Where to Invest Money in India? Learn to Grow Money

Introduction

One of the most important questions these days is “where to invest money”. Due to inflation only saving does no good. These savings are required to be invested. This is the only way to defeat the effects of inflation. There are many types of small investments to make money for beginners. But investing is a wise decision to make. You should take extreme care in deciding where to invest money. Your financial decision is not optimum till your money increases while you sleep. So, make intensive research. Also, be up to date with the factor related to the economy for your investment to grow. It is very important to learn to grow money or have an extra income. Start investing even from your first salary.

The small investment that makes money

There are many small investment opportunities available in India to earn money. You don’t need large sums to invest. Even small money can become big with smart investing. It is more important to work smart than to work hard. Similarly, it is important to invest smartly than invest in large amounts. A few of such small investment avenues are mentioned below:

where to invest money
September 1, 2021
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Table of Contents

Investment in mutual funds

Mutual funds are the group of shares from different companies. Buying a unit of a mutual fund is equal to indirectly investing money in a diversified portfolio. Invest in mutual funds under a systematic investment plan (SIP). Under SIP, a particular amount is invested in a selected mutual fund as an installment. It can be monthly, quarterly, semi-annually, etc. It requires as small as 500 rupees. You can select your own investment amount and installment intervals. It provides the benefit of compounding. There are many types of mutual funds. They can be of the high cap, mid-cap, or small-cap. They may be of the same industry or diversified into various industries. Mutual funds provide high returns with very relatively less risk. It works as per the market, so there is always a risk.

Buy shares

Shares are also a good option for small money investments. India is a developing country. Therefore, its corporate sector is also booming. Investing in shares provides huge returns. But it possesses huge risks. The return depends on various factors. Performance of company, the whole economy, market conditions, public sentiments is few such factors. Investment in shares requires good knowledge of these factors. If you don’t have access to such knowledge, better to take the help of an advisor. Through research should be done before any investment. They are very volatile. For example, at the time of onset of COVID-19 lockdown share market fall drastically. It’s a loss situation but after a year it rises at doubled pace.

Small business

Small business, generally home business can be started with a very small investment. The better technologies, online selling, wide reach, and other benefits help small businesses to prosper. Businesses like food delivery, candle making, soap making, bakery, etc. can be started with very low investment. It requires continuous hard work. But it has good earning potential. It is a good option for those with less demanding jobs, housewives, students or retired people, etc.

Retirement plan

There are many schemes for retirement benefits. With small available money, it is wise to secure the future. Investment for securing the retired life is very beneficial. There are many insurance plans, provident funds, ETFs, etc. They help to make the non-earning phase a little less stressful. For many people, retirement is a very difficult stage of life. Make it less difficult by taking care of finances at an early stage.

Recurrent deposits

Recurrent deposited requires periodical investment as installments and gives a compounding rate of returns. It works like a mutual fund. But it does not have risk factors of the volatile market. Almost all bank provides this service. It is a secured way of earning returns. But with low risk generally comes low return. That’s why these deposits yield comparatively low returns. It has penalty charges if you miss depositing any installment. The rate of interest also varies with the duration of the deposit.

Fixed deposit

It is another type of bank deposit. In a fixed deposit, a fixed amount is deposited for a fixed period of time. The rate of interest is decided by the bank. Both principal and interest are either withdrawn or extended as FD upon maturity. It is one of the most common instruments uses by people from all working backgrounds. Fixed deposits are time-bound instruments. But it has a high interest rate as compared to recurrent deposits. Right now, it is not very attractive as interest rates are not much higher than the inflation rate of 5.67 percent.

Informal loaning

You can loan your extra money to your friends, relatives or other known people. It is very risky. It requires proper cautions. There can be chances of losing all money if the person defaults in paying it back. This option is only beneficial when lending the is done to very trustworthy people. But it has a higher rate of return. You yourself decide the rate of return. It definitely provided more interest than the fixed deposit and recurring deposit.

Prepare investment portfolio

The investment portfolio is the collection of different kinds of investments. Start making a diverse investment portfolio. Diversify your investment in different instruments. This mitigates the effect of adverse performance on few instruments with the good performance of others. It provides the stability and risk set off.

How to invest money wisely?

Investment is a very important financial decision. It has life-altering effects on your future. So, this decision requires great attention. You need to be wise enough. It is very important to make a wise investment decision. There are many factors that need to be considered before making any such decision. Investments are done out of hard-earned money. Investment should result in positive returns. Such factors are:

Investment income ratio

Investment should always be 15 to 20 percent of your income. If you can spare more that is a benefit. Income is the base of any investment decision. The source of income can be salary, wages, profits, etc. It can be savings for students. You cannot invest more than you earn. It is only possible by borrowing. Which again increases liabilities. This is not a good investment. It can hurt more than it heals.

Goals

Goals are the main driver of investment. People have goals to achieve at every stage of life. All investment decisions must be aligned with these goals. For example, a person may have a goal of buying a house, buying land, going on a long vacation, etc. All such goals alter the attitude towards investment. Therefore, goals are the nucleus of investment decisions.

Expectations

Every person has some expectations from the investments. For example, higher risk automatically attracts high return expectations. Similarly, there are many other expectations like tax saving, high returns, capital appreciation, etc. Every investment avenue has different outcomes. Therefore, it is very important to align the outcomes with the expectations.

Risk factors

The risk here is the chance of losing the principal money invested. Every investor has different risk-bearing capacities. The investment options range from no risk to very high-risk avenues. Risk capacity depends on income, and it is also a personal choice. It mainly depends on the nature of investors. If an investor can take high risk, chances of enjoying higher returns are also high. Therefore, before selecting the investment avenue, risk factors should be kept in mind.

Age

The age of an investor has a great impact on their investing decisions. People at their young age have fewer liabilities. This helps them to take more risks. Conversely, people in their mid-forties and mid-fifties have different expectations and may take lower risks. The age of an individual helps in shaping their views towards investments. Younger people tend to go for long-term high-return avenues. While the older people go for avenues like retirement plans, insurances, and other lower risk and moderate return avenues.

Marital status

Whether you are unmarried, married, or married with kids has a different impact on your investments. Unmarried people have lesser liabilities thus enjoy more freedom in investments. On the other hand, people who are married and have kids see things very differently. You should consider the upcoming obligation before committing to any investment opportunity.

Market and economic conditions

Market conditions are very volatile. The economy can get affected by various events. Many factors like political instability, policy changes, inflation, depression, epidemic like COVID-19 can have a huge impact on the market. All the investment opportunities work in the market. Therefore, they can get affected by such factors. Before investment, analyze such factors properly. This will help in taking better decisions. You can also seek the help of an advisor in such matters. It is very important to keep yourself updated with what going on in the economic and political environment.

The best way to invest money

There is no one best way of investing money. Every investment option is best for some people and not good for others. The benefits of the investment option depending on the various factors mentioned above. Therefore, the best option for a person having large sums of money can differ from the bet option for a person with little money to invest.

Similarly, a person with a high-risk bearing capacity may invest in high-yielding equity shares while the person with a lesser risk appetite may go for mutual funds. There are many more examples that prove that there is no one best way of investing money. It all depends on your personal factors and expectation. The investment portfolio for every individual is different and tailored for them only.

Where to invest money for a good return?

There are many investment avenues that provide a very good rate of returns. A few of them like shares, mutual funds, etc. have been discussed in the section mentioned above. Some of the other, rater new invention options are available in the market. These provide a high rate of return as well as capital appreciation.

A few of such investment options are:

  1. REITs: REIT is an abbreviation of the real estate investment trust. They are companies that deal in high-income producing properties. They are rather new to the Indian markets. But they provide attractive returns in terms of dividends as well as capital appreciation.
  2. ULIPs: It is an abbreviation of unit-linked insurance plans. They directly depend on the performance of the share market. Thus, they are at risk but provides a great opportunity for wealth creation.
  3. Real estate: If you have a good amount of money to invest in the real estate industry is for you. The investment with a futuristic approach has many benefits. Large sums of money can be earned in the future with the appreciation in the value of such estate. It also provides regular income in form of rent.
  4. IPOs: It is an abbreviation for initial public offer. IPO is the issue of fresh shares. It is a first-time issue in the market. It has a maximum of 10 – 12 days of locking period. You can enjoy the listing profits when the shares got listed in the share market. It involves risk as there may be loss instead of gain. But generally, it provides gain to the investor.
  5. Gold: Gold can be bought with less money, but it will not yield good returns in such cases. It requires a large amount of money. Gold is hovering in its all-time high figures. Investment in gold is very risky in the current scenario. It is advisable to verify all facts and predictions before investing in gold.

Online Money Investment

We are living in the digital era. Everything is online, from buying to selling, booking, etc. In a similar fashion, you can also invest in different opportunities online. The whole share market works online. You can invest in shares, mutual funds, gold bullion, and cryptocurrencies. Every transaction in these is fully online and does not involve any physical interaction. Also, you can make money online by selling goods using various merchant apps available.

You can also make money as a Q&A expert with Chegg India. Chegg India is incorporated providing solutions to various questions in different subjects asked by students around the globe. You can earn online by working here as a subject expert by providing solutions to the problems. You can earn at your own convenience.

Conclusion

Investing money is very important. It helps you to combat the inflationary effect. So, Invest in various options available. Focus on the rise and return factor. Keep investing keep growing. You may also like to explore more ways on earning money online.

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