Money & Investments

How to invest money in 2023-24? 6 tips and an amazing guide for newcomers

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The article provides valuable insights and tips for individuals looking to invest their money in 2024-25. It emphasizes the importance of diversification, risk assessment, and long-term savings. Investment options are categorized based on risk and returns, ranging from safe and low-return avenues like savings accounts and government bonds to higher-risk options such as equity-linked mutual funds and property investments.

Additionally, the article advises on the separation of insurance and investment, and the importance of centralized investment management through a Demat account. Overall, it offers a comprehensive guide for navigating the investment landscape in the given time frame.

Planning to invest money in 2024-25? Here are 6 valuable tips and a detailed guide for newcomers venturing into the world of investments.

The cardinal rule when investing your money remains unchanged: “Never put all your savings into one instrument. Diversification is key, tailored to your priorities and risk tolerance.”

For someone new to the realm of financial security through savings, selecting the right investment avenues for optimal and secure returns can be daunting. In today’s market, there’s a plethora of options such as equity (stock market), mutual funds, fixed deposits (FDs), bonds, property, and more. But how does one navigate through these choices?

In recent years, the equity market has experienced significant downturns, gold and silver prices have stabilized, commodities face market uncertainties, and fixed deposits and bonds offer modest returns of no more than 8%, which may not suffice in today’s high-cost environment.

Traditionally, property has been a lucrative investment, yielding average returns of 20% annually. However, it requires a substantial initial investment; even a small plot of a thousand square feet may cost upwards of 30-35 lakhs.

But fret not! By the end of this article, you’ll have a clear understanding of how to effectively safeguard your hard-earned money.

Tip 1: Long-term and consistent savings are imperative for maximizing returns across any investment option.

Tip 2: Before diving into any investment, assess your risk appetite and align your choices accordingly.

To simplify matters, let’s categorize investment options based on risk and returns:

1. Safe and Risk-free | Low Returns but Guaranteed

  • Savings Account: Banks offer savings accounts with interest rates ranging from 3.5% to 6% annually.
  • Recurring Deposit: Fixed monthly deposits for a predetermined term yield interest rates of 7% to 10%.
  • Fixed Deposits (FD): Banks and non-banking financial companies provide fixed deposit accounts with returns ranging from 7% to 10%.
  • Government Bonds: Offering fixed interest rates, government bonds are considered secure investment options. Various types are available, such as liquid bonds, PSUs bonds, and tax-saving bonds.
  • Public Provident Fund (PPF): This government scheme offers a fixed interest rate, presently at 8%, with a minimum deposit of Rs. 500 and a maximum of Rs. 1,50,000 per financial year.
  • Post Office Schemes: Various schemes, including savings accounts, recurring deposits, time deposits, monthly income schemes, and more, are available through Indian post offices.

Avoid treating investment as gambling. Ensure your decisions are backed by a guarantee of favorable outcomes.

2. Low Risk with Good Returns

  • Property: Though requiring a substantial upfront investment, property investment can yield excellent returns based on geographical factors. Due diligence is crucial to mitigate risks associated with fraud or legal issues.
  • Gold & Silver: Investing in physical gold or silver, particularly in non-jewelry forms, can serve as a viable investment option. However, the high making charges associated with jewelry may lead to losses upon resale.
  • Mutual Funds: Certain types of mutual funds, such as those investing in government bonds or fixed deposits, offer low-risk investment opportunities with moderate returns.

Tip 4: Begin with small savings, gradually reinvesting in property, particularly in plots or commercial spaces. Consider flats or apartments only if you plan to reside there.

3. High Risk & Higher Non-guaranteed Returns

  • Mutual Funds (Equity Linked): While high-risk equity-linked mutual funds have delivered substantial returns in the past, they come with volatility and uncertainties. Systematic Investment Plans (SIPs) offer a disciplined approach to investing in mutual funds.
  • Unit Linked Insurance Plans (ULIP): Combining insurance protection with investment opportunities, ULIPs allocate a portion of the investment towards life cover and the remainder into funds investing in stocks or bonds.

Tip 5: Distinguish between insurance and investment. While life cover is essential, consider mutual funds for investment purposes.

Additionally, equity trading, forex trading, and commodity trading offer avenues for higher returns but require expertise and carry substantial risks.

Tip 6: Centralize your investments by opening a Demat account with your bank for ease of tracking, withdrawal, and fund transfers. Be proactive in reallocating funds from equity to balance or debt in times of market uncertainties.

By adhering to these tips and guidelines, you can navigate the investment landscape of 2024-25 with confidence and prudence.

Note: Please do not invest your money in any institution or company not authorized by the government like chit funds & BCs where your money is unsecured or you don’t earn interest.

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I am lucky enough to reside in the vibrant city of Mumbai, India with my wife and two beautiful children. My kids are the apple of my eye, always keeping me on my toes with their playful and mischievous nature. They truly are the greatest gifts that God has bestowed upon me! I have a great passion for Digital Marketing techniques and I relish any opportunity to share my thoughts on the subject. Writing has become a beloved pastime of mine, allowing me to share my knowledge and entertain my audience through blog posts and stories. When I'm not busy working or writing, you can find me indulging in a variety of sports, including table tennis, badminton, carrom, and of course, cricket. These activities help me to stay active and maintain a healthy lifestyle, which is crucial to me.

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