Making smart investments can help you generate income by putting your money to work. While you may work hard to earn money, it may not always be enough to fulfil your dreams and goals. To start investing, you can consider either growth-oriented or fixed-income investment instruments.
People often get confused between savings and investments, which play different roles in your personal financial planning. While both savings and investments are important, they have different objectives. The intent or purpose of keeping the money aside is the first differentiating factor.
You usually save money to keep some money aside for emergencies. However, investing is when you put this money to work for you in smart investment avenues, with the hope to generate wealth for the future.
Savings and investments vary in the way your wealth is accumulated. While savings are considered as a passive way of wealth accumulation, well-planned investment strategies can help in accumulating more wealth.
Before you start investing, it is best to understand the different types of investments. For most investors, investments vary in terms of risk levels – low risk, medium risk and high risk. Here’s a look at these investment options in detail:
Low-risk investments – These are instruments which pay fixed income – irrespective of the changes in the business or economy. Bonds, debentures and fixed deposits come under this category. Also, special investment vehicles – PPF, EPF, SCSS, Sukanya Samriddhi, National Savings Scheme and other small Post Office Schemes which are created by a government statute for specific purposes are low risk as they guarantee the returns. The returns are periodic and pre-determined.
Low-risk investments are not linked to the stock market movements and are usually governed by the interest rate movements of the financiers. However, there is always the returns are always guaranteed.
Government bonds and life insurance policies provide good returns, however, they have long lock-in periods. So, you will have to wait for a long time to earn substantial returns from these investment options. Fixed deposit is one of the very few low-risk investments that offer stable, high returns and immediate liquidity.
Medium-risk investments – These are investments which might have a certain percentage of risk but these also pay higher returns to investors willing to invest in them. Debt funds, balanced mutual funds, and index funds fall in this category. Such instruments do have an element of debt and stability, but they have their volatility linked to the markets which can hamper your principal amount. The irregularity in earnings can make any fixed income from such investment impossible.
High-risk investments – These are investments where there is no limit to the upside along with the downside of risk-returns. These are stocks of companies, equity mutual funds, even stocks, and derivatives. The return on these instruments can give huge returns as well as chances of losses depending on various external factors to the company and internal ones. The quantity and timing of returns on these instruments are not fixed. Hence, they are at high risk.
Here is a look at the top 10 investment options Indians look at while savings for their financial goals
Here’s a comparison of various types of investment options.
Top 10 Best Investment Options In India
|Direct Equity||High||Can be sold anytime||High||Market-linked|
|Equity Mutual Fund||Moderate-High||Open end*||High||Market-linked|
|Real Estate||High||Can be sold anytime||Low||Market-linked|
|Gold||Low-moderate||Can be sold anytime||Varies||Market-linked|
|PPF||No risk||15 years||Partial withdrawals**||7.90 percent|
|Bank fixed deposit||Low||7 days to 10 years||Premature exit||Varies|
|Debt Funds||Low-high||Open end||High||Market-Linked|
|RBI taxable bonds||No risk||7 years||Low||7.75 percent|
|NPS||Low-high||60 minus entry age||Limited||Market-linked|
|Senior Citizens’ Saving Scheme||No risk||5 years||Low||8.60 percent|
|*ELSS comes with 3-year lock-in **Subject to conditions|
|For physical gold, paper gold and debt funds, long term is 3 years. For real estate, long term is 2 years|
Looking at various options, FDs have been the favoured choice of investment for people all along. From ease to flexibility and various options, FDs are a boon to investors of all age groups and income levels. While bank FDs are governed by each bank’s assets and liabilities situation, company FDs pay higher interest than bank FDs. Bajaj Finance FD offers secure and stable growth for your savings. It is one of the best investment options for investors across all categories due to following reasons:
Annual rate of interest valid for deposits up to Rs.5 crore (w.e.f 07 December 2019)
|Tenor in Months||Minimum deposit (in Rs.)||Cumulative||Non-Cumulative|
|12 – 23||25,000||7.60%||7.35%||7.39%||7.46%||7.60%|
|24 – 35||7.90%||7.63%||7.68%||7.75%||7.90%|
|36 - 60||8.10%||7.81%||7.87%||7.94%||8.10%|
+ 0.25% for senior citizens
+ 0.10% for Bajaj Group employees, Bajaj Finance Ltd customers and Bajaj Allianz Life Insurance existing policyholders
+0.10% over and above the rate of interest at which the deposit is booked
In addition to the special tenor scheme, existing customers or Bajaj Finserv employees can benefit from 0.10% higher interest rates, and senior citizens can get 0.25% higher interest rates on their fixed deposit.
This is one of the most basic questions that people ask along with where to invest. The answer to both these questions depends on your earning and spending. First, analyse your financial goals and how much money you require in each time frame. A certain portion of your portfolio should always be in a stable and safe investment option like FDs. You can determine the amount and invest per each time frame.
Now you make an online investment in fixed deposits online from the comfort of your home. Research a bit to find out what are the best available options for you and start investing. All the best!
Do you plan to invest in FD? Find out how to open an FD account.
For more information on investment ideas, how to invest and various requirements, please get in touch with us.
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