Choose an Investment that suits your financial needs!

Investment in terms of financial context, means any money that is spent today in the hope of financial benefits that may be reaped in the future. An investment is the act of buying or creating assets with an expectation that the same would yield interest earnings or dividend compared to the money put in initially. Almost all investments are differentiated from other kinds of transactions based on the aim of the money spent. Money spent on making investments is primarily with the aim of obtaining some sort of return in a specific period.

In this article you will find different kinds of investment options. Many options are available today for a person to invest his money and make a decent return. Let’s skim through a few of these schemes.

Mutual Funds

Mutual funds are financial instruments that are professionally managed and that invest money on behalf of any investor, in different securities. These mutual funds are classified into various types based on the type of securities that they invest in. Some of the most popular mutual fund types are balanced funds, stock funds, open-ended funds etc. These funds are classified based on their percentage allocation in different securities. So, an equity fund invests purely is equity and is a high risk high return product while a debt fund invests purely in debt and money market instruments and is hence a low risk low return financial product.

Fixed Deposits

As the name itself indicates, fixed deposits are financial instruments that are one of the oldest and safest ways to save money. These are not necessarily active investment tools, but are rather a passive way to save and earn returns. A fixed amount of money is kept aside with a financial institution for a fixed number of days or months or years. In turn, interest is earned on this money. The rate of interest differs with the deposit tenure and with the banking entity.

Real Estate

Property rates are soaring with every passing day which has made real estate a hot investment avenue for investors. Buying, selling and leasing of property offers substantial returns to investors. Appreciation of property makes real estate a good investment tool. With urbanization gaining ground rapidly, real estate prices in certain major cities like Mumbai, Bangalore, New Delhi, are skyrocketing. This has made these places hot hubs for real estate investors. Most investors take loans from banks to purchase real estate and then lease out or sell the same property to enjoy returns offered due to appreciation in price of the property.

Employees Provident Fund

Employees Provident Fund is a small savings scheme that is primarily offered by your employer. This includes salaried individuals of both private and public organizations. Any company with a workforce of more than 20 employees is mandated to register for the EPF scheme. Around 12% each month is deducted from the salary and contributed towards the EPF account of an employee. This EPF account is maintained by the Employees Provident Fund Organization, commonly known as the EPFO. The amount deposited towards EPF is eligible for tax exemption under section 80C of the Income Tax Act.

How to Plan for Your Child’s Future

As is the duty of all parents, making sure that their child's needs are taken care of is essential. It's the dream of every parent to facilitate the best possible upbringing for their child/children and assure the best future for them. However, for every dream to be realized, we must cross the bridge of multiple realities. If you want to fund your child’s education, you'll need to amass a large amount of money. By planning ahead, you can provide a much wider array of education options.

Starting early and consistency in savings are the two key factors in achieving your child's successful future planning. With careful planning, early savings along with realistic and practical investment approach, you can successfully give your child the future they deserve.

The best way to start is with a mix of savings in government securities (like National Savings Certificate, NSC, and Public Provident Fund, PPF) and investments in mutual funds and primary equity markets.

While the former will give you assured, though low, returns that will multiply every year, the latter will balance it out with a possibility of high growth. The first strategy will help you reduce your risks and the second will put you at higher risks with a probability of higher returns.

Never purchase insurance in the name of your child. Understand the importance and purpose of child insurance plan. It is to be purchased to manage the risk prevalent in one’s life – death, health problems, accidents. If you want your goals to be met comfortably, then proper insurance planning is inevitable.

Proper estate planning is vital. You should write a proper and tax-efficient will which helps in proper distribution of wealth among your children. You can create different tax files by not allocating the assets directly to the children but to his Hindu Undivided Family (HUF), grandson/granddaughter. You can also create a Trust through your Will. This is the most important exercise which you should perform the moment your child is born.

At the end of the day, choose a plan that can make you financially secure and meet your child’s educational aspirations, irrespective of uncertainties your life may bring. After all, your dreams lie in the dreams of your children!