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7 Options to Invest Your Money the Smart Way

26-April-2022 |

Working as a salaried professional or entrepreneur enables you to fulfil your and your family’s financial goals. After taking care of all your needs, investing whatever surplus money you’re left with is one of the best things you can do for your future self.

The importance of investing your money wisely can’t be overstated. A monthly plan helps secure your life by achieving your financial goals, both for the present and the future. The options you choose depend on your goals, liquidity needs, investment term, and risk appetite.

By generating a secondary source of income, you can create more wealth and earn returns to beat inflation, enabling you to lead a comfortable life even after retirement.

What are the Safest Investments with the Best Returns?

Most people want to invest in a way that allows them to incur high returns as quickly as possible while reducing the risk of losing principal money. Sadly, a high-return combination doesn’t exist.

Returns and risk are directly proportional, the higher the returns, the higher the risk and vice versa. That’s why, before you decide to park your money in a monthly investment plan, you need to match your personal risk profile with the associated risks of the product.

Investment products are typically categorized under financial and non-financial assets. Financial assets are then classified into market-linked products such as stocks or mutual funds and fixed-income products like Public Provident Fund (PPF) and bank fixed deposits. Examples of non-financial assets can be physical gold or real estate.

Here’s a summary of 7 smart investment options you can look into:

  1. Public Provident Fund (PPF)

  2. The interest earned and principal invested in a PPF is backed by a sovereign , and thus makes for a safe and smart investment. Since PPFs have a tenure of 15 years, the impact of compounding tax-free* interest is huge.

  3. Fixed Deposits (FDs)

  4. A bank fixed deposit is one of the safest investment instruments providing moderate and stable returns. Depositors’ investments are insured up to ₹5 Lakh, which applies for both the principal and the interest amount.

    Based on your requirements, you can choose to opt for monthly, quarterly, half-yearly, yearly, or cumulative interest options. However, keep in mind that the interest accrued becomes part of your income and will be taxed* as per your slab.

  5. Mutual Funds

  6. Mutual funds offer you the advantage of investing indirectly into stock markets using the expertise of professional managers. Equity mutual funds contains risk factor as the money is predominantly invested in volatile equity stocks.

    Debt mutual fund schemes are suitable for investors who want fixed, steady returns. Compared to equity mutual funds, they’re a lot less volatile. Debt mutual funds primarily invest in fixed-interest securities such as corporate bonds, government securities, treasury bills, commercial paper, and various other money market instruments.

    However, mutual funds are not risk-free. Investors should know the related risks before investing. These days, there are countless online investment options that let you assess the performance of various mutual funds in real-time.

  7. Direct Equity

  8. Stocks are a risky and volatile asset class . Apart from picking the right stock, timing your entry and exit is also very important. The risk of losing a part or even all of your capital is high unless you are careful and know what you are doing.

    To reduce the risk to a certain extent, you could diversify across different sectors and market capitalizations. That being said, over long periods, investing directly into stocks has been able to deliver higher returns compared to all other classes of assets.

  9. Government Schemes

  10. If you’re over 60 years of age, the Senior Citizens' Saving Scheme (SCSS) should be a must-have in your investment portfolio. It can be availed from a post office or bank.

    The Pradhan Mantri Vaya Vandana Yojana (PMVVY) has a tenure of 10 years and is intended for senior citizens aged 60 years and above to provide them with an assured return of 7.4 per cent per annum.

    You can opt for pension income payable monthly, quarterly, half-yearly or yearly as per your convenience. The minimum pension amount is ₹1,000, while the maximum is ₹9,250 per month.

  11. Non-financial Assets

  12. Investments such as gold or real estate certainly add to your long-term investments owing to their ever-increasing prices. Investments in real estate deliver returns either through capital appreciation or rentals. Thus, the location of the property is the single most important factor that will determine the value of your property as well as the rent you can earn from it.

    Alternatively, if gold is your thing, you may choose to invest in gold biscuits, Gold Exchange-Traded Funds (ETFs), gold mutual funds, or even gold deposit schemes.

  13. Life Insurance Plans

Life insurance plans are a great choice for beginner investors who have a steady source of income. You can opt for savings insurance plans like guaranteed1 return plans or monthly income plans that offer assured returns with life cover. Or, if you wish to invest in market-linked funds while getting life cover under the same plan, go for investment-insurance options such as Unit Linked Insurance Plans (ULIPs).

Tata AIA Life Insurance Plans offer lucrative options to help grow your earnings and secure your future. You can buy a Tata AIA savings insurance or ULIPs online by following a few simple steps.

  • Go to the website.

  • Under plans, select Savings Solutions or Unit Linked Insurance Plans based on your preference.

  • Browse the different plans available.

  • Finalise a plan based on your specific investment and financial needs.

  • Follow the easy step-by-step process, pay the premium online and get a soft copy of the policy on your official email ID.

Tata AIA Life Insurance Fortune Pro ULIP (UIN: 110L112V04) One of the popular ULIPs from Tata AIA, this plan allows you to grow your investments with market-linked investments while securing your loved ones’ future with a life cover. You can choose from 11 different funds of different risk profiles and invest in a fund that matches your risk-taking capabilities and financial goals.

Additionally, Tata AIA Life Insurance Fortune Pro (ULIP UIN: 110L112V04) offers you flexible premium payment modes and life cover up to 75 years of age. You can switch between funds as per changing financial strategies or opt for the ‘Enhanced SMART’ feature for systematic and guided investments.

You can further enhance the plan coverage through 5 different ULIP riders# and avail of applicable tax* benefits as per prevailing ULIP taxation* rules.

Conclusion

Some of the options mentioned above are fixed-income while others are market-linked. Market-linked investments offer the potential of high returns but also carry high risks, while fixed-income help in the preservation of accumulated wealth to meet your desired financial goals.

It is important to make the best use of both and have a mixed portfolio, keeping the risk, taxation*, and term horizon in mind. Any investment plan you’re looking to get into, be sure to make a wise and informed decision.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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