Investments are always a trade-off between risk and returns. Higher the risk, higher the returns and this is a downfall for many young investors as they want higher returns in short span of time.
People in their 30s have lot of time ahead of them, they can surely take some risk and be aggressive investors.
Investments are always a trade-off between risk and returns. Higher the risk, higher the returns and this is a downfall for many young investors as they want higher returns in short span of time.
Before starting to invest it is important to do the following:
Making a financial plan/ goal as where we want to reach in next 5-10 years
Pay off High Interest loans – such as credit card outstanding / personal loans
Make an emergency cash reserve for any unexpected contingency that may come. Ideally it should be about 3-4 times of your salary
Invest with small but regular amounts to spread the risk, monitor the performance and take corrective actions.
For any investment the KEY is timing – timing for making an investment and timing for exiting an investment depends upon your financial goal.
People in their 30s have lot of time ahead of them, they can surely take some risk and be aggressive investors and hence the natural choice is of;
Traditional financial wisdom has typically said that a house is one of the best investments you can buy, but whether or not this is true depends upon numerous variables and your commercial goal/plan.
For young investors, the ability to pay off a mortgage soon is a key determinant of an investment property’s success. You must assess what you can afford and act upon it. Young investors must know that an investment property is not meant to be a dream home. In the end, it all comes down to the functionality and practicality of your real estate investment.
The limited liability in your equity shares holds one of the major benefits for selecting this investment scheme. Also, the return of dividend becomes one of the attracting aspects for sticking to equity share investment.
However, the fluctuations in the market might affect the return directly your investments.
Mutual fund is one of the easiest means to grow your wealth. This is why the fund manager’s expertise (thereby the fund house’s reputation) is an important factor to consider. All mutual funds are registered with SEBI and therefore, they are quite safe to invest in.
The ELSS Plan which is also known as Equity Linked Saving Schemes is fast proving to be in India as one of the best investment options. This plan is associated with a lesser risk and a shorter tenure as linked to other plans.
The Indian Government has provided it's backing to equity based mutual fund schemes for people to join in and now such schemes has done quite well in the past few years.
FD also known as Fixed Deposit is a saving instrument that offer attractive interest rates for a particular amount of money that is invested for a fixed period of time. Fixed deposits are offered by companies as well as banks. Thus, bank fixed deposits and corporate fixed deposits are the two types of fixed deposits, which have low risk and considered as a safe option for investment.
Some low risk Investment options are
Public Provident Fund (PPF)
National Pension Scheme
Government Bonds
Since there is a government involvement in above scheme, they are considered to be the safest with low risk. Normally they range between 7-8.5% per annum, which is a good tool to beat the inflation and keep the money protected.
There are always pros and cons in regard to any investment, your final decision should be based on your financial plan/ goal and its affordability and timing your investments.
The author is Finance Controller, ITM Group of Institutions.