It is undisputed fact that long-term investment strategies trump short-lived ones. But still, people do not take that path. So we are going to focus on 5 investment strategies ranked based on their riskiness and returns. Remember, With greater returns comes with greater risks. We have eliminated the extremes and put up the following list.
Bank’s Fixed Deposits (FD):
Ranked first and the safest would be the Fixed Deposits with lock-in period from 7 days to 10 years for your investment. They offer decent returns which are taxable. Set aside a part of your income in this category.
Public Provident Fund (PPF):
Next in the list is PPF where the investor can claim Tax Deduction for the amount invested. But the caveat here is the 15 year lock down for the investment. So start these investments early in your career for future life goals.
Investment in ELSS Funds:
ELSS are Equity based schemes where the fund invested can be claimed for deduction under Section 80c. The lock in period is for 3 years and the returns make it a smart investment choice. Regular investments made via SIP (Systematic Investment Plans) generate better returns and choose a plan which has good long-term returns.
Sukanya Samriddhi Yojana (SSY):
If you have a daughter below 10 year of age, SSS is a better alternative to the PPF. It offers a higher interest rate and the interest earned is tax-free. The minimum investment limit is Rs.1000 per financial year with the maximum limit set at Rs.1.5 Lakh. The fund matures when the girl turns 21 although one can withdraw up to 50% of the fund after she is 18.
Equity/Debt Based Mutual Funds:
There are many mutual funds that do the investing for investors. The returns are good and the risk is high as well. But there are some well-established and long running funds that have decent returns. Try to choose the Growth type funds over the dividend option. The key here is to re-invest. There are debt-based funds for shorter investment periods.
We’ll be doing an in-depth article for each of these methods over the next few weeks. Happy Investing till then!