As salaried individuals, you can look for a fixed income the end of each month, which helps you budget their expenses and plan investments in advance. With salary hikes, bonuses and extra periodic growth, cash inflow can be accumulated for achieving long-term financial goals.
Some investment options that could help you grow your wealth have been discussed below:
Fixed deposit (FD)
FD is amongst the safest investment options where the return on investment is assured at the time of maturity. FDs offer higher interest rates than a normal savings account. For example, NBFCs provides Fixed Deposit with highest interest rates, which help you enjoy stable returns.
When facing liability crunches, some banks also offer loans against FDs up to 75% of the principal amount at cheap interest rates. In terms of more flexible money source that is perfect in times of financial crunch, do look for the pre-approved offers from NBFCs. The best part about these pre-approved offers is that you can avail them instantly – just 3 clicks and your offer is ready. You can get assured returns from your fixed deposit investment once it has been matured. You can check out the gains using the online FD calculator for getting your returns.
Sovereign Gold Bond (SGB)
Investing in gold is one of the best hedges against inflation for salaried individuals, which can be redeemed on maturity in cash. SGBs are also a good option to plan for your or a family member’s marriage.
Besides gaining on the appreciation of the prices of the yellow metal, you can earn an interest of 2.5% per annum. Note: The interest earned on SGBs is taxable.
ULIP (United Link Insurance Plan)
ULIPs are offered by insurance companies. A part of the premium that the investor pays, goes in government bonds, equity, and other market-linked investments. The other part of the premium covers investor’s life insurance. The money can be withdrawn after a lock-in period of 5 years. Based on the premium allocated, the money can be received as per the market value.
Money Back Policy
This is one of the best endowment plans for a particular period of 10, 15, 20, 25, 30 or 35 years. After a fixed period of time, the sum assured along with the bonus can be withdrawn. If the policyholder has passed away before the maturity of the policy, full sum assured plus bonus will be provided to the nominee selected.
Public Provident Fund (PPF)
PPF is another good investment plan for salaried people. Investments made in PPF are exempt from tax under Section 80C of the Income Tax Act. PPF offers high returns, but, is an unpopular saving option, because:
- It has a lock-in period of 15 years.
- There is a cap on the maximum investment of Rs 1,50,000 that one can make in a year.
FDs in comparison, have a flexible maturity period from 7 days to 10 years, depending on the scheme you choose and have no maximum limit on investment amount.
Employee Provident Fund (EPF)
Under this scheme, the employer deducts a certain fixed percentage, generally 12% of the basic wages, from the employee’s salary towards EPF investment. An equal contribution is made by the employer. Investments made under EPF too are exempt from tax under Section 80C of the Income Tax Act. The current interest rate on EPF contributions is 8.55%. EPF is a good retirement plan for the salaried people. Though EPFs come with a lock-in period, you can withdraw money from your account during emergencies.
Conclusion
Be clear about your requirements, ability to take risks and the best investment option you need. A particular option may sound good, but may not be suitable for the tax deduction. If you have a good income, invest in ULIPs or equity, but understand the risks involved.
