Now a day’s everyone is eager to learn where to invest money or smartinvestment to generate earn extra money from at least any one of the legitimate earning investment instrument from the financial market like FD, RD, mutual fund, commodity, equity, real estate etc., for financial independence. The point is how the investment is working for you is it getting the desired legitimate earning or expected to earn considering post inflation & tax as a wealth builder. If your investment earning 7% annually then with the inflation around 4 to 5% + tax min 10% (i.e Rs. 0.70) = 5.70 so what is your net earning from Rs.7.00- Rs.5.70=Rs. 1.30 for every Rs. 100.00 invested or 1.30% absolute return it’s not a wealth builder or earns extra money.
So you needed to know right investment strategy or investment options available to get more returns. As we can see in today’s financial market there are plenty of smartinvestment options available. Read the following article to fully understand different investment instrument and its returns. We will walk you through the best smartinvestment decision that you can make.
investment needs to be diversified among the instruments based on your goals & risk appetite. To find the details how you can diversify your smartinvestment portfolio based on your age, period, risk appetite, financial goals, the “77 tips for your wealth generation” book provides the best answer. Investors when investing needs to diversify among different asset class like SB, FD, RD, mutual funds, commodity market, equity market, real estate in certain proportion so as to earn extra money moreover which need to maintain earning stability in your investment portfolio at the same time should have the liquidity to use for the emergency needs.
10 best investment options in India
1. Public Provident Fund (PPF) :
Investing in PPFs is perhaps the smartinvestment and most secure option, government introduces this smartinvestment scheme to give the social security to people in the unorganized sector also these funds are locked for long term so as to be useful to the people in their old age or post retirement moreover to utilize some portion of the fund for building the infrastructure in the country. From past 5 years, the returns range from 8.8% in the financial year 2012-13 to 8.1% in the financial year 2016-17 annually. The investment in the PPF gives the stability in your investment options portfolio it’s a wealth builder over the long-term. Some of the features are as follows:
- The returns are entirely tax-free.
- You can open a PPF account in any nationalized or private bank or your nearest post office.
- The minimum annual investment is Rs.500.00 while the maximum is Rs. 1,50,000.00
- The money invested in a PPF scheme is locked for 15 years and you earn compound interest on it.
- You can extend the investment period in a block of five years.
- You may partially withdraw the amount at the end of the sixth year.
- You can also take a loan against your PPF balance.
In the process of wealth creation, PPF gives stability.
If you feel uncomfortable to invest in the equity market and mutual funds, then the smartinvestment decision is bonds. There are several good bonds in the market that provide a high return on investment. Bonds are regulated by the government. A 10-year bond typically offers 8% interest. Bonds are a long-term legitimate earning investment to build wealth for stability in one’s portfolio.
Tax-saving infrastructure bonds are a good option in the fixed income category. … Investment up to Rs 20,000.00 in these bonds is eligible for income tax deduction under Section 80 CCF of the Income-Tax Act. This is over and above the Rs 1,00,000.00 deduction available under Section 80C.
3. Post office savings:
It’s one of the safest investment instruments in India and earns extra income from home with decent returns. The post office monthly income scheme is immensely suitable for retired persons who want a regular extra income from home can park their provident fund money in a post office with absolutely no risk. But the rate of interest is pretty low or looking for some stability in your investment portfolio.
4. The company fixed deposits (FDs):
Which is comparatively better than to bank fixed deposits (FDs) because they yield a higher rate of interest. You have to select the investment period carefully because you can’t withdraw the money before the maturity, it is locked in investment. Company FD’s carry no insurance benefits and are not monitored by any regulatory bodies such as RBI, however, they are among the smartinvestment and legitimate earning option in India. They have an amount of risk but investing in good companies with a proven track record will serve your investment goals, it’s is recommended to invest in the AAA rated deposits. Investment amount can be as low as 2000/- & a minimum maturity lock-in period of 12 months there is no upper limit for the investment. The investment in the company or corporate FD gives the stability & low growth in your smartinvestment portfolio.
Tax: The tax benefits are not available in company fixed deposits. TDS is not applicable on interest earned up to Rs 5,000.00 per annum. You have to club the interest earned on these deposits as ‘income from other sources’.
5. Mutual funds:
The investment is a convenient smartinvestment meant for the people who wanted to know where to invest money? with a balanced mix of convenience, risk & return are the ones usually opt for mutual funds. Investing in the capital market has burgeoned in recent years via mutual funds, the systematic investment plan (SIP) mode of investment options has become especially popular and offers much better returns than other methods, mainly for the salaried people it gives them to plan properly of their monthly budget averages the value of investment over a period of time considering the volatility of the stock market. It helps build a staggered portfolio over a long-term and is the ideal investment vehicle for small smart investors. You can, of course, invest in a lump sum. But most people usually don’t have enough money to make a one-time investment. SIP helps in riding market instability because you invest regularly. A SIP can be started with as little as Rs. 500.00. There are various types of mutual fund investment options like mid cap, large cap, sectoral, blue chip, ELSS, debt mutual funds managed by various fund houses.
Debt mutual funds:
Debt mutual funds. have the ability to give you superior returns than bank deposits, as they park some money into equities it is a wealth builder with stability for moderate risk taker. Debt mutual funds are safe as they invest most of the money in debt instruments such as corporate bonds, government securities, fixed deposits of banks, money market instruments etc. These schemes are generally considered as debt free and can have in one’s portfolio if you have a long as well short term objective in mind. Since the mutual fund house manages the investment of thousands to lakhs of people & their leverage to purchase as many stocks, say 15 to 30 or more different stocks & tracking their performance is easy with their systematic networks & dedicated fund manager. The past performance of the fund may not reflect the future performance, check if any thing like fund manager or any major portfolio changes happened in the recent past to make a smartinvestment decision. Some funds may announce dividends in between it’s of no value to you unless until if you require to with draw some money in-between else opt for growth scheme instead of dividend payout. The investment in the mutual funds gives the investment portfolio low – moderate growth to create wealth over a long-term.
Tax for the mutual fund:
Taxation of equity schemes :
A mutual fund scheme qualifies to be taxed as an equity scheme if it invests at least 65 per cent of the total corpus in equity and equity related instruments. Returns from an equity mutual fund are treated as long term capital gains if investments are held for more than a year. Such returns are completely exempt from income tax according to the current laws.
Taxation of debt schemes :
Mutual fund schemes that invest less than 65 per cent of the corpus in equity are categorized as non-equity funds for the purpose of taxation. Your debt mutual funds fall under this category are gold funds, fund of funds, international funds, etc are categorized as non-equity schemes for the purpose of taxation.
6. Unit Linked Insurance Plans (ULIP):
ULIP is a life insurance product, which provides risk cover for the policy holder along with investment options to invest in any number of qualified instruments such as stocks, bonds or mutual funds. In ULIP the fund house will decide where to invest money in both equity and debt market. Fluctuation is counted by the net asset value of the ULIP. But it plays a major role in the investment market. The number of units you get depends on how much you invest and the price of the units at the time you buy. ULIP have minimum investment period with partial withdraw options still continue to have the risk cover for a longer period of time. minimum maturity plan 1,00,000/- eligible for the person below 45 years. The investment option in the ULIP gives the stability in your smartinvestment portfolio legitimate earning to generate wealth over the long-term, also to protect you from any emergency expenditure.
7. Equity linked savings scheme (ELSS):
Investment portfolio will be in equity market at 100% investment, these type of mutual funds will have 3 year lock-in period for the investment. If you want to save tax besides growing your money, then ELSS is one of the best options. Invest in top ELSS funds where you earn extra money could be anywhere near 12%, whereas PPFs and other tax saving instruments will fetch you around 8% to 9% returns, ELSS funds are one of the best avenues to save tax under Section 80C. Investors who can take limited risks but expect to pocket high return over the long-term should opt for ELSS. The smartinvestment in the ELSS gives the growth momentum in your investment portfolio a legitimate earning moreover generate wealth over the long-term it’s is managed by fund house- fund managers.
8. Initial Public Offering (IPO):
It happens only once for a company for the investors looking where to invest money? it’s the prudent smartinvestment for legitimate earning or earns extra money it’s a wealth builder provided you make the smart analysis, expansion is initial public offering, when the company again want to issue additional shares it’s called FPO or follow on public offering. If an IPO is launched by a reputed growth oriented high performing sectoral company then the stock value is almost certain to rise during listing. You can earn a decent listing gain by selling some portion of your stock holding and can also stay invested for a long term which is a smartinvestment option. But there are some risks though since there is a lack of information is one among them. You need to study and do all the due diligence initially moreover check the offer documents., assess the sectoral performance, economic outlook, market sentiments, anchor investors for the company etc. are all the very important factors to analyze before investing. retail investors get 5% discounted price moreover 35% is reserved for the retail investors however the upper limit to apply is Rs. 2,00,000.00.
9. Investing in stocks:
where to invest money in stock? Large cap, Mid cap, Tiny, IT, Blue chip, Heavy Electrical, Infrastructure, FMCG, Pharma etc. sectors or which company stocks? investment options are plenty, make a smartinvestment decision will fetch you legitimate earning and earn extra money thus can become wealth builder in your portfolio. If you look for long term growth and able take risks, then the stock market is the best option with any capital you can start. You must study the fundamentals of the stock, economic outlook, sectoral view of the company, competitors performance, debt equity ratio, earning per share etc. all these factors you need to analyze before concluding to invest in the stock or take professional help, at wealth generation tips we provide the information of good stock with the list of 10 companies stocks to the members and different ways to increase earning potential. Invest for a longer duration and in good companies run by a strong management.
You need to have a demat account to invest in shares. Investing in stocks have multiple benefit one with the share price appreciation + dividends announced by the company + derivative premium (based on your position & volatility)- if you were hedging the investment through the derivative market, you will be earning more money by shares investment along with securing your smartinvestment , the derivatives which have the potential to earn more money regularly month after month (based on your position & volatility). The investment in the shares gives the growth, with high-risk high return basis in your investment portfolio to create wealth over the long-term can start with any amount but for a prudent smart investor, it’s like a light in the darkness.
Taxes: If you sell a stock which you hold over one year period the gains you make are known as capital gains, and the tax is called the capital gains tax.
- Smartinvestment held under stocks for a more than 1 year it’s taxable at 15% if you are in a 25% or higher tax bracket
- Only 5% if you are in the 15% or lower tax bracket.
- Ordinary dividends earned on your stock holdings are taxed at regular income tax rates, not at capital gains rates.
- The stock held for less than a year before you sell it, you’ll have to pay your regular income tax rate on the gain – note: Rate that’s higher than the capital gains tax.
10. Real estate:
The real estate sector is still one of the most attractive investment options, even after being hit hard by last year’s demonetization in India. There are huge prospects in the leading sectors like commercial, housing, manufacturing, hospitality, retail, and others. The value of property usually rises every six months and you can invest in a plot of land or flat. If you have agriculture family background, invest in agriculture land as it’s the limited resource in the long run. Real estate investments carry low risk. It’s the investment instrument which requires bulk investment. Unlike olden days there is regulatory guidance are in place for the real estate sector to make an informed decision. The investment in the real estate gives the stability & growth in your investment portfolio to generate wealth over the long-term but requires bulk investment.