When planning your investment strategy, it’s crucial to consider the advice of a reputable financial advisory service to align your choices with your unique financial goals and risk tolerance.
Investment Plans: A robust investment plan can help investors meet their financial goals and help them generate substantial wealth. Usually, investors are recommended to factor in their financial goals, investment horizon, and risk appetite to develop a suitable investment plan.
The majority of people start by classifying their objectives as either long-term mid-term, or short-term. Assigning time frames against their goals helps them pick investment instruments that are most suited. Read along to understand which investment plans are best suited for each category of investment goals and navigate them for better planning. high net worth investment advisors often recommend a judiciously diversified portfolio for individuals with long-term financial goals, such as building a corpus for retirement or a child’s education. This strategic approach helps investors navigate the intricacies of high-yielding volatile options, spreading out risks and aiming for inflation-adjusted returns over 7-8 years.
Investment Plans Instruments for Your Short-term Goals:
Typically, those who have surplus money at their disposal for a short period often feel comfortable investing it for the short term, say 1-2 years. They seek out high-yielding investment options to generate substantial returns in those times. Based on one’s risk profile, individuals have an array of short-term investment plan to choose from.
Debt Funds:
These investment options encompass schemes like money market funds, ultra short-duration funds, and liquid funds and are designed to generate yields for the short term. Most of these options accompany a low risk-reward quotient and offer investors better accessibility to their capital amount. This particular trait is usually not found in traditional savings options like a fixed deposit. They come with a low risk-reward quotient and offer better accessibility to one’s principal investment than other traditional savings products like a fixed deposit.
Fixed Deposits:
Individuals who are looking to park their money into safe investment options for the short term often go for fixed deposits. What makes fixed deposits so popular in India is their zero exposure to market-linked risks. This ensures individuals that their capital will remain safe and they will earn a steady return on their investment. However, individuals should note that while the returns on deposits are assured they are often not enough to beat the inflation.
Moreover, individuals have to pay a hefty penalty to withdraw their capital before a lock-in period. The existence of a lock-in period limits fixed deposit’s liquidity significantly. Regardless, being a safer investment option it still attracts a lot of investors each year.
Individuals who are interested in parking their money into fixed deposits for the short term can use an online fixed deposit calculator to understand what to expect from the plan and how they can maximize its benefits.
Investment Plans Instruments for Your Medium-term Financial Goals:
Mid-term investment goals are those that can be achieved within a time frame of 3-5 years. Some common examples of mid-term goals include saving up for a down payment for a home loan/car loan, planning a wedding, planning a home or office renovation, and more.
Typically, mid-term investment plans are known to offer substantial returns that can help beat the impacts of inflation. A few mid-term plans also do not expose investor’s portfolios to market volatility.
Post Office Time Deposit:
This particular investment option allows investors to park their money for the mid-term. However, they come with a fixed period. Such plans are known to provide investors with higher returns than most banking institutions. Post Office Time Deposit is one of the most popular government-backed schemes and the risks that entail it are also quite limited.
Debt Funds:
Investors should note that there are 16 categories of debt funds available in the market and they come with varying risk-reward components. Some of the most popular dent mutual funds in the market today are banking funds, corporate bond funds, PSU funds, and short-duration funds. Based on one’s requirements and risk appetite, individuals can pick a debt fund that suits them the best for the mid-term. They can also use an investment calculator to estimate the returns they can expect at the end of their holding period.
Hybrid Funds:
This type of mutual fund tends to park money into multiple asset classes. The most popular type of hybrid funds tends to put money into both debt and equities, whereas other lucrative options opt for real estate and gold. Hybrid funds are known for the stability they bring thanks to their debt instrument components and the overall growth potential courtesy of equities. Collectively, they ensure investors have a perfect blend of safety and returns by the end of their holding period.
National Savings Certificates:
This particular instrument is also a post office savings plan and is backed by the government. Typically it functions like a 5-year fixed deposit plan and also has a lock-in period. While National Savings Certificates offer depositors an annual interest income at a pre-specified rate, the entire sum is paid to them only at maturity.
Term Deposits:
When crafting an investment plan tailored to short-term financial goals, individuals often seek stability and security for their surplus funds. One such option is term deposits, which provide a safe haven for investors looking to park their money for a fixed period. Term deposits, commonly known as fixed deposits, stand out for their zero exposure to market-linked risks, ensuring the preservation of capital while offering a steady return on investment. to know more click this link.
Investment Plans Instruments For Your Long-Term Financial Goals:
These goals can be defined as those that can be accomplished in 7-8 years. These goals can be anywhere from building a corpus for retirement or a child’s education or saving up for purchasing a house. Many investors prefer high-yielding volatile options to park their money in when looking for investment options for the long term. This is because staying invested for the long term helps them to spread out the risks involved and also helps them to generate inflation-adjusted returns.
Direct Equity:
This investment option is regarded as a popular means to generate wealth and build corpus to meet long-term goals. Direct equities typically park money in company stocks and help to reap benefits in the form of profits and dividends.
Equity Mutual Funds:
These funds carry relatively fewer risks than direct equities and help diversify one’s investment portfolio. However, equity Mutual funds invest money most into stocks, and the same is maintained by professional fund managers.
Public Provident Fund (PPF):
This government-backed investment instrument guarantees assured returns to individuals, making it a safe savings plan for many. PPF exposes an individual’s portfolio to little marketing volatility which makes it a safe choice. However, it generates lower returns when compared to most market-linked investment instruments such as mutual funds, stocks, and National Pension Scheme (NPS).
National Pension Scheme:
This long-term investment product is considered to be a viable option for retirement plans. It is essentially a market-linked voluntary contribution scheme and is regulated by the government of India. It allows individuals to park money into different asset categories such as corporate bonds, equities, government bonds, and corporate bonds.
NPS allows investors to choose the percentage of money they wish to park in different asset classes. This helps them plan their investment as per their risk appetite. Subscribers of this scheme are also entitled to avail of NPS tax benefit under Section 80 CCD(1).
Unit-Linked Insurance Plan (ULIP):
This long-term investment option combines the best of insurance and investment. The scheme allows investors to invest money in bonds and equities, allowing them to build a strong corpus. Another part of their investment is made toward the investment component of the scheme.
This helps them to avail of financial coverage and save up for their future. However, it should be noted that ULIPs come with a lock-in period of 5 years, during which investors cannot dip into their accumulated funds.
Regardless of one’s financial goals and which investment instruments one opts for, one should weigh their risk-taking capability to develop a suitable investment plan. This will help them achieve their goals while exposing them to a level of risk they can stomach.
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Conclusion:
This article explores the wide range of investment options designed to fulfill various financial goals across different time horizons, including short-term, medium-term, and long-term objectives. When planning your investment strategy, it’s crucial to consider the advice of a reputable financial advisory service to align your choices with your unique financial goals and risk tolerance.
Selecting appropriate investment tools hinges on aligning them with your risk tolerance and financial aspirations. A judiciously diversified investment portfolio stands as your key to realizing those fiscal objectives, all while mitigating potential risks.
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