It is an 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, greater returns comes with greater risks. We have eliminated the extremes and put up the following list.
Investing through Bank’s Fixed Deposits (FD)
Ranked the safest would be the Fixed Deposits. They come with a 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.
Saving through the Public Provident Fund (PPF)
Next in the list is PPF where the investor can claim Tax Deductions for the amount invested. But the caveat here is the 15-year lockdown for the investment. So start these investments early in your career for future life goals.
Investing in ELSS Mutual 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.
Investing through Sukanya Samriddhi Yojana (SSY)
If you have a daughter below 10 years 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.
Exploring other Equity/Debt Based Mutual Funds
Many mutual funds 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 until then!