The ultimate goal of all our endeavours is financial freedom—for which savings are just not enough. To attain financial freedom after a few years of your professional life, you must make your money work for you. This is done through investing. The basic objective of a financial plan is to align your goals with your investment.
Why Should You Invest?
- Financial Security and wealth Creation: Investing enables you to not only beat inflation but grow your wealth through the power of compounding. It secures your present as well as future against any financial emergency.
- Financial goals: They steer you towards your financial goals like purchasing property, emergency fund, or retirement fund.
- Combat inflation: The value of Rs. 100 today is not the same as it was ten years ago. The present rate of inflation is 6.20%. The rising inflation diminishes the value of your savings. Since investments ensure compulsory savings, and the money invested is linked to the markets, the ill effects of inflation are marginalised.
- Compulsory Savings: Investing enables you to have compulsory savings, instilling financial discipline to achieve your goal. Your savings are pre-decided, and you tweak your expenditure accordingly.
- Tax Savings: There are some investments like PPF and ELSS that serve the combined purpose of investment as well as tax savings.
Where should you invest in 2022
The investment avenues depend on your risk appetite, investment horizon and financial goals. Depending on these factors, you can invest in the following options available:
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Fixed Deposits
These are the safest avenue for investment and are preferred by conservative investors, who want fixed returns on their investment.
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Public Provident Fund (PPF)
This is a government savings scheme aimed to encourage long-term investments. These are good options to build a retirement fund, as they have a lock-in of 15 years.
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National Pension System (NPS)
This is a pension scheme introduced by the Government for people to save for a retirement corpus, from which they can withdraw after retirement.
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Mutual Funds
These are considered one of the most lucrative investment avenues today due to the wide array of options available for investors of different risk appetites, capacities and life stages.
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Stock Investments
It is more suited for the active investor. Using the investment platform for online investing, investing directly in stocks will give you returns over the medium and long term. Markets have benefited the investors who have preferred their time in the market rather than ‘timing’ the market. Stock investments are generally for the informed investor with a moderate risk appetite.
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Which Investment Option Should You Choose?
To create wealth, you need patience coupled with periodic investments spread across sectors. As the adage goes—“Do not put all your eggs in one basket”—the same holds for your investments. Carefully picking the components in your portfolio not only minimises risk but also gives you maximum returns.
It is imperative to know how and where to invest, make your savings goals a reality, and enjoy your journey with each step towards them. You can decide on the investment platform with the best online trading experience. Whichever you choose, the bottom line is: start investing today.
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