Investing your money in the right places can help you keep it safe as well as get an income out of it. Insurance products like ULIPs, life Insurance and health insurance plans also come with tax exemption benefits. There is no dearth of investment plans in the market; they come with different benefits and varied levels of risk. However, if you are a beginner you might want to consider a lot of factors before deciding on the best investment plan for you. You will have to spend more time researching about the payment options; the risks involved etc. and understand whether or not it will suit your financial aspirations and condition. On the other hand a regular investor will be well versed with the risks associated and can assess whether the plan will suit him/ her without much homework.
For beginners, it is important to understand not only the risks but also the complete terms and conditions while investment planning. Read them carefully before signing any documents. Determine what plan will suit you most, if you need access to your principal amount in the near future it will be better to go for short term plans else you can go for mid or long term plans. Also remember that the risks involved are always directly proportional to the potential of the plan. Here are some tips to choose the best investment plan for beginners:
- Determining your financial goals before putting your money anywhere is important. There are various benefits why people choose to invest their money like income, growth, safety, tax exemption, savings and more. Keep in mind that you cannot always get all the benefits in one plan; you might have to compromise on income and growth if you concentrate on safety or vice versa.
- See what payment plans suit you the best. If you have enough saving to make a lump sum payment and go ahead for plans that require a onetime investment. You can also opt for investments that require you to invest on a regular basis. Some of the best investment plans for beginners in this category are recurring deposits, systematic investment plan etc.
- Your desired access to the principal amount will determine the plan you investment in. If you need access to your principal amount in the near future it will be better to go for short term plans else you can go for mid or long term plans.
- If the investment you are making is for an emergency fund, it is always safer to go for low risk options that provide reasonable returns like debt mutual funds, bank fixed deposits etc.
- If you are an investor who has just started earning, you will not have much tax liabilities; in that case you can opt for schemes and plans that have low tax saving but offer high returns.
- Setting up bank accounts and/or hiring a broker is the next step in investment planning depending on the type of investment you choose. If you opt for stocks or mutual funds, you must hire a broker. Since you are beginner you might have to choose someone with lower annual fees to save money. In investment plans like fixed deposits, recurring deposits etc. you will have to open a bank account to facilitate that if you do not already have one. Hiring a financial advisor also can help you keep track of the market and the investments you have made.
Here is a list of some of the best investment plan for Beginners:
- Public Provident Fund
- National Savings Certificate
- Money Market Funds
- Bank Fixed Deposits
Take your time reading up about the market and the various risks involved in the plan you desire to invest in and choose the best investment plan for you accordingly. Start small and slowly move towards plans that offer higher potential and high risk as you gain a thorough understanding of the market.