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8 Places To Invest From Your Monthly Salary In India

8 Places To Invest From Your Monthly Salary In India

If you are a salaried person and don’t know how to DIY your finance, Don’t worry you’re not only one. To achieve financial freedom if you have salary of ₹25,000 in India

Yes, you can achieve financial freedom if you have ₹25,000 salary in india

To start with you have to make portfolio of investment which will help you in your retirement and live life full of money

  1. MUTUAL FUNDS

1) This option involves investing money in market securities.
2) These securities are issued on a yearly or monthly basis by organisations seeking to raise cash.
3) This option can provide you rates of return ranging from 8% to 9%. This investment option can provide high returns in a short period.
4) However, the returns from this option are not guaranteed and depend on market fluctuations.
5) You can choose to invest in various types of mutual funds, like diversified funds, gold mutual funds and more.
6) Choosing to invest in SIPs on a monthly basis may be the most prudent option for you.

2) Invest in Insurance

Unit Linked Insurance Plans (ULIP)

Unlike Insurance policies, a Unit Linked Insurance Plan (ULIP) is a product offered by insurance companies that gives an investor both insurance and investment option under a single integrated plan. The investors looking for secure life plans and earning secure returns can opt to invest in ULIPs (Unit Linked Insurance Plan). Under a ULIP, the investor or policyholder can pay the premium either on a monthly or annual basis.

Similar to other insurance plans, the investors are supposed to pay an yearly premium in favor ULIP. A part of this premium is used for providing insurance cover and the rest of the amount is invested in the fund (Equity, Debt or Hybrid) chosen by the policyholder. The beneficiaries will get insurance cover or the market fund whatever is higher based on the chosen ULIP plan.

Aggressive and conservative investors can invest in either equity or debt oriented plans, respectively. While traditional insurance plans are known to offer returns of 4%-6%, Unit Linked Insurance Plans can offer you returns in double digits, specifically if invested in equity funds.

Who should invest in ULIP:

  • Investors seeking dual benefits of capital investments as well as a life cover
  • People who do not have much time for investing but want to save money. There are active fund managers of the ULIPs who keep track of the investment portfolio with utmost dedication
  • Investors with a long term investment horizon (15 years)

3) Gold ETF

Gold Exchange Traded Funds are instruments that function as a mix of stock and gold investments. These funds are traded on the National Stock Exchange (NSE) and can be bought and sold just like any other company stock. Gold ETFs are passive instruments based on gold prices, which make them completely transparent in terms of pricing.

While market-linked instruments are volatile in terms of risk, they tend to offer higher amounts of returns as well. Hence, the choice of financial instrument for the purpose of making investments should be made only after gaining complete information about the product and the market.

Who should invest in Gold ETFs:

  • Investors who are willing to invest in gold markets
  • Conservative investors with low risk appetite
  • Individuals who want to invest in Gold but do not want to spend on making, storage and additional charges can invest in Gold ETFs

4. Public Provident Fund

PPF is one of the safest funds among all investment options because of the sovereign guarantee from the government. PPF investments also qualify for tax deduction under Section 80C. With a lock-in period of 15 years, PPF is currently offering 8% returns compounded annually. However, the Ministry of Finance reviews the interest rate every financial quarter basis the government bond yields. Additionally, you can extend your investment period after the maturity of 15 years with 5 years block. Maximum limit to invest in PPF is Rs 1.5 lakh in a financial year while the minimum amount is Rs 500.

Lack of liquidity is the PPF’s biggest drawback. Partial withdrawal is permissible only from the 7th FY onwards. Premature closure of the account is allowed after the 5th financial year for medical treatment of serious ailments or life-threatening diseases or for higher education.

5. National Pension System

NPS is a market-linked product for retirement planning. Salaried investors not falling under the ‘Government or Corporate’ model can join NPS under the ‘All Citizens of India’ model. The investments remain locked-in till you reach 60 years of age, which can be extended up to 70 years. Minimum 40% of the accumulated corpus has to be invested to avail annuity while the remaining tax-exempt amount is withdrawn on maturity. You can avail tax deduction of up to Rs 1.5 lakh under Section 80C and an additional deduction of up to Rs 50,000 under Section 80 CCD 1(B).

6. Voluntary Provident Fund

VPF is an extension of the EPF, yielding the same interest rate. Apart from mandatory contribution towards EPF, you can voluntarily choose to increase your contribution to up to 100% of your basic salary and dearness allowance in VPF. The interest rate is reviewed by the government every year and the investment amount qualifies for tax deduction under Section 80C. The interest earned is tax-exempt provided the employee continues to be in service for 5 years or more.

7. National Savings Certificate

National Savings Certificate is a fixed income investment scheme with a lock-in period of 5 years offering an interest rate of 8% compounded annually. Just like the PPF, the NSC interest rates are reviewed every quarter. With minimum deposit of Rs 100 and no maximum deposit limit, you can claim tax deduction of up to Rs 1.5 lakh under Section 80C.

8. Unit Linked Insurance Plan

ULIP combines life insurance with market-linked investment. A part of the premium goes towards insuring your life while the other part is invested in stocks, bonds, market instruments, etc. They offer both death and maturity benefits. ULIPs come with a lock-in period of 5 years and qualify for tax deduction under Section 80C. Insurers also offer various fund options to suit varying risk appetites. One can also switch between these fund options to cater to the changing risk appetite or market conditions.

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