Today we will discuss on very important topics where to invest first savings. In this blog we will tell you risk and return on various things.
Type of Investments
There are the various option available in the market for the investment like
Life Insurance –
Life insurance is a life cover of your life. You can check all the option in policy bazaar In our view HDFC and ICICI prudential have aggressive plan in less premium. while selecting the LIC check the settlement of claim ratio.If you are jain you can take the policy from JITO.
Medical insurance –
Medical insurance is a health cover of your life. You can check all the option in policy bazaar . while selecting the mediclaim insurance check whether if premium not used in first year whether is will be carry forward in next year or not. In our View Apollo Munich is a good option.If you are jain you can take the policy from JITO.
Fixed Deposit in Banks –
In this rate of return is very less but there is no risk in that investment. In this also tax saving FD option is available but in that there will be lock-in period of 5 years.
PPF (Public Provident Fund)
In this rate of return is very less but there is no risk in that investment. It will be better than Fixed deposit for the rate of return. Also in PPF investment limit is 1,50,000 and tax saving option is also available in PPF. Once the PPF account is open it can be redeem after 15 years. It is always advisable to open an PPF accounts as soon as possible as the 15 year lock-in is for first year in second year it will be 14 years.
Mutual funds are Risky comparative to FD and PPF. But return in that is also high In Mutual fund also two three type of option is available. tax saving option is available in long term mutual fund where the lock in period is 3 years.
Blue chip – In this funds investment is done on large cap. It is less risky than mid cap.
Small and Mid cap – In this funds investment is done on growing company. It is more risky than blue chip but in this return is high. Aggressive fund in this category are DSP black rock.
Option in Mutual Funds
There are two option in mutual funds -Dividend Fund or Growth funds. In dividend fund difficult to maintain the entry. Growth fund will be goods.
Modes of Investment in Mutual funds
Lump Sum investments – In lump sum investment has been done in single transaction
SIP – In SIP you will purchase unit every months,Quarter, Day.
Things to be checked in Mutual Fund –
For Mutual fund investment check all the funds in value research their risk and return in 3-5 years. Also check the expense ration of all the mutual funds. As we all know its very difficult to make money but more difficult is to maintain the money. Once will become rick only if his money will make money.
Where to Invest First Savings
In our opinion savings should be invested in following manner –
Life cover – First priority should be life cover
Medical insurance – Second priority should be health cover
PPF – Open a PPF accounts and invest some amount there
SIP – SIP is a good option for youngster, As first saving will be earned in young age only. invest in blue chip fund where expense ration is less. Instead on one Mutual fund invest in 2-4 mutual funds having different portfolio. Axis long term equity fund and SBI blue chip fund are good option.
Things to be avoided in initial savings
In our opinion not to do the following things –
Trading in Stock market – Avoid trading is stock market and try to become rich in short period of time.
ULIP – Avoid taking policy like ULIP who offer equity linked life cover. Charges in ULIP is very high and only agent will earn money in that.
Life cover with investment – Don’t take LIC policy that cover both life and will give sum assured after certain period of time. in that premium will be very high and return will be very less.
Which is Safe investments
Fixed deposit, PPF etc are safe investments in that risk is less but if you are using the interest amount every year it will not be safe. Interest rate in FD is 7-8 percent and inflation rate is 5-6 percent. If you are using the interest every year than it will be very difficult to beat the inflation.
It is advisable to hire a Investment planner and make a long term goal for doing the investments.