Today’s topic is on the current market scenario going on around the world, global turmoil. Here I will be highlighting on various ways on how to protect your corpus thus staying invested. The outlook of the world has changed in the past few months. Novel Corona-virus, along with other factors like the stock market crash, crude oil crash, recession, etc. have contributed to the global meltdown. But yes, definitely there is always a ray of hope in the worst of the scenario.
What is investment?
Investment is an act of putting your money into something that will generate your profit/income in the future. This something can be either bank FD’s, post office deposits, mutual funds, stock market investment, provident funds, real estate, government bonds, etc.
To enjoy a comfortable future, investing in the present is very essential. Frankly speaking, investment is considered an extra source income, which can be further accumulated to meet some future uncertainties or help fund your retirement or even help for a new startup business in the future. All above, investment is considered as an add-on to our current income generation their-by increasing our purchasing power with time and hence meeting our financial goals.
Investment can be divided into 2 categories- financial and non-financial assets.
1. Financial assets
They are the assets which are highly liquid and easier to value. Some example of the same, cash, stock, bond, mutual funds, PPF, bank FD’s, etc.
2. Non-financial assets
They are the assets that derive their value from physical attributes. They are tangible assets like land, building, vehicle, equipment, etc. They are not available for trading on the financial market.
You may also like 20 Business Ideas during the lockdown
Here is a list of 10 investment opportunities one can look forward to staying invested.
Stock market trading:
In India, we have two popular exchanges, BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). Opening a share trading account with any of the brokerage firms will provide us with an online platform to do share trading. Investing in shares seems to be a little tricky. It has been proven with time that short term trading is riskier than positional calls. It’s also difficult to pick the right stock and tame the market.
The risk of losing a considerable portion of your investment is very high unless one remains extra cautious and accordingly looks for proper entry and exit points followed by a stop-loss order. However long positional calls along with sector diversification are the key to success in share trading.
You will love reading 10 Easy Ways to Create a Secondary Income Source
Mutual funds:
Mutual funds are basically managed by fund managers. A mutual fund is a common pool of funds in which you contribute and thus become part-owner of the fund. The fund manager according to your choice of fund type puts your money in stocks, bonds, money market instruments, and other assets. Based on asset type there are 3 types of funds.
- Equity fund
- Debt fund
- Hybrid fund
The return from mutual funds is highly dependent on the fund manager’s efficiency to pick the right stock and percentage of investment in different sectors, thus generating a high return. One can either look for lumpsum or SIP (Systematic Investment plan), mode of investment.
National Pension Scheme (NPS):
NPS is a government-sponsored pension scheme launched in January 2004 for government employees only. Later on, it was open for all the citizens of India who are in the age bar of 18-65 in the year 2009. It is a long-term retirement-focused investment option managed by PFRDA.
The minimum annual contribution is Rs. 1000 and maximum no limit. On retirement, one can withdraw a part of the fund in a lump sum and use the remaining fund to buy an annuity and avail the benefit of regular income after retirement. Besides this a deduction for investment up to Rs. 50,000 is available under section 80CCD(1B).
Public Provident Fund (PPF):
PPF is a tax saving instrument introduced by the National Savings Institute of the Ministry of Finance in 1968. A person of any age can open a PPF account. The minimum contribution in a year can be Rs. 500 and the maximum are Rs. 1,50,000. PPF attracts income tax deduction under section 80C for the amount invested subject to the maximum limit of Rs. 1,50,000 a year. PPF has a lock-in period of 15 years. One can though withdraw 50% of the PPF amount after 5 years and the withdrawals are tax-free.
Bank Fixed Deposits (FD):
Bank fixed deposits are considered a much safer option as compared to equity and mutual funds. The interest rate earned is fixed depending upon the option opted like monthly, quarterly, half-yearly, yearly, or cumulative interest payment. Under the Deposit Insurance and Credit Guarantee Corporation (DICGC), each depositor is insured up to a maximum of Rs. 5,00,000 for both principal and interest amount. This change has come in effect from February 4, 2020, prior to this the coverage was maximum of Rs. 1,00,000 on both principal and interest amount.
Unit Linked Insurance Plans (ULIPs):
ULIPs have a wide range of benefits associated with it along with joint benefit of investment and insurance. They are best known for their tac benefits and considered one of the ideal investment options.
Senior Citizen Saving Scheme (SCSS):
SCSS is a government-sponsored saving scheme for senior citizens or early retirees. The scheme was introduced in 2004 for safe and secure income to senior citizens post-retirement. In order to open the SCSS account, one needs to visit either the post office or bank branch. The minimum amount to open the account is Rs.1000 and maximum is Rs. 15 lakhs. SCSS account has a maturity period of 5 years and can further be extended for 3 years after maturity.
The interest earned is fully taxable but a senior citizen can claim a deduction of up to Rs. 50,000 in a financial year under section 80TTB. Further, investment done under this scheme qualifies for section 80C as well.
Pradhan Mantri Vaya Vandana Yojana (PMVVY):
PMVVY scheme is for senior citizens above 60 years of age. The scheme is available until March 31st, 2023. The maximum amount that can be invested in the scheme is Rs. 15 lakhs and the tenure of the scheme is 10 years. The scheme offers an assured return of 7.4% per annum. The scheme offers guaranteed payment of pension either monthly, quarterly, half-yearly, or annually. The minimum pension amount is Rs.1000 and maximum is Rs. 9,250 per month. Return from the scheme is taxable as per existing tax rates.
Real estate:
Real estate is a property that consists of land and building along with natural resources like, land, crops, water, something immovable. Real estates are of 4 types,
- Residential Real Estate
- Commercial Real Estate
- Industrial Real Estate
- Land
The value of the property is highly dependent on the location of the property and thus accordingly earn the rent. Real estate investments deliver us returns in 2 ways. Capital appreciation and rentals. Real estates are highly illiquid and require a lot of regulatory approvals.
Learn the ways Getting Rid Of Debts
Gold:
Gold is a shining yellow metal which probably lures everyone. Currently, gold is priced at Rs. 44,750 for 10 grams. Gold can be purchased in the form of jewelry but it attracts making charges in the range of 6-14%. Now a day’s banks are selling gold coins as well. Another alternative is vis paper gold which is much more cost-effective, popularly known as gold ETF. Here the buying and selling of gold happen through the stock exchange (NSE or BSE) with gold as the underlying asset. Sovereign gold bonds and gold mutual funds are the other two ways of investing in paper gold.
Conclusion
Lastly to conclude would like to suggest that the above-mentioned investment tools are either financial market-linked options or fixed income return options. The one linked with financial market though provides high return but at the same time are risky. Market linked tools are said as high risk and high return options.
A fixed income option gives you a fixed return on your accumulated wealth and is comparatively very less risky. Considering the future, one must look for both the investment options keeping in mind the risk, taxation, and time factor. Hence diversification is the key to success, generating you a high return on thoughtful picking of investment options.
After reading your article, it reminded me of some things about gate io that I studied before. The content is similar to yours, but your thinking is very special, which gave me a different idea. Thank you. But I still have some questions I want to ask you, I will always pay attention. Thanks.
Thank you for your sharing. I am worried that I lack creative ideas. It is your article that makes me full of hope. Thank you. But, I have a question, can you help me? https://www.binance.com/pl/register?ref=PORL8W0Z
Your article helped me a lot, is there any more related content? Thanks! https://accounts.binance.com/en/register-person?ref=PORL8W0Z
Can you be more specific about the content of your article? After reading it, I still have some doubts. Hope you can help me. https://www.binance.com/sl/register?ref=WTOZ531Y
Thank you very much for sharing, I learned a lot from your article. Very cool. Thanks. nimabi