Sunday, 2 March 2014

Planning Investments: Be Wise Invest Wise

“INVESTMENT”: What does it mean?

In simple term it means any action or process of putting your present money or earnings in to any instrument or financial product which would provide good return on fund put in, it can also mean accumulation of assets which have the potential to appreciate in the future thereby enhancing the wealth of the concerned individual. Some though might invest to safe guard against any future shortcomings and also to cover their medical expenses in case of illness.
We have wide range of financial as well as non financial products to invest into. You have the luxury of investing into Mutual Funds, Bullion Goods, Real Estate, Life Insurance Policies, Health Insurance, Retirement Plans and many others which keep coming up. However you have to very careful while planning your investments. Most often it is seen people are influenced by the decisions of others. Don’t let that happen with you so be careful as to what you want your money to do?

Things Do Before Investing:

  1. The Financial Obligations which needs to be met in the future and fund required for it.
  2. Analyze your earning potential and the possible saving which you can make for the future.
  3. The Investment options which are available in the market and their performance.
  4. Compare the return on investment with the period for which you want to remain invested in.
  5. Investment in schemes which would provide protection in case any emergency or unfortunate event occurs.
  6. Return on investment should be higher than the inflation rate at the very least so that it would be sufficient for the purpose.
  7. Sound Investment plan should not only look at the inflation but should take care of rise in cost due to improvement in Standard of Living.

Read about the different schemes and the types of product which fall under it:

Tax Saver Schemes: These kind of Saving schemes are useful to save Tax and at the same time also provide modest return on the investments on completion of vesting period. Here it serves the dual purpose of Investment as well as reduction of Tax Liability. Tax Saving schemes also provide different features to the individuals such as Interest or Dividend on Investment as well as Risk cover depending on the plans along with the Tax benefit. Most of the plans provide Tax benefits to the individuals on the investment.
Public Provident Fund
National Saving Certificate

Risk Coverage Schemes: These are the typical Insurance schemes which provide Life cover, Health and Accidental cover to the individuals. They can also be termed as Security Cover in case of any unfortunate event or risk arises. Most of them do enjoy the Tax Deductions and are not that productive from the investment point of view. Few may offer low rate of interest on investment or no return on the investment. The nature of these policies does not make them good investment options and should only be availed for the Risk Coverage provided by them.
Personal Accident Cover
Term Insurance
Health Insurance

Growth Schemes: The best possible investment options are the Growth Schemes as they provide better return on the investment and ensure rapid acceleration of the capital vested. In the long run the results have shown they are not only able to tackle the rising cost of living but also provide incentives to improve one’s standard of living. With time they keep growing and add value to the portfolio. Here you can plan your investment with respect to the amount of risk you are willing to take. Higher the risk greater the return as more investments will be in the equity market and rest in debts instruments. So you need to be careful with your investments.
Mutual Funds
Equity Market

Stable Return Schemes: Conservative investors prefer Stable Return investments over others as the risk is minimum and the return is guaranteed. It ensures continuous and regular flow of income to the individual. However since the Return on Investment is quite low as there is a guarantee of the payment. Debt instruments are picked by for investing as they are more secured compared to other options. It is concerned with steady flow of return rather than appreciation Capital.
Retirement Plans
Fixed Deposits

All in One Plan Schemes: They can be also called the Classical Insurance Policies which over the period of time offer Tax Benefit, Risk Coverage and Return on Investment after the vested period. However the return on the investment is low but to the premium charged for the risk coverage. But yet this is the most popular among the investors. As it offers them just the right blend required.
Endowment Plans
Life Insurance Policies with Return

Real Estate and Gold as Investment: Many Investment managers do not consider them as investment but in reality they too are a type of investment. The investment in Real Estate is the safest and secure form of investment and appreciation of capital is guaranteed as Land value keeps on increasing. Here the return on the investment can be very high and rarely fails. Whereas, Gold is not very productive as far as investment is concerned as the present price is already at all time high and chances of going further is remote. But it is also a good investment option nonetheless.

To sum up, you be should be careful in planning your investment as it should be a combination of different types of Investment Schemes as only then it will give you better control and minimize the risk.

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