A sense of freedom can be felt when getting employment is the best joy that will come to your life. You will have your own hard-earned money in your hand, and you will understand the importance of that part of your life. But things can be overwhelming when you get so much money in your hand that you cannot choose between available investment options.
Gaining trust in investment will take some time which is very precious to lose. Being an employed professional with joy will also bring many responsibilities along, which means finding financial security. While getting newly employed, you will be mostly in your 20s; that is the right time for you to kick start your investment portfolio.
Rather than living your life aimlessly, you should understand and set your financial goals right. You should understand all your financial requirements and make sure to analyze them. When you do a thorough analysis, you can determine that savings can be the best part of your investment.
The initial years of your employment are crucial. You should understand things well before making your final investment choice. This article will get you through the different types of investment options available and their overview. Thoroughly understand all the five types of investment options available and choose the right path for your investment portfolio.
National Pension System (NPS):
Retirement might look far away from you as you are a newly employed person. But starting your savings from the starting of your career will provide you with the best financial start. National Pension System (NPS) is one of the best investment options available offered by the Government of India. It is the best investment option that will support your retirement goals.
The Tier one NPS aims for your post-retirement savings option. When you are a person who is between 18 years to 60 years, you are eligible to open an NPS account. It will permit you to capitalize the choice for choosing the investment avenue and fund managers below the new pension scheme. The contribution quantity and frequency can be chosen by yourself.
You can save to a maximum of up to Rs.2,00,000 and get a tax exemption under Section 80CCD of the Indian Income Tax Act. The operational charges for your NPS account are very minimal, so it is the best option when you are a newly employed professional.
Recurring Deposit (RD):
A recurring deposit is an investment option provided by both NBFCs and banks. As you are a newly employed person, you can opt for an RD investment to invest a fixed amount each month for a selected tenure. The money you invest will grow along with interest it gains until RDs maturity. You will get a lump sum on the final stage with your small initial efforts.
A recurring deposit investment comes with a higher interest rate, flexible tenure options, minimal documentation requirements, and minimal monthly instalments. As the RD interest rate doesn’t depend on the market for its returns, it’s a very safe and secured investment choice.
When you are a conservative investor, your RD will provide a higher avenue than mounted deposits.
- It will permit monthly deposits that will enforce saving habits within you.
- It will act as the best short-term investment option to provide higher returns with a minimal risk factor.
- When you want to save a lot of money for the future, saving a little each month will be the best choice.
Unit Linked Insurance Policy (ULIP):
ULIP is an investment scheme that will bring the positives of an insurance policy and mutual funds together in a single investment. The premium you pay will further provide a return on investment through debts, bonds, stock, etc.
The unique benefits of ULIPs are:
- It offers you the flexibility to divide the premium quantity between the insurance and the investment to create a perfect investment plan for you quickly.
- It will permit you to shift the sum endowed in the debt and equity funds. It will offer you a chance for requiring variables, calculate risks, and maximizing your investments.
- Under Section 80C of the ITA, you can access returns for your premiums. The interest payout you get can get a tax exemption under Section 10D.
- As a younger earner, you will get a rare chance for synchronizing insurance and earnings.
Public Provident Fund (PPF):
The Public Provident Fund (PPF) is a fund account created in any bank or Post-office. You can make your deposit amount between Rs.500 and Rs.50,000 per year for your PPF investment. The major disadvantage for your PPF investment will be a hefty lock-in period for fifteen years. With the more extended lock-in period, you will have to manage your finances as you cannot expect this investment in your hand.
The interest rate for a PPF account is variable but higher than your standard savings schemes. The current rate of interest for your PPF account will be more than 7% per annum. Under the Income Tax Act Section 80C, you can get a tax exemption for your PPF investment and the interest you gain. The annual PPF investment you make, the interest it earns, and the payment is taken will be tax-exempt.
Systematic Investment Plan (SIP) For Mutual Funds:
Mutual funds are the most popular investment options available to provide a varied investment choice and portfolio. Many funds are available for paying off during a year and people who provide returns for over a decade. Mutual funds may be your one-stop solution for buying monetary coming up.
SIP is turning into a well-liked method for speculating in mutual funds. SIP’s will enable people for speculating a selected quantity into a chosen open-end investment company monthly rather than an investment on one go. As you are a brand new employee, you will embark on it with Rs.500 each month.
The significant advantages are:
- You will get into a monetary discipline as you will save a certain amount each month.
- It provides you with the advantage of rupee-cost averaging. That is, you can purchase additional stocks for a constant quantity once costs are lower or contrary-wise.
- It’s beneficial to be a newly employed person as you will lack a significant payment in the nearing future.
- This type of investment will profit you by the power of the combination method and make each penny of yours count.
Wrapping Up:
When you are a newly employed person, you must start your investment in any of the top five best investment options. These five investment options will help you make the right financial decision and secure your future financially.
But the primary thing that you must do before choosing is to understand each one to the core. Without a clear understanding of the products, you cannot risk investing in the wrong product. So do deep research and choose the right product that will best suit your financial portfolio. Happy investing!
