Planning to Invest? Here Are 7 Safe Options You Should Consider

Dec 01, 2017 | 12 months ago | Read Time: 3 minutes | By iKnowledge Team

Are you interested in increasing your wealth? Do you want to put your money in an investment avenue that gives you good returns? If so, here is a list of options that can help you build your wealth this year:

Planning to Invest? Here Are 7 Safe Options You Should Consider

  • Fixed deposits

Fixed Deposits (FDs) are one of the most popular investment choices among Indians. This is because FDs are extremely safe. In other words, the chance of losing your money is minimal.

FDs offer fixed and steady returns. The maturity period for an FD ranges anywhere between 7 days to 10 years. You also have the option to take out a loan on your FD. Most banks allow you to withdraw around 90% of the principal[1]. This saving plan is a great option in case you need money in an emergency.

Risk factor: Low

  • Bonds

Bonds are one of the most common investment avenues out there. You are basically lending money to a company when you buy a bond. In return, the company pays you interest.

They are quite like fixed deposits. Bonds are known to be a safe avenue of investment but that doesn’t mean they are risk-free.

Factors such as inflation, interest rate risk and liquidity risk can affect the returns from bonds. So, make sure you analyse the rate of interest, credit rating and compounding frequency before you invest in a bond.

Risk factor: Low to medium

  • Endowment plans

An endowment plan is a life insurance policy that allows you to save money for a specific period. At the end of the policy period, you receive a lump sum amount for your investment. This is regardless of whether the policyholder survives the tenure or not. Endowment plans are a low-risk investment option and when it comes to returns, you can be certain of an assured payout.

You can use this lump sum to meet various financial goals such as paying for your child’s education, buying a home or even saving for retirement. The Aegon Life Premier Endowment Insurance Plan is one worth investing in.

Risk factor: Low

  • ULIPs

Unit Linked Insurance Plans or ULIP is an insurance product that offers both risk cover as well as investment options. ULIPs are a good way to invest if you want both insurance and investment in a single package.

In a ULIP, your money is invested in different investment avenues such as equity and debt. The remaining money is invested in a life insurance cover. Based on your risk profile, you have the freedom to choose how much you want to invest in equity and debt. You also have the option to switch between different investment options in accordance to market movements. For example, if the stock market is very volatile, you can choose to shift your units (fully or partially) towards debt and vice versa.

Risk factor: Low to medium

  • Post office schemes

If capital protection is one of your chief concerns, then post office schemes are ideal for you. They are very safe and ideal for very conservative investors interested in long-term investments. Public Provident Fund (PPF), National Saving Certificate (NSC) and Post Office Time Deposit are a few schemes in which you can invest. These schemes are ideal for long-term investments since they have specific lock-in periods. For instance, you cannot fully withdraw your investment from PPF within 15 years. So, these investments are ideal for financial goals where you need the money after a long period of time.

Risk factor: Low

  • Gold

Who doesn’t like Gold? According to World Gold Council, India is among the top gold buyer countries in the world. However, when it comes to investments, it’s important to not limit yourself to gold jewellery. You can choose to invest in gold coins, gold ETFs and gold stocks. Of course, each form of investment has its own benefits and risks associated. So, based on your risk appetite, you can choose your options to invest your money in. For instance, Gold ETFs have the potential to give you higher returns than other gold-based investment options. Understanding your needs, and being a smart investor is the need of the hour.

Risk factor: Medium

  • SIPs

If you want to invest in mutual funds, then Systematic Investment Plans (SIPs) are the place to start. SIP is an investment vehicle that allows you to invest small amounts in mutual funds in a periodic fashion. You can start investing with as little as Rs 500 each month. And as your income increases, you can consider investing larger amounts of money in the SIP. This is an easy and efficient way to increase your wealth in the long run. You also benefit from investment discipline.

Risk factor: Low to medium 

Conclusion

There is no one size fits all option for everyone in the world. Similarly, there is no universal investment option for everyone. Select the best investment option based on your financial goals and risk appetite and start investing today!

 

 [1] Bank Bazaar


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