“Mutual funds or stocks risky hai, FDs karlo.” You have probably heard this statement from your parents or relatives in your life. Indians have stayed away from stock market for years now. According to SEBI, compared to United States (55%), the United Kingdom (33%), and China (13%), only 5% of the Indian population has ventured into the stock market.
Reserve Bank of India data shows that a staggering 95% of Indians have savings in FDs. While fixed deposits are safe and secure, are FDs the best way to invest money in 2024? Let’s look at some of the best emerging ways to invest money in 2024 and help you choose which investment is the right match for you.
Before we start with the blog, here’s an existential question (and answer) for you
Why Should You Invest?
If you have ever contemplated why you should invest at all, then here’s a brilliant reason to convince you to start. Rising inflation. Inflation erodes the purchasing power of your cash over time. The money in your account today is losing its purchasing value. Investing your money in the right instruments is what matters – it will help you keep up with the rising costs of commodities and allow you to enjoy a stress-free life. Investing ensures your money is working for you and offers you a debt-free life in the future.
Here are some compelling reasons to invest in 2024:
- Beat Inflation: Investing can help you outpace inflation and preserve your wealth. Take education inflation, for example, it is nearly 10%.
- Financial Goals: Investing can help you achieve your financial objectives, such as buying a house, funding your child’s education, or retiring comfortably.
- Create Wealth: Investing can generate substantial returns over the long term, helping you build wealth.
- Tax Benefits: Many investment options offer tax benefits, reducing your overall tax liability.
- Diversification: Investing in a diversified portfolio can help you manage risk and reduce volatility.
- Affordable: Investing is affordable. Whether you opt for FDs, RDs, or mutual funds, you can start investing with as little as ₹1000. It is a great option to grow your money in the long run. You can opt for a lumpsum or SIP style of investing.
- Financial Security: Investing is the gateway to financial security and independence. It can help you with your daily needs, emergency funds and help you accomplish long-term goals like your child’s education costs.
- Uncomplicated: Investing is the easiest, straightforward and uncomplicated way to use your money. It can accomplish various goals in one go and you can start investing in less than a day from the comfort of your house.
- Accessible: If you have a phone, PAN card, Aadhar card and an Indian bank account, then accessing the best investments is just a few taps away for you. You can invest in mutual funds, digital gold and FDs all at once from a single app.
What are the types of investments in India?
There are various types of investments available in India, each with its own risk and return profile. Some popular options include:
- Equity: Investing in stocks of companies, aiming to benefit from their growth and appreciation in value.
- Debt: Investing in bonds, debentures, and other fixed-income securities, providing regular interest income.
- Real Estate: Investing in properties, either residential or commercial, for rental income or capital appreciation.
- Mutual Funds: Pooled investment vehicles managed by professionals, offering diversification and access to various asset classes.
- Gold: Investing in physical gold, digital gold or gold-backed securities, considered a safe haven asset during economic uncertainty.
- Fixed Deposits: Investing in fixed-term deposits with banks or non-banking financial companies (NBFCs), offering guaranteed returns.
- National Pension System (NPS): A retirement savings scheme offering tax benefits and a mix of equity and debt investments.
- Public Provident Fund (PPF): A long-term investment scheme with a guaranteed return and tax benefits.
- Government Schemes: There are several government investment schemes that empower Indians and encourage to invest money. Schemes like Atal Pension Yojana, Kisan Vikas Patra, Sukanya Samriddhi Yojana, Sovereign Gold Bonds, etc.
Now that we know the types of investment instruments available to us in India, let’s talk about which, among them, are the best ways to invest money in 2024.
10 Best Ways to Invest Money in 2024
You should always choose investment instruments based on your unique needs, risk tolerance and goals. So here are some of the popular investment options in India for 2024:
- Stocks: Investing in stocks of promising companies can offer substantial returns over the long term. It is one of the best ways to invest your money in 2024 – stocks can help you grow your wealth over a period of time, help you fetch attractive returns and give you liquidity to withdraw your money in time of need.
- Mutual Funds: Mutual funds have emerged as one of the most popular ways to invest money in India. Mutual funds allow you to invest in a host of stocks at minimal cost. These funds are a diversified portfolio managed by fund managers who can help you achieve your investment goals. They are inexpensive, easy to monitor, and have minimal maintenance costs. Mutual funds offer returns that rival inflation rates and help you save consistently for long term goals like your child’s education. Here’s all about the best & latest mutual fund offerings for your unique needs.
- Real Estate: Investing in properties can provide rental income and capital appreciation. Land is considered a sacred investment in India; thousands of people consider this an emotional yet practical investment in our country. While property is a great investment, it can be a costly one. It requires months of planning, research and effort to buy a real estate investment.
- Gold: Gold is considered a safe haven asset and can hedge against inflation. Gold is an evergreen investment. It is a natural hedge against inflation. You can invest in gold digitally as well as in the physical form. Digital gold investments are easy, inexpensive and there is no fear of storage or purity defraud.
- Fixed Deposits: A reliable investment option with guaranteed returns. Fixed deposits are historically the best ways to invest money in India. They are safe and allow you to grow your money at a predetermined interest rate. There is another category of investments within this group called corporate fixed deposits that can offer a higher rate of returns at the same investment cost.
- Recurring Deposits: If you are looking for a safe investment where you can invest regularly then opt for recurring deposits. They are like FDs, but you can invest monthly in these investments instead of a one-time investment like FDs.
- National Pension System (NPS): A tax-efficient retirement savings scheme. It is a government monitored scheme which allows you to growth your money in a safe and secure manner.
- Public Provident Fund (PPF): A long-term investment with guaranteed returns and tax benefits.
- Sukanya Samriddhi Yojana (SSY): A beneficial scheme for a girl child. You can save for your daughter’s education or marriage till they turn 14 years of age. Your investments are safe under this scheme.
- Bonds: Investing in bonds issued by companies can provide regular interest income.
Who should invest in which investment?
The best investment option for you depends on your individual circumstances, risk tolerance, and financial goals. Here’s a general guide:
- Risk-Averse Investors: Consider fixed deposits, government bonds, or low-risk mutual funds.
- Moderate Risk-Takers: Explore equity mutual funds, corporate bonds, or a mix of debt and equity investments.
- Aggressive Investors: Consider direct equity investments or high-risk mutual funds.
- Long-Term Investors: Focus on investments with a long-term horizon, such as equity, real estate, or NPS.
- Short-Term Investors: Opt for investments with a shorter time horizon, such as fixed deposits or liquid funds.
How much should you invest?
The amount you can invest depends on your income, expenses, and financial goals. It’s essential to create a budget and allocate a portion of your income towards investments. Start small if necessary and gradually increase your investments as your income and financial situation improve.
When should you invest?
The sooner, the better. The more time you give your investments to grow and flourish, the bigger your final amount. The best time to invest is typically when the market is experiencing a correction or downturn. However, it’s important to remember that timing the market is difficult and can be risky. A better approach is to invest systematically over time, regardless of market conditions. This strategy helps you average out the cost of your investments and reduces the impact of market volatility.
8 factors to consider before you invest money
Here are some factors to consider before you start investing money in different investment instruments:
1. Know your financial goals
Every person has financial goals to achieve; whether it’s to cruise around the world or pay for your child’s foreign education. Everyone has them and everyone needs to work for them.
The first rule of investing is to determine your short-term goals like buying a car and long-term goals like buying a house to figure out how to work towards it based on your finances and spending.
When it comes to financial planning, it’s best to be realistic. Understand your goals and determine the best way to attain them without compromising your present needs!
2. Study your finances
Before investing a huge sum, it’s good to budget your finances and understand where your money is going. For instance, if you have an income of Rs. 45,000 a month and if you spend Rs. 25,000 on rent then it’s not feasible for you to invest Rs.20,000.
You have to take care of your utility bills, food, and other miscellaneous expenses. It’s best to pick a realistic amount for investing every month that you can pay consistently before starting a SIP.
3. Time your financial goals
Knowing how much time you have and need to achieve your goal is a crucial aspect of investing. Some investments have a lock-in period; suppose you choose an investment that has a lock-in period of 5 years but you need your money in 3 years, this can throw your financial planning off the charts.
So, it’s important to align your deadlines with your investments so that you can take care of all your needs on time ways to invest
4. Know your risk appetite
Some investments are riskier than others, some offer low to medium risks. Depending on your risk appetite you can choose the option that suits your financial goals and current needs.
Risk appetite depends on a number of factors like your running income, sources of income, financial obligations, number of dependents, age, etc.
5. Put your eggs in different baskets
You have probably heard this line more than enough to know relying on one financial tool like an FD Mutual Fund or ETF alone can be a huge mistake.
It is always beneficial to diversify your investments so that you can achieve your financial goals faster and more efficiently. Speak to an expert if you have trouble assessing the different investments for your unique goals!
6. Avoid impulse decisions
Many first-time investors make the mistake of investing everywhere without any specific goal in mind rather than the lure of lucrative returns.
While these avenues may be a great investment opportunity, they could prove to be a loss. So do your research well, understand your needs, and then invest your hard-earned money into schemes you can vouch for!
7. Ensure you have enough liquidity
Some investments have lock-in periods and levy extra charges for redemption before the set date. This can be a huge loss on your investment!
While you cannot foresee future emergencies, you can prepare for them with emergency funds and some liquidity, that is, cash in hand!
8. Market research is key
While the pandemic introduced various changes and led to the emergence of pharma companies like high-return investments, the winds are changing again.
Companies like manufacturing and logistics are making a grand comeback, especially in India with the start-up culture in full swing. So, know your market before making any big investments. If you have no prior expertise in share market research then contact an expert!
Choosing from the best ways to invest money in 2024 can be overwhelming and exhausting! Consult our savings experts and determine which of the following ways to invest perfectly aligns with your goals. Download the EduFund app to connect with our experts and start investing!
