimate purpose of profit and savings. Deciding upon an investment option really depends upon the tenure and amount you have in mind. Fixed Deposit accounts are a great way to earn returns, if you have a few decades of tenure on your mind. However, if it’s a short term of (say) 8 to 10 years, then you’re better off investing in real estate.
Investments will help you plan out your future financial goals, and make them achievable. They’re also great for any retirement plans you may have. An investment cannot be skimped upon, so it’s best to choose the right kind for you.