The primary intention behind investing one's money is to see it grow. Wealth augmented
over months and years can accumulate into a handsome sum of money for the future.
However, it is not enough to merely set a sum aside from the monthly income in lieu
of savings. It is equally important to invest one's money in the right financial
instrument.
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Savings bank account: This is often the first financial product people are
exposed to. The first bank account one opens is normally the savings bank account.
It offers a rate of interest of up to 5% and most banks insist on a minimum balance
per month in the account.
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Fixed Deposits (FDs): These are investment plans by which a person may deposit
a sum of money in the bank for a minimum of 30 days and maximum of five years. The
bank pays interest on the money (about 7.5% to 8%, while up to 10% for senior citizens)
at the time of maturity of the FD. It is recommended to keep the FD live for at
least 1 year to earn an appreciable amount of interest on it.
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Money market funds: These are open ended liquid mutual funds that are short term in nature. They are invested for a very short period of time. Their primary purpose is to earn income on the capital to grow the investor's wealth. Several banks now allow customers to issue cheques from their money market fund accounts. The Birla Sun Life Cash Plus is an excellent money market fund to try.
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Public Provident Fund (PPF): This is one of the most popular investment options
in India. It offers a high 11% post tax return, and is extremely low risk in nature.
Also, it is one of the most affordable investments: you can deposit a minimum of
Rs 500 per year to keep the fund active, and maximum of Rs 1,00,000 per year. However,
you can withdraw money from it not before the seventh year of the fund begins.
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Post Office Savings Schemes (POSS): These are normally more preferred over
FDs, and they have a component of a monthly income plan. This is a useful feature
for retired or unemployed individuals. It is also preferred because no TDS (Tax
Deducted at Source) is cut on it. Under POSS, customers can opt for various schemes
such as NSC (National Savings Certificate), Recurring Deposit (RD) and Kisan Vikas
Patra, among others.
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Life
Insurance: These offer a maturity and death benefit, and 8 to 9.5% returns
post-tax. Besides, they help protect one against future financial burdens. They
can be purchased to coincide with important life goals and future expenses such
as children's education, retirement and hospitalisation corpus.
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Mutual Funds: This is one of the most affordable and best investment options
in India today. They offer investors the chance to make an income on a diversified
fund portfolio with a limited investment. Also, those who do not wish to invest
large sums of money for the fund can take the SIP (Systematic Investment Plan) route.
Though there is low to moderate risk with mutual funds, an experienced fund manager
handling the portfolio manages it expertly to minimise risk. Birla Sun Life Mutual
Fund's diverse range of mutual funds solutions offers the best investment options
in India.