Investment is the only solution to eliminate financial instability and grow money. Today’s generation is growing up with the fanda of easy money, which can be assured only through proper investment. If invested right, it maximises your earning potential. Nevertheless, finding the right type of investment options is the real challenge here.
Thus, with the financial market is flooded with plenty of investment tools, we have come up with the following investment alternatives that offer lucrative avenues to grow your money. Let’s gather some knowledge about them:
- Post office MIS
Also popular as Monthly Income Scheme, MIS offers an assured monthly income out of your investment. This investment scheme comes with a fixed rate of interest of 8% per annum. You can invest your funds under this scheme for 5 years and can avail 5% bonus on maturity. However, the maturity amount is eligible for tax deductions as per the Income Tax Act, 1961. The maximum limit for investment is 4.5 lakh for an individual account and up to 9 lakh for a joint account.
For instance, A invests 3 lakhs in Monthly Income Scheme and gets a monthly return of Rs. 2000 per month. If he opts for a 6-year scheme, at the end of the FD tenure, A will receive Rs. 15000 and additional bonus, apart from the maturity amount.
- Fix Deposit(FD)
Among the various investment options available in the market, fixed deposits are quite popular due to their characteristic safety of capital and assurance of good returns. They are considered as a low-risk investment option, wherein the depositor invests money for a fixed period of tenure. Persons with low-risk appetite, who wants to save and earn additional money, can opt for this investment. Here, the interest can be earned monthly, quarterly, half-yearly or on annual basis. In addition, premature withdrawal is allowed as well. However, the rate of interest may differ from bank to bank or from company to company. Usually, banks offer 8-9% return on FDs.
- Senior Citizen Saving Scheme
Considered as one of the best investment options, Senior Citizen Saving Schemes are specially designed for the age group of 60 years or above, i.e. Senior Citizens. The maximum tenure of the scheme is 5 years and you can extend for 3 more years when the account matures. The FD interest rate offered under Senior Citizen Saving Scheme is 9%, which is paid every 3 months. This option is best-suited for retirees and those who are getting a pension and want to earn an additional income.
- MIP of Mutual Funds
Some mutual funds come with an option of regular monthly income. The return of MIS, FD or SCSS in MIP is not certain and may fluctuate from time to time. The rate of interest so offered ranges from 8% to 9%. The amount paid towards MIP is called ‘dividend’. Opportunely, these dividends are tax-exempted.
- Earn from Real Estate
Real Estate has been gaining popularity as an option to generate monthly income. Specially in metro cities like Delhi, if you own a spare property and rent it out, you can expect an adequate earning out of it. However, it is a high-risk, high-return investment where the possibilities of not getting tenants or the right tenant or a decrease in property rate could be a problem.
- Long-term Government Bond
This is one of the more secure ways to create wealth. These government bonds also offer an attractive half-yearly return of 8%. These come with a long-term tenure, and on maturity, the principal amount will be returned. One can also sell these bonds as they are tradable in the secondary market.
While there are various ways to generate regular monthly income and create wealth, Annuity, however, is less recommended. The reason- it takes some time to generate sufficient income. The return completely depends on the tenure of the pension and the type of plan that you opt for.
ULIPs (Unit-linked Insurance Plans) combine the features and benefits of insurance and investment. The money invested in a ULIP is utilized in two parts, i.e. a portion of the premium paid in utilized to provide insurance coverage to the investor while remaining part is invested in debt and equity funds. The returns offered by ULIPs are market linked and investors are allowed to switch between various funds to earn more profit.
In a Nutshell
There are lots of investment options to maximize your wealth. However, the right approach is to research thoroughly before zeroing down on one. Lack of knowledge can lead to financial losses or you may end up with low returns. Therefore, it is necessary to learn how to manage your portfolio, perceive the risk and make smart decisions!