Does your investment plan suit your life goals?
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Does your investment plan suit your life goals?

  • Highlights

  • Recurring or fixed deposits give risk-free returns

  • Fixed maturity plan and liquid funds give fast returns

  • Equity linked savings scheme is unaffected by inflation

  • NPS and EPF promote retirement savings

Any life goal, be it a medium-term or long-term one, has the potential to serve as your guiding light and inspire you to work harder towards achieving it. Investments are an important part of this process as they help you achieve your goals and reap rich dividends. Here are the top 5 goals you can set, and how you should make systematic investments to achieve them.

Becoming a car owner

Saving up to buy a good mid-segment car doesn’t have to be difficult. Accumulating a decent sum to make the down payment is a good way to start off. To make this happen in a relatively risk-free, hassle-free manner, you can open a recurring deposit account with your bank. A fixed amount will be deducted from your savings account each month to put towards your recurring deposit. When the scheme matures, you will get the principal amount you saved along with the applicable interest.

Another great investment option to start saving up for your car would be a cumulative fixed deposit, scheme, where you will earn interest on the amount you deposit. Your earnings will soar, courtesy of interest compounding. On maturity, you will be able to earn a significantly bigger interest amount as opposed to just parking your money in a savings account. You can either use funds from your FD on maturity to buy a car or avail a loan by pledging it as collateral.

Saving for a vacation or present for your parents

Planning to give your parents a much-needed break with a trip abroad? Make sure you plan their finances well to avoid last minute hiccups. To save up, you could consider investing in a Fixed Maturity Plan. You can invest for a period of 1 to 3 years and earn interest at a rate of up to 9%, which is good enough considering it is a relatively risk-free short-term investment.
If you’re considering a maturity period shorter than that, a Liquid Fund is the ideal option. It is a great short-term cash management scheme that invests in securities having residual maturity of less than 3 months (91 days). You have the benefit of low volatility and high cash liquidity with you and can look at an investment horizon of a month.

Becoming a homeowner

A home is one of the biggest single investments you will make. While home loans are a good finance option, you will still need a very strong bank balance to support this investment and to ensure you have necessary funds to make a down payment for your chosen home. To this end, you can start investing in an equity mutual fund. You can choose from large-cap, mid-cap, or small-cap schemes; the higher the risk associated with a particular scheme, the higher your returns will be.

A major benefit of equity-linked savings scheme is that your returns will be largely unaffected by inflation, which results in good capital appreciation and enables you to build substantial wealth over the years. A home loan from a good lender at a nominal interest rate will also provide you additional benefits on the sum you borrow. Not only will a good loan give you enough time to repay your principal, but also give you the option to avail a top-up loan on it. You can use these funds in the future to renovate your home or for other expenses while you are still paying off your home loan.

Saving for retirement

Retirement is a scenario that you will have to plan and save for from a very early stage in your life. You will have to control a lot of moving parts in your financial machinery, including but not limited to your living expenses, insurance, medical bills, taxes, and the occasional vacations. To ensure all of this is taken care of smoothly, create a robust investment plan. The NPS, or New Pension Scheme, should be one of your first options. It is mandatory for government employees, and can offer returns at a rate of around 10%. In addition, it will also prove to be helpful in providing tax relief, as you can claim exemption under section 80C.
Another popular instrument to save up for retirement is the Public Provident Fund, more commonly known as the PPF. It offers a great interest rate of 7.60% per annum and the interest earned is tax-free and compounded, which translates to higher returns. You can also claim a tax deduction of up to Rs.1 lakh under section 80C.

Earning income after retirement

As a pensioner, along with a decent sum in your bank account, you will also need a steady source of income to cover your day-to-day expenditures. For this purpose, a non-cumulative fixed deposit is an ideal option. It gives you the option of collecting the interest on your principal amount on a monthly, quarterly or annual basis.
The Senior citizens saving scheme (SCSS) is another great investment instrument that is by far the most risk-free option – just what a retired pensioner needs. It has a maturity period of 5 years and offers an amazing annual interest rate of 9.2%. Your local post office or any nationalized bank will help you get going with this investment.

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Thus, you need to choose your investment according to your financial needs and goals. Use the above examples to do the same for maximum efficiency in financial planning and the best returns. This can help you achieve your goals faster.

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