A beginners guide to the most popular investment avenues
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
While we receive several life lessons during the course of our lifetime, including how to earn and manage our money, an important lesson often gets left among them - investing our money. Never before have there existed as many varied avenues of investment as there are in today’s world. Whether it be for the purpose of fulfilling a short term requirement or a long term need, some of the best investment options are available to meet a specific investment goal.
However, while this variety of investment avenues offers us all the more options to choose from, it can also prove to be quite overwhelming if you are a beginner to the world of investment. While every investor has a unique background, objective and risk tolerance, there are a few tried-and-tested options in the market that serve the needs of a wide variety of individuals.
Popular Investment Options for Beginners
If you are a beginner looking to make a reliable investment, it might be a good place to start by reviewing the most popular investment options in the country. Here is a guide to help you along the way:
Life Insurance Plans:
Life insurance plans are essentially an agreement between the policyholder and the insurance provider whereby if the insured dies during the course of the policy, his or her beneficiaries will receive a predetermined amount of money from the insurer. In return, the policyholder is required to pay a specific sum, called a premium, on a regular basis for a certain period of time.
Life insurance plans are often considered an essential investment because they help safeguard the financial future of your loved ones in the unfortunate event that you pass away or suffer a disability. These plans can come in many forms, each with their own features. Some offer insurance for a short period, while others offer life cover with guaranteed benefits and an option for life long income.
ULIPs, or Unit Linked Insurance Plans, are essentially a type of insurance policy, but one that has the additional benefit of wealth creation. When you invest in ULIPs, the premiums you pay for the plan are directed partly towards providing you with life insurance coverage and partly towards an investment fund. As a ULIP investor, not only do you get to choose the type of life cover you want but also the type of investments you wish to make - equity, debt or a mix of both. It is because of this dual benefit of insurance and investment and the flexibility of choice that ULIPs are easily considered one of the best investment options for beginners.
Public Provident Fund:
The Public Provident Fund, or PPF, is a government-backed investment instrument that serves the purpose of both accumulating long-term savings as well as providing tax benefits. PPFs are typically considered a popular investment option in India because they are accompanied with the safety of being a government-run scheme. While it is not the most liquid investment option in the market, the tax benefits offered by a PPF make it one of the most desirable.
Fixed deposits have been and still remain a popular investment option, particularly among older generations. When you invest in a fixed deposit, you essentially place a lump sum of money into an FD account for a fixed period of time and at a fixed rate of interest. The appeal with fixed deposits is primarily that it offers higher rates of interest than savings accounts and is relatively low risk. However, it is important to note fixed deposits are not as flexible as several other investment options in the market and its interest rates can often be matched by other types of instruments.
National Pension Scheme:
Another popular government-backed investment option in the market is the National Pension Scheme, or NPS. NPS is essentially a voluntary defined pension scheme. This means that although there is an annual minimum requirement, you voluntarily choose how much to contribute to the scheme in order to save for and receive a pension upon retirement.
Now that you have a better perspective on the most popular investment options in the country as well as what purpose they serve, you can make your choice by considering your own goals. Some of these options are indeed more versatile than others, benefiting the investor in more ways than one.
For instance, HDFC Life Click2Wealth offers the option of focusing mainly on wealth creation with Invest Plus optionor securing your spouse and children’s future with a Premium Waiver option Moreover, it also offers the option to focus and save for your post-retirement life with the Golden Years Benefit option that provides life cover till 99 years of age. Get started on your investment journey with this versatile ULIP investment from HDFC Life today.
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