Whether it is housewives or salaried employees, the reason for investing is either to make more money or they want to save taxes. However, figuring out where to invest your money to make more money is easier said than done. We are in the third quarter of 2018 and cash counters are ringing. Before we jump into the top 10 investments and where to invest your money, let’s understand how to invest money in order to make more money.
What is Investment Management?
Investment management is managing your funds and financial resources to achieve your monetary goals. This is the simplest answer to the question ‘What is Investment Management’. Other parameters to determine before you decide how to invest money include how much you’re willing to invest and your risk profile.The purpose is to help you prepare for the future, know how to invest money wisely by managing your funds, assets and securities.
Where to invest your money in 2018?
Now that we have answered what is investment management, how to invest money and use the investment in order to make more money, we bring to you the best Investment Options for 2018.
1. Mutual Funds: Currently, equity mutual funds, in particular, are believed to be the best investment option. Top funds have generated nearly 20% CAGR over a 10 year period.Friendly tax norms and convenience of SIPs make them all the better.
2. Gold: Gold is a worthy investment as it diversifies risk and acts as a hedge against inflation. For instance, gold jewelry is expensive and making charges generally range between 6-14%. You can choose minted coins or paper gold.
3. RBI Taxable Bonds: RBI replaced the 8% Savings (Taxable) Bonds 2003 with the 7.75% Savings (Taxable) Bonds. The bonds were made available from January 10th and the tenure was increased to 7 years from the earlier 6 years.The bonds fare well compared to small saving schemes such as NSC which offers 7.6% interest for a 5 year period.
4. National Pension System (NPS): NPS is a safe investment option as it is a government scheme. NPS is a long-term retirement focused investment comprising of a mixture offixed deposits and corporate bonds among other things. Another benefit is that NPS is an excellent tax-saving tool.
5. Public Provident Fund (PPF): PPF is one of the safest investment options. Numerous people prefer storing their money in PPF accounts which carry virtually no risks. The principal amount and interest generated are re-invested thereby thus reducing risks.
6. Equities: Investors can know how to invest online by either investing directly in equities or in equity-oriented mutual fund schemes. The former is preferred when investors ask how to invest but are familiar with stock markets and are willing to take the related risks. Equity-oriented mutual funds are the schemes that invest at least 65% of its assets in equities and other related instruments.
7. Commodities (MCX): Investing in commodities helps to diversify one’s investment portfolio. Usually, when bonds and stocks fall, the commodities rise. Another benefit it that commodities maintain their values and prices during inflation, unlike stocks and bonds. Investing in commodities like gold also offers high liquidity.
8. Bitcoin: By March 2017, the market cap for cryptocurrencies had reached $21 billion dollars. However, in April this year, the RBI issued a circular giving its entities a three month period to end all business relations with firms or individuals dealing in cryptocurrencies. This means that cryptocurrency exchanges will not be able to let traders liquidate crypto assets.
9. National Saving Certificates (NSC): NSCs are the most secure option owing to the six-year term and availability of government subsidies. You can study how to invest your money online and start as low as Rs. 100 as your principal amount and there is no upper limit! The interest of 8% is calculated twice in one year. Moreover, you can claim deductions up to Rs. 1 lakh on NSC returns.
10. Post Office MIS: This one’s for those who want to know how to invest money wisely. MIS or Monthly Income Scheme is one of the many offerings from the Post Office. With a maturity period of 5 years and interest at 8.4%, MIS guarantees regular monthly income. An added benefit is that you can open a joint account under this scheme where the investment limit goes up to Rs. 9 lakhs.