Generally, there is a common misconception amongst people that in the realm of personal finance, earning revenue is directly linked to saving money. The more an investor can possibly hoard, the more they are making. However, the truth is that this isn’t strictly true. While a large bank balance might be reflective of liquidity, they are also susceptible to drainage, especially if you don’t have job security or alternative sources of income. However, you don’t need to be a financial wizard to be able to recognise a good investment opportunity, nor is there a need to have a hefty sum in your account for investment purposes. Small, but smart investments are reliant more on consistency than lump sums to be able to give you fruitful revenue. Whether you’ve just gotten your first job or you’re well into your fifties, investments are a great and secure way to earn more money. Listed below are some of the smart investment options that you can opt for on a small budget:
- High-yield savings accounts (HYSA):
An HYSA i.e., (High Yield Savings Account) is a reliable source of earning passive income. If you are setting aside a part of your income in a savings account, you should do your research to find an account that offers you minimal charges and maximum returns. Many banks have varying interest rates on savings accounts, so you should find one that works great for you.
- Fixed deposits (FDs):
While FDs are not a recommended investment option if you are a very young investor, they can be beneficial right before you take out other kinds of debts. The interest rates they offer are higher than savings accounts and they are a more secure investment option for saving money compared to an HYSA. Extremely straightforward to use and many have good interest rates to offer as well. If you’re worried about liquidity, then some banks offer FDs with premature withdrawal options, as well.
- Insurance and government schemes:
Even the government has created a lot of opportunities for investment. A few of these are funds that you might already be investing in, through your employer. One of the most well-known ones is the PPF (Public Provident Fund). Other options include the NPS (National Pension Scheme), and NCS (National Savings Certificate). They are a great investment option if your contribution is very low, and they function as good retirement savings.
- Gold Bonds:
In India, gold is among the most popular investment options in India. But, nowadays, you don’t need to rush to buy jewellery and coins or find a storage locker. Instead of being jewellery physically, you could opt to invest in gold bonds. Gold bonds are a much more stable investment option since there is no expense in buying actual metal or any kind of metalworker charges. Furthermore, gold bonds (unlike real gold) are free of GST charges, too. They come with very attractive interest rates, and they’re all guaranteed by the Government of India to ensure the safety of your investment.
- Mutual Funds:
Mutual funds are a safe way to invest in the stock market if you don’t have the knowledge about equity investments. While it is recommended for you to learn more about the market and how to make your own investment choices in specific companies, a small- or mid-cap mutual fund is a good place to start. Another benefit of investing in a mutual fund is that your stock portfolio is very diversified. While investing, it is recommended to opt for a SIP (systematic investment plan) to even out your dividend and yields across market fluctuations. SIPs are helpful especially if you’re a beginner investor.
While the five above are some of the numerous smart investment options, ultimately, you must make the decision on what to invest in. Please remember to consider things like your debts, your retirement plan and emergency funds before deciding to jump into any investment. More importantly, make sure your investment plan is highly diverse so that you’re not facing losses because one industry is getting affected.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.