Investment has become a mainstream option for wealth creation in India. Despite the market’s volatility, it helps cushion the profits against inflation and prevents the money lying in the banks idle.
Through capital gains and investment income, investors can easily attain their financial goals and objectives and live a secure life in their retirement years.
However, to reach the goals, there are a few challenges that you might need to face first and that is choosing the best investment plan or idea for yourself.
Not every long-term investment earns the right income, so based on your requirements and risk appetite, you need to pick the best plan.
This article covers the best investment plans in 2023. But before exploring the ideas, let’s get to know a bit more about investing for beginners.
Why is investing an important activity?
You might have come across the older generation saying how cheap everything used to be in their time of youth compared to now.
All this price increase over time has been because of inflation. What inflation does is it simply erodes the value of money as the years go by.
There is not much you can do to protect yourself from this decreasing purchasing power but with the help of investing in multiple plans, you will be able to cushion this downfall.
The kingpin behind the successful concept of investment is the “power of compounding”.
Compounding here suggests that every return earned on investment gets reinvested to earn additional returns. Thus, you will be able to earn returns on returns. It is quite a fascinating concept indeed.
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Never invested before? Keep these two in mind
As a beginner, it might be quite overwhelming to directly jump into this new world without many guidelines. So, in the initial stage, just remember two important factors:
Investment objective and time horizon
Always have a clear outlook on the goals and objectives you want to achieve through the investment because it will become the base for picking the right investment plan for you.
Also, if you are looking for fast returns, that is, returns in less than 12 months of investment, then investing may not be the right wealth creation tool for you.
Diversification and Risk Appetite
There is no doubt in the fact that investing is a risky feat, however, that does not mean that it does not have a solution to it.
The best way to mitigate the uncertainty of market volatility is by opting for diversification when it comes to investing. Just invest in multiple sectors which are not directly correlated to each other.
Thus, the homework for you before starting investment is to define your financial goals and gauge your risk tolerance.
Once you have determined these factors, the next part is the exciting part and that is to pick the right investment for yourself from the list provided below.
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Top 10 Investment Ideas for Beginners
Use the below information as a guide list of investment ideas for 2023:
The term is no more foreign to any investor, new or old. Cryptocurrency is a type of digital currency that only exists virtually. The asset doe not have any regulating body and is running on a decentralized system.
However, the basic concept of demand and supply is what determined its value. It is observed that the crypto market is not directly correlated to the stock market, thus it can be a good diversification tool.
If you are not looking for an investment that required you to constantly follow the market, fixed deposits are ideal for you. They are meant for risk-averse investors looking for secured returns without any market volatility.
However, it can be also an ideal investment for high-risk appetite investors if they want to stabilize their portfolio.
Gold bonds are securities with gold as their underlying assets. This investment tool is issued by the Reserve Bank on the behalf of the Government.
This substitute of physical gold can be bought in cash and at maturity redeemed in cash as well.
Mutual funds are investment tools that are created by pooling the funds of multiple similar investors. The asset manager of these funds will invest in bonds and stocks on behalf of their clients and will even manage it for them.
Like a fixed deposit, this investment tool also provides generous returns and another best thing about it is that you can invest with smaller amounts.
NPS is a pension alternative. It is a profitable government-backed investment option where the funds of the investors are invested in government securities, bonds, equity, and other investment tools.
The scheme will only mature once the investor reached the age of 60.
Public Provident Fund
PPF is another trusted investment plan which is widely adopted in all of India. One of the reasons behind its popularity is the small initial investment starting at Rs.500 per annum.
The interest earned and the amount received at maturity, all are tax-exempt. It has a lockout of 15 years however if needed partial withdrawals are allowed.
Real estate has always been one of the best investment options as it is the ever-growing sector of India. You can either resort to buying a flat or a plot.
As the property rate increase and the appreciation happens every six months, the investors will be able to earn high capital gains. It is an ideal investment plan for individuals who are risk-averse and are looking for long-term investments.
REITs stand for Real Estate Investment Trusts which are institutions that are part of financing income-producing real estate projects or themselves own one of them.
Most of the REITs trade on major stock exchanges however to get listed on them, these companies are required to meet multiple regulatory requirements.
Senior Citizen Saving Scheme
As the term indicates, this scheme is for retirees. This is a long-term investment/saving plan for retirees.
People looking for stable and secure retirement years should invest in these schemes. It will allow you to have a steady source of income like the monthly salary you received in your working years.
And finally, the most popular investment tool is equity. Stocks are said to be the best investment tool, especially for long-term investors.
Though it is important to keep in mind that since this investment idea is highly market-linked, it will always have the risk of leading to capital losses and irregular returns.
So, it is sort of the ideal investment for people who like a bit of challenge and is ready to take up risks.
Hope the article has been an informative piece for you to begin your journey in investment. Though equity is a popular means of investment, it is not the only option available.
Conduct proper research and find the best match for your financial requirements.
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