A healthy approach to your finances is to budget your income and set aside an amount for investments. Whether your financial goals are short-term or long-term, the best way to grow your wealth is by investing part of your earnings. You can choose from the plethora of investment options depending on your risk appetite, the investment tenor and the interest rates in India.
Generally, most investments have a lock-in period and you should make a note of these periods as not all investments let you withdraw before its term, and if they do, it is at a cost. The trade up is that these are high-yielding investments, which means that the locking in of your funds is usually worth it.
Take a look at 4 high-yielding instruments that aid your financial growth with a lock-in period worth your while.
Public Provident Funds
If you’re thinking of a long-term, high-yield investment, then a PPF is a great choice. Investments made in a PPF have a tenor of 15 years and the current interest rate is at 8%, which is reset every quarter. PPF investments enjoy zero tax on interest gains and get you deduction of your annual investment amount too. After the 15-year tenor, you can extend your PPF investment in blocks of 5 years to further grow your wealth. Your investment principal grows through the power of compounding interest. This, coupled with the fact that you’re required to lock-in your investment for an extended period, translates to immense gains at the end of the tenor.
NBFC Fixed Deposit
An investment option that isn’t affected by market volatility is a fixed deposit. This is because of the fact that an FD offers you a fixed interest rate at the time of investment. NBFC FDs generally offer a higher interest rate in comparison to bank FDs and this is why they make for a lucrative investment.
NBFC Fixed Deposits are rated by Credit Rating Agencies in order to indicate whether or not it is a safe FD to invest in. The best FDs will either have a FAAA CRISIL rating or an MAAA ICRA rating. An excellent FD to choose is the Bajaj Finance Fixed Deposit as it has both, MAAA ICRA and FAAA CRISIL ratings, making it an extremely safe investment.
This FD offers one of the highest interest rates in India, which is 8.95% for senior citizens and 8.60% for regular investors for an investment made for at least 36 months, payable at maturity. Additionally, the minimum investment amount is only Rs.25,000, which adds an element of affordability to the investing experience. To invest in this FD, apply online and a representative will call you and help you fill out the FD form required to proceed.
Equity mutual funds
Equity Mutual Funds invest in share of companies and the profit earned is based on their performance. Due to this fact, it carries a higher risk quotient, but it also has the potential to yield incredible returns. Equity mutual fund investments are basically divided into 3 types, large-cap, mid-cap and small-cap. These are based on market capitalisation and it is advisable to entrust your investment to an expert fund manager as it requires extensive market knowledge in order to generate returns. The minimum lock-in period for this type of investment is 3 years, and it has yielded returns at 10% to 12% historically.
Fixed Maturity Plans
This is a type of mutual fund investment that has a low risk quotient and is especially efficient at meeting short-term goals. FMP investments are close ended in nature, which means that they mature at a fixed timeline and have fixed availability. Due to this, you get to enjoy the benefit of indexation which amounts to higher returns and increased savings on tax. FMPs invest in debt securities such as government bonds and treasury bills, which is why they have a lower risk quotient that other options.
Most of these investment serve different financial goals, but an FD is the most flexible as it offers a high yield, investment security and the option of continuous liquidity through laddering. Whether you’re planning to fund your child’s education in a few years or preparing for your retirement, an FD is your safest bet. You can even apply FD online and get started with your investment today.