8 Best Investments For Any Age Or Income

“If you don’t find a way to make money while you sleep, you will work until you die.” – Warren Buffet.

And what’s a better way to make your money work than investing it?

Most would argue that investing is easier said than done, especially when the market is flooded with hundreds of investment options.

A large section of people falters when it comes to selecting routes matching their investment intent.

The first cue that one must follow is to weigh in their age, present obligations, and investment horizon before deciding.

For instance, if you are young and do not have any significant financial commitments, investment plans with a high risk-reward quotient may suit you more than conservative investors or those nearing retirement.

On that note, let us quickly take a look at some of the best options in India.

Top 8 Investment Instruments For You!

These are among the top instruments of investment in India for every age and income group –

• Stocks

Stocks or securities represent a share of ownership in a company. Investing in shares accompanies high risk and reward as a stocks’ performance depends entirely on the company. This makes stocks one of the riskiest investment avenues in India. Generally, individuals with solid market knowledge and high-risk tolerance prefer investing in stocks.

• Equity Mutual Funds

Ardent believers of “Don’t put all your eggs in one basket.” may find equity mutual funds more suitable and a safer investment choice. Typically, equity funds invest at least 65% in equities and involve high risk and reward quotients. 

Based on your investment objective and risk profile, you can invest in any of these equity funds – small-cap, mid-cap, large-cap, ELSS, etc. 

• Debt Mutual Funds

If capital preservation is your primary goal, debt funds should be a good choice. These funds invest a significant part (at least 65%) of their assets in debt instruments. They provide stable returns and expose an investor to low to moderate risks. 

Liquid funds, gilt funds, overnight funds, ultra-short duration funds, and fixed maturity plans are some popular examples of this investment option.

• Hybrid Funds

Love the idea of getting the best of both worlds, i.e. low risk and high returns? You can check out hybrid funds that follow 60:40 asset allocation to debt and stocks based on your investment goal and risk appetite. Conservative funds, balanced funds, arbitrage funds are some standard picks in this category of funds. 

• Government Bonds

They are debt-based investment options where you will be lending money to the government in exchange for a fixed income paid on maturity. The government relies on such bonds to raise capital. Sovereign-backed, these bonds come with a low-risk quotient.

• PPF, or Public Provident Fund

Given that the government guarantees the returns on this fixed income programme, it can be said to be a risk-free investment.

Among its attributes are:

Availability

1. Accessible at practically all banks and post offices in India.
   There is a single account limit.
2. Age is not a factor in determining who can open an account. Up to the age of 18, a minor’s guardian manages their account.

Investment Amount

1. The annual minimum investment amount is 500 INR.
2. The annual maximum is INR 1.5 lakh.
3. In a fiscal year, you may deposit one time up to twelve times.

Profit from Investment
Currently, the annual interest rate is 7.10%.
The fact that PPF interest rates are variable means they could alter on a quarterly basis. In general, the interest rate change ranges from 0.25% to 0.75%.

Maturity
A PPF fund reaches maturity after 15 years.
After five years from the date the account was opened, partial withdrawals are permitted.

Taxation
PPF investments are tax-free.
Your investment’s interest income is likewise tax-free.

• Post Office Monthly Income Scheme

The post office monthly income programme is well-liked in domestic settings, particularly among housewives and anyone wishing to invest passive money to generate returns.

Availability
The Indian postal service offers single accounts, joint accounts (up to three people), accounts under the names of minors over 10 years old, guardians or parents of minors, and accounts for disordered minds.

Investment
A minimum deposit of INR 1,000 is needed to start an account, while INR 4.50 lakh and INR 9 lakh are the maximum balances allowed for single and joint accounts, respectively.

Maturity
The account may be closed five years after it was first opened. Premature closure, however, is not permitted before the year. Similarly, if the account is closed between one and three years, 2% is subtracted from the principle, and between three and five years, 1%.
If the depositor passes away prior to the maturity period, nominees may submit a claim.

Return on Investment
The programme offers a 6.60% annual interest rate that is payable on a monthly basis.
The depositor’s savings account may automatically receive the interest payment or it may be cleared electronically.

Taxation
Deposit interest is subject to taxation.

• High-yield savings accounts

Savings accounts provide a little return on your money even though they are not officially investments. The greatest yielding options may be found online, and if you’re prepared to look at rate tables and comparison shops, you can obtain a little bit more yield.

In order to: You can never lose money in a high-yield savings account, therefore it is absolutely safe. The majority of accounts are government-insured up to $250,000 per account type per bank, so even if the financial institution collapses, you will still be compensated.

Risk: Cash doesn’t lose value in terms of dollars, but inflation can reduce its ability to buy things.

Accounting for money markets
A money market account may resemble a savings account in terms of how it operates and the features it offers, such as a debit card and interest payments. The minimum deposit for a money market account could be greater than for a savings account, though.

Why Invest?
Money market account rates could be greater than those on comparable savings accounts. Additionally, you will have the freedom to use the money as you see fit, even though the money market account, like a savings account, can have a limit on your monthly withdrawals.

Risk: The FDIC offers guarantees for money market accounts of up to $250,000 per depositor per bank. Therefore, there is no risk to your principal with money market accounts. The cost of having too much money in your account and not generating enough interest to keep up with inflation, meaning you could lose purchasing power over time, is possibly the biggest risk.

• Certificate Of Deposits (CD)

It is a savings account where investors invest a fixed sum of money for a specific period. In exchange, issuers pay interest to investors. On redemption, investors receive the invested sum of money along with the interest income it accrues.

• Fixed Deposits

Investors with a conservative outlook towards investment plans may find fixed deposit schemes a viable option. FD schemes help generate higher returns than a savings account but associate zero market risks. These require investors to park a lump sum amount in the FD account for a specific period, which accrues interest. These schemes come with a maturity period and may allow premature withdrawal on certain conditions. 

• Alternative Investment Options

If stocks, bonds, or bank deposits don’t pique your interest, you may look into alternative means of investing like invoice financing. As invoice financing is gaining popularity in the business community, the demand for investors is high, and so is their growth scope. 

Typically, investing in a company invoice is a short-term endeavour that may stretch up to 90 days and be an effective means of diversifying your portfolio. These invoices are pre-vetted and drawn primarily against large corporates. Thus, investors are exposed to minimal risks. Furthermore, this option offers high returns in the short-term, ranging from 12% to 20%.

Bottom Line

Investments can turn out to be quicksand for those who don’t have a proper grasp of its fundamentals. So, to navigate through the highs and lows of it, gain an insight into things like your investment goal, risk-taking capability, and time horizon. 

Above all, make sure to dedicate substantial time towards studying the market, trends, and factors that influence its movement. As Benjamin Franklin said, “An investment in knowledge pays the best interest.” So, put your knowledge to the test and pick investment options that suit your profile the most.