Saving money and investing in right direction is the best way to create passive income in future. We need corpus which will create regular income in future when we don’t work. So it’s important that every month we should save good amount of money so the corpus should grow and this saved money need to be monthly invested in some investment options so corpus grow at faster pace.
First we should understand behaviour of investment as this will only decide our destiny and paved way for achieving required corpus in right duration.
Type of investments are as under
- Secured Investment.
- Medium Risk Investment
- Risk Investment
Based on our age we can chose option. As our age grow our risk taking capacity will reduce. Also we should see in which type of investment we are comfortable, sometime investing in risk type investment options may give mental stress.
All the three invest types will give different type of returns. As much risk is more the return will be higher. If we start investing money at early age, the option for risky investment will be more advisable, as if we lose some money it can be earn.
Secured Investment –
Secured Investments are those investments where returns are less but the investments are secured. End of the investment tenure you will get the money which can be further re-invested in secured investments where ever returns are comparatively higher. A small amount starting from Rs 500/- can also be invested in secured investment schemes. Few are the secured investments options are as below where investments are almost secured.
- Public Provident fund ( PPF )
- Provident Fund ( PF )
- Bank Fix deposits ( Nationalised & Reputed private banks )
- Bank recurring deposit ( Nationalised & Reputed private banks )
- Post office recurring deposit
- Post office National Saving Scheme ( NSC )
- RBI Bonds
- Other post office schemes
Few investment schemes like PPF, PF where limited amount can be invested and few are open for un-limited investment. On our monthly income we can invest some amount on recurring and other savings can be invest in schemes where unlimited amount can be invested.
In all schemes if lock in period is more than the returns are higher as interest will also be compounded. Compounding has immense power which can multiply our saved money.
Medium Risk Investments –
Medium risk investment where little risk are involved but it will give more returns than the secured investment options.
- Mutual Funds
- Bank Fix Deposit ( Small / Co-operative Banks )
- Corporate Bond
Mutual Fund – Mutual funds are less risky than the investing directly in stock market. In mutual fund, the fund managers are investing in thousands stocks and average income they are distributing to mutual fund investors.
Small Bank Deposits – Many small and co-operative banks are offering higher interest rate on fixed deposits. It is secured at certain level depending upon bank performance. Before investing in small banks credential need to be checked and some amount should be invested in these banks.
Corporate Bonds – Many big companies are selling their bond to collect fund for investing in their business. These bond are offering higher interest rate for fixed period. Before investing in corporate bond, the credential, credibility, performance and specially rating of the company need to be checked. Although these all are precautionary measures which can minimise the risk.
Property – Property is good investment but it need big amount to invest. Very less chances where less amount can be invested. Also it is for longer duration and taking out money in such investments will take time. Property investment in form of flat, plot, Bungalow, agriculture land, commercial offices/ shops etc.
Risk Investments –
Risk investment where risk are very much involved but it can also create best returns and enhance the investment very faster but same time even whole investment is on risk.
- Stock Market
- Giving loan to individual
- Investing in others business ventures
- Start your own business.
Stock Market – Stock market is one of the option where returns are higher, but same time chances of loosening money is also very high. Stock market is offering intraday trade and normal trade. In intraday trade the stock can sell and buy in same day. In normal trade the stocks can be purchased and can be retained and can sell in future. The stock can be purchased in demat form by opening demat account is bank or institution those are dealing into trade like Banks, Sharekhan, Motilal Oswal etc. Stock market is not in our control hence investing money is at higher risk can hammer on our hard earn money. So limited amount recommended for investment.
Giving Loan to individual – We can give loan to well-known person or friends who can return the money in time with agreed interest. As these kind of loans are for shorter time hence the returns are high but as most of the time there loans are giving without documentation hence are more risky. In business market many businessmen are looking for such kind of loan on short term basis which they are utilizing for their business. If we have such reliable people how is looking for such loan can give us best returns sometime 3-4 times of bank interest. Making base of such kind of group can give best returns. But money will always on risk. So small amount can be invested.
Investing in others business ventures – Many people has good business idea which can generate good amount of profit but they don’t have money for investment. If we will invest in their venture it can be very much profitable. The terms of profit sharing should be decided at initial stage and it should be properly documented so the risk can be minimised.
Start your own business – Starting your own business need investment and your time. Business is little risky as at initial stage we need to invest and another few months it need more investment to meet monthly overhead. In business generally we are doing good investment at initial stage & further for to meet monthly overhead. After getting in, getting out may lost your bug chunk of money. Hence which starting the business the total risk can be determines in case of failure.
We need to see in what type of investment is good suits our mind set as most of us will depressed while loss of money. If you are not comfortable then secured investment or medium risk investment options are the best option. In longer duration like 20-25 years secured investment will create good amount corpus for financial freedom due to compounding of interest. This will gives us peace of mind.