5 best investment options to build wealth without taking too much risk
Financial planning is yet a low precedence for most of the people as they observe it to be a complicated task. It is true that everybody wishes to amass extra money, in addition to their regular income.
Financial planning is one of the most crucial tasks and it is similar to monthly or annual budgeting. It is known that financial planning concerns not only an individual’s present needs, but it also considers his/her future requirements. But financial planning is yet a low precedence for most of the people as they observe it to be a complicated task. It is true that everybody wishes to amass extra money, in addition to their regular income. For such cases, investing the money in some best investment options can prove to be useful. Let’s have a look at a variety of such options to amass wealth without taking a high risk:
1. Mutual Funds:
Mutual funds are known to be a perfect investment vehicle for an individual who is a novice in the field of investment. This investment option is convenient for people of every age. It is known that mutual funds can be selected depending on financial goals of individual and the investments are made easy into monthly SIPs (systematic investments plans). An advantage that mutual funds offer over more conventional instruments is the lack of a lock-in period. The advantage provides consumers the convenience to redeem money anytime they need. In addition to that, other benefits comprise of portfolio diversification, professional manage-ment, transparency, liquidity, and cost-effectiveness. Making an investment in the appropriate mutual funds can incur finest possible returns.
One of the major reasons why people go for this option is that investment in mutual funds is basically a kind of expert management with low risk. Many people prefer this option because they usually do not have sufficient expertise or time when the matter comes to managing their portfolio. In simple terms, a mutual fund is one of the best investment options because it is an expert management of people’s money in absence of any kind of risk.
2. The National Pension System (NPS):
The NPS (The National Pension System) is essentially a Government-sponsored pension scheme as well as a prevalent saving tool. This investment option is known to be an easily accessible, flexible, tax-efficient, low cost, and handy retirement savings account. The prime benefit of NPS is that it assists people serving in unorganized sectors to make preparation for retirement. It is known that NPS offers tax-free withdrawal up to limit of 40% of the retire-ment amount (for a period of 60 years), and along with that, it provides an additional tax ben-efit worth Rs 50000/- over and above Section 80(C).
3. Employee Provident Fund (EPF) and Public Provident Fund (PPF):
EPF (Employee Provident Fund) and PPF (Public Provident Fund) are recognized as long-term investments that are advantageous for an individual post-retirement. If you are planning to accumulate wealth on a long-run, in absence of risk, then go for this investment option. The option is found to be extremely safe and promise guaranteed returns at 8.5 %( EPF) and 8% (PPF) annual interest, respectively. The investment option works with an aim that investing small amounts at present will make for a huge amount by the time of retirement. In addition to interest, an EPF also guarantees a considerable growth during the maturity period. PPF assists individuals with low earning potential because a minimum deposit is only Rs 100/-. You can open it at any branch of designated banks, the Post Office, and financial institutions.
4. Investment of capital in bonds:
Bonds are one of the best investment options and also they are one of the most favorite kinds of investment solutions for the investors till now. Presently, government and different businesses issue certain bonds with the purpose to raise certain funds from the investors who purchase them. An investor can choose from wide variety of bonds. There are certain bonds which provide regular interest to its investors whereas some bonds promise principal back after the bond gets matured. The decision entirely relies on the investor to choose the kind of bond he wishes to invest in.
Investors usually find it as an easy option because they need not pass through much hassle for getting their hands on the desired bonds, whether it corporate one or the bonds that are issued by the government of the particular country. Furthermore, investing in the bond is known to be the finest aspect for those people who have already retired from work and could not afford to lose their savings. For them, bonds permit to keep their money secure.
5. Investment in real estate:
Investment in real estate is the best if you wish to put your saving to some use. Out of many investment solutions, this is one of the best investment options because of its trend and ben-efits offered. Investment in real estate is something people usually have been doing for many years. You can purchase an apartment or house and rent it out so that they can avail regular income.
Making an investment in real estate comes with benefits of shelter and security for future. There are many reasons for this. Purchasing a house is an approach of securing your money as well as your future. People usually think of the long-term benefits i.e. while they will be in their middle age the house would assist them financially with the rent and while they will be old, they can live in it.
In addition to these, investment in real estate assures to generate cash flow. Presently, there is a trend that people usually purchase a house and then rent out its basement. Out of all the options, this one is the smartest way of earning from your house when you are still living in it. Purchasing real estate surely brings a sense of security because the prices of real estate property do no vary as compared to several other investment solutions. You can certainly sell the real estate property whenever you prefer to make an investment in something bigger.
People usually prefer to go for low-risk options while investing their capital to build wealth. Based on your capital, preference and future goals, you can go for any of these investment options.