What is Investment?
Investment in simple terms means saving money for future use. The insurance experts across geographies have stressed upon the need for devising a clear cut strategy in order to get your wealth invested in the right place.
What do the Insurance Experts say?
According to insurance experts, the key to start investing at the right time is not anticipating the right time, but to commence as soon as one gets a job during his early twenties. Although many people start building a real and proper asset portfolio once they have reached their thirties, this time is although bespattered with marriage, having kids and other responsibilities but the goal of having created a fine cushion for oneself in case of financial tweaks should be a person’s top priority.
What are the best investment plans according to insurance experts?
There are a lot of options meted out to the people aiming to invest their money as described by insurance experts. Let us dig deeper into what the best plans have to offer –
Investing in Equity directly
Investing in stocks is the most vulnerable option since the risks attached are high. But if you have a knack for stocks, adopt the stop-loss method to curb your losses and have the patience to wait for long periods; you can be blessed with a glut of returns. Stop-loss method means a prior order of selling a stock at a deemed price is made. You need to open a dematerialized account for the same.
Investing in Equity through mutual funds
Another way of investing in equity is through mutual funds. The returns are largely dependent on the ability of the fund manager to trigger high returns. They are classified according to the market capitalization of the companies that they invest in.
Money Market Investments
Money market investments include investing in Treasury Bills and Commercial Papers and other short-term debt securities. The offered rates of interest are better, and the money is generally insured by insurance authorities making it the preferred choice for investors.
Investing in Government Bonds is a two-way benefit. The issuer of the bond lends his money to the borrower (government or private agencies). These are used by government agencies, municipalities and states to infuse money into operations and projects. A bond comprises an end date, which is the due date for repayment of loans along with interest.
Trusts have been established in various countries that govern the laws about the acquisition of real estate property. The buyers invest in real estate. The common business model for such trusts is that they lease space on rent to commercial businesses, and collect the rent. This rent is the income that is distributed among the shareholders. This option lacks highly in liquidity and getting approvals from regulatory authorities is a tedious process.
Whether it is fixed or recurring deposits, banks are ready to offer safe investment plans that run no risk of ditching the investor or falling short. The interest rates are predefined either on a yearly, half-yearly or quarterly basis.
Having clarity of financial goals for wealth creation is important. Some investments are fixed while others are fluctuating. While keeping in mind factors such as time-frame, taxation and risk factors, a sagacious mingling of both plans is important.