Investing your money wisely early on in life is one of the best things you could do for your future self. This not only secures your future but also helps curb unnecessary expenses. While you may feel the pinch of curbing expenses for now, you will thank yourself in the future for doing so.
Before we get into the nitty-gritty of any investment, let us first understand what a long-term investment really means.
A long-term investment is a kind of financial investment you make for over a long period of time. In most cases, your money multiplies, thus giving you a financial cushion for future needs. An investment that spans for more than three years is generally considered to be a long-term investment. Some investments may also span up to five, ten, or even more years. In fact, the longer the investment, the better it is.
What type of long-term investment should you choose?
While a long-term investment is a great idea, selecting an investment option that will help your money grow is most essential. If you’re wondering where do you turn to for the right one, here are some of the best long-term investment options:
1. Public Provident Fund
A Public Provident Fund (PPF) is one of the best saving plans. Not only is it a safe bet, but also is a great way to save taxes. This fund earns you a yearly interest rate of about 7.9 percent. It is a risk-free option where all you need to do is deposit a certain amount regularly and you will yield the returns of it over the long term. This is also a great retirement investment option.
Here, asset management companies that are regulated by Securities and Exchange Board of India (SEBI) invest your money in shares, money market securities, debt securities, fixed income securities, and other such funds. This is one of the best investment plans as it has a good chance of yielding high returns. There are three main types of mutual funds—Debt Mutual Funds, Equity Mutual Funds, and Hybrid or Balanced Funds.
3. Unit Linked Investment Plans (ULIPs)
These are high-risk investment options where your money is invested in stocks, bonds, and mutual funds. ULIPs act as great long-term saving plans that are ideal for funding marriage expenses, making down payments towards home, as well as sharing retirement costs.
4. Real estate
Real estate features among the best investment plans in the market. But before you invest in real estate, you need to study the market well in order to make an informed decision. Although real estate will not ensure immediate liquidity, the returns on it are exponentially high, especially if your investment has been around for a rather long time. There are cases when the returns received on real estate have doubled and sometimes even tripled.
“Only buy something that you’d be perfectly happy to hold if the market shuts down for 10 years”, is what stock market guru Warren Buffet advises. Therefore, investing in stocks for the long term is a wise idea. You should thoroughly analyse the market before you invest in stocks. This is because, while stocks may give you high returns, they also stand a chance of hitting rock bottom.
If taking a risk is not your thing, then try investing in bonds. This is another great option. Here, you invest your money with either the government or a private company and they, in turn, pay you a certain amount of interest on the money lent. You could also invest in inflation-indexed bonds, where the rate of interest is subject to inflation. Long-term bonds ensure a higher rate of returns as compared to short-term bonds.
Whatever form it may be in, owing to its ever-rising prices, gold certainly adds to your long-term investments. You may choose to invest in gold biscuits, gold Exchange-Traded Funds (ETFs), gold mutual funds, or even gold deposit schemes.
With the information above, you have at your disposal a slew of some of the best long-term investments to choose from. So, whether it’s a high or low-risk investment you’re looking for, be sure to make a wise and informed decision.