Investments in India – The Importance and Where to Invest?
INVESTMENTS are important because talking about the present scenario, earning money is not enough. You work so hard, unfortunately, that won’t be enough for you to fulfill your goals & dreams or lead a comfortable life. To make it a HIT, it’s important to make your money work for you; therefore, investment turns out to be important.
The Indian investor has numerous options to choose from; there are traditional investments that have been used from generation to generation, whilst some are new options that have become popular recently. Let’s take a look at a few of the options:
- Mutual Funds: A mutual fund is an investment that pools money from people and later invests it in a vast variety of bonds, stocks, and other investments. All–together, they are managed by ‘Fund Managers’, who are experts at managing investments and money.
- Money pooled from different investors
- Managed professionally
- Well-regulated by SEBI
- Allowing to invest in small amounts
- High returns as compared to conventional investing
- Access to large portfolios
- Stocks: Also known as company shares, stocks are one of the long-term investment options in India. When you buy a stock of the company, you buy ownership in that company, thus allowing you to participate in the growth of the company. Stocks offered by the company are publicly listed on stock exchanges & can be bought by any investor. Precisely, stocks are long-term investments.
- Public Provident Fund: Public Provident Fund or PPF is a long-term investment option which offers better returns and interest rate on the amount invested. The returns and interest rate are not taxable under the income tax. The person must open a PPF account and the amount deposited yearly will be claimed under 80C. Also, it comes with a lock-in period of 15 years. The investor can use to earn a tax-break with PPF. The Government of India decides the PPF rate in every quarter.
- Recurring Deposits: A recurring deposit or RD is another mode of long-term investment option in India. Here, an investor needs to put-in a fixed amount every month for a pre-defined time period. RDs are offered by post offices and banks & the rate of interest is defined by the offered institution. Also, RDs offer guaranteed returns as well as capital protection.
- National Pension System: The National Pension System or NPS is counted as tax-saving instruments. NPS contribution are entitled for tax-deduction up to INR 1.5 lakh under section 80CCD and up to INR 50,000 under section CCD(1B). NPS contributions can be invested in corporate bonds, government bonds, and equities through an NPS pension fund.
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