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  • Money investment in a better way

    Confused about the best place to invest money and get the best returns? Searching for financial advice and details regarding where to invest? On this Ask Expert page scroll through the responses to your question.

    My father used to work in a government organisation. and he expired recently. The department has given us benefits and my father savings through out the service. So I was in a dilemma about where to invest the money. So I request you to suggest me the best.
  • Answers

    8 Answers found.
  • Investment of money requires a lot of prudence and home work. There are a number of investment avenues available today in the market and everyone will tell us the benefits of some scheme and prove that his scheme is better than other but we should not fall in the tarp of the agents who somehow show their investment products on the top of everything. With that caution in the background let us now see what are the options available in the market today.
    In investment world there are some risks associated with the investments depending upon where one is investing. These areas are governed by two main factors known as high risk - high return and low risk - low return areas. For example share market is high risk - high return area while Bank FDs today are as low risk - low return area.
    It is also said that an investor should not put all his money in one type of investment as there are dangers ahead if the particular scheme fails or does not give good return. So some of the schemes where money can be invested are as follows -
    1. Post Ofiice - It is still a good place for investment as the returns are around 7% per annum which is quite good from the perspective of falling interest rates in our country. There are many schemes there like NSc, KVP, MIS, RD and one can select as per ones liking.
    2. PPF account - This is also giving a return of about 7.5% and in this you can deposit only Rs 150000 per annum every year initially for 15 years and then it can be extended further.
    3. Balanced Mutual Funds - This is one area where lately the returns are not very encouraging but once corona threat is over and economy bounces back, there are potentials for good returns. So a part of the corpus can be invested here.
    4. Insurance linked annuity schemes - Some Banks and LIC are having this scheme where one has to deposit some money either in instalments or lump sum at one time and after some initial lockdown period the returns would be there. Right now the returns are around 7-8% but seeing the decrease in interest rates in the country these returns may also fall down.
    5. Company FDs - This is a slightly risky area but if you choose some reputed company then you can think of depositing some money as FD there. The returns are around 7-8%.
    6. Share market - It is a high risk area but if you choose a few blue chip companies (top companies in FMCG, Drugs, Construction material, Finance etc) and buy not in one but in a few of them then in long run it could fetch you a very good return. The key is to hold them for a long period.

    Knowledge is power.

  • There are many instruments where we can invest our money. But we should be very careful and study the scheme before we make a decision. The first point we should remember is that all eggs should not be kept in the same basket. All the money should not be parked in a single plan. We should invest in different schemes. That will ensure that we will not be in heavy loss if something happens to one of the instruments.
    The money you got is from the hard work of your father. So you should invest very intelligently and see that you will further improve the financial position and pass it on to your next generation.
    Life insurance policy is also considered as an investment plan these days. It serves two purposes. Your money will increase and at the same time something happens to you, your family will get the money from your insurance policy and they need not suffer financially. In addition to LIC of India, there are many private insurance companies also like Kotak, which are controlled by IRDA and you will not have any problem of losing your money.
    The following are the best ways to invest money.
    1. Public Provident fund: You can invest a maximum of Rs.1,50,000/- per year in this account. Every financial year you have to deposit a minimum of 500 rupees. You can open this account in any bank or post office. Initially, this account can be for 15 years. It can be extended afterwards. The rate of interest will be around 7.5% per annum.
    2. Mutual Funds: There are many mutual funds floated by LIC and other organisations. You can invest a big amount once or you can invest small amounts regularly. These days the investment in mutual funds is supposed to be much safer.
    3. Equity Shares: Investing in various company shares is also a way of investing. But one should be careful and study the market well and make the decision. You may gain a good amount but the risk of losing is also there.
    4. Real Estate: These days a lot of money is there in this area. It gives good returns. But you should study all the concerned documents. Take the legal opinion. If there is no risk only you should invest. The prices will increase fast and whenever you want you can sell them.
    5, Gold and Gold bonds: This is another area where you can make a safe investment. You can purchase physical gold and sell as and when you want the money. The prices of gold will be always increasing and returns will be good. Instead of purchasing physical gold, some banks are issuing gold bonds. You can think about that also.
    6. Fixed deposit schemes in banks and PO: The money can be invested in FDs either in Post office or any bank. These days the rate of interest is coming down. But the investment is fairly safe.
    7. FDs in companies: You can invest in good companies as FD and the rate of interest will be better. But you should invest in standard and reliable companies.

    always confident

  • It is important to save and invest the saved money in the right place. If you have invested money in such a place, the returns from which are less than the inflation rate, then it means that you have not invested your money in the right place.

    1. Mutual Fund
    You can invest in Mutual Fund schemes according to your long-term, financial goals, and your ability to take risks. The trend of investing in Mutual Fund has increased over the years. If you want to invest every month, then you can invest in Mutual Fund with the help of a Systematic Investment Plan or (SIP). SIP is a good option for investing in Mutual Funds with less money. Whether you have less or more money to invest, you must seek the help of a financial advisor to invest in a Mutual Fund. Financial advisors help you choose the right mutual fund according to your financial goals, investment duration, and risk appetite.

    2. Invest in direct shares -
    If you have time to do research and read the balance sheet of the companies and know how to extract information from them, then you can invest in shares directly. If you can invest in stocks of companies with good growth, then you can earn money in a short time. Only when you have a piece of good knowledge about the stock market, you should invest directly in the shares of companies. The ability to do a technical and fundamental analysis of the stock chart can help you earn the desired returns in investment.

    Public Provident Fund (PPF) has been a great investment option for those people who do not want to take risks for a long time. In this, returns are given according to the pre-determined rate. If you invest in PPF, then you can avail of tax exemption under Section 80C of the Income Tax Act for investments up to Rs 1.5 lakh per annum. If you want to invest in PPF, then you can open a PPF account in any bank or post office near you. Your investment in PPF is locked for 15 years.

    4. FD of companies
    If you want to earn more return on your investment than bank FD, then you can invest in corporate FD. Investors generally invest in fixed deposits (FD) of companies in search of assured returns and safe options due to stock market turmoil. The higher the FD rating, the lower the risk. This is why distributors advise investors to place bets on deposits with AAA or AA + rating.

    5. ELSS
    If you want to earn a better return on your investment and also want the option of tax savings, then you can invest in Equity Linked Savings Scheme (ELSS). Financial advisors say that investing in ELSS is the best option to meet your long-term financial goals. ELSS is the equity schemes of mutual funds, whose majority of the funds are invested in shares. This is the reason why investment advisors want investors to invest and invest in equity mutual funds.

    6. Bonds
    If you do not want to take the risk, then Bond can prove to be a better option for you. Investors' interest in bonds is also increasing because the returns from many types of bonds are tax-free. They have less risk and volatility. However, in the period of the boom of the domestic stock market, the brightness of the bond fades.

    If you want a fixed amount every month for your household expenses by investing, then Post Office Monthly Income Scheme (POMIS) is the right option for you. Monthly Income Scheme (MIS or MIS) is an investment scheme run under the Union Ministry of Communications. The Post Office Monthly Income Scheme (POMIS) offers 7.5 percent interest annually. Your capital is safe in this. Also, you get better returns than debt instruments. The Post Office Monthly Income Scheme (POMIS) gives higher returns than FD.

  • Information provided by you is very raw and there is no clear or approximate amount of money you received. Also your age and your profession is also not known. Do you have some liability or not or some dependent members is also missing from the details provided by you. So, the only option left is to provide you with the available schemes that provides best return or alternatively plan out multiple choices of investment based on many assumptions.

    Most members have provided you details of all the available avenues for investment but I would assume few things to suggest you some more options so that you investment creates wealth for you and not just returns.

    I am assuming that you are married and have a daughter who is 2 years of age.
    Here, the best investment option for you for your daughter will be Sukanya Samriddhi Yojana that provides over 8% return currently and the same also fetches you Income Tax deduction under section 80C.

    This investment in the name of your daughter will help her in her higher education or marriage at the time of maturity.

    You can even invest in Government bonds that will fetch you a regular return at regular intervals and can act as a supporting income in case of emergency. As if now the return on Government bonds is 7.1%

    If you have risk taking appetite then you can opt for stock market but you must take guidance or help of professional if you do not know much about it. Mutual funds will be less risky.

    Gold as if now is also very safe investment considering the current pandemic situation and the same will remain bullish throughout 2021.

    NSC or National Savings Certificate is also a good safe investment fetching around 6.8% return.

    You must allocate the sum received lumpsum into every option and choose the investment avenue based on your current and upcoming situation in your life and your immediate dependents.

    Hope you choose well and make proper use of funds received.

    Live before you leave.

  • If you are a tax payer then your investment strategy should be based on saving in those products where you get advantage of the tax laws. For example if you deposit in PPF which is allowed up to Rs 150000 per year only then you get a deduction of this amount from your income and your tax liability would reduce. Another advantage is that the interest earned on PPF is also tax free and in future you can always separate out it from your income to arrive at taxable income. Similarly there are some Bank FD schemes where also this advantage is there but in them the money would be locked for 5 years. Also, there is no benefit of tax on the interest earned on such FDs.
    Another avenue is Govt or PSU bonds. They have a long maturity period but they give a good return and are a safe investment option. They have a great advantage that their interest earned is tax free. So, basically they are very good for the retired people or high net worth individuals. Only downside is they are for a period of 10/15/20 years period. But as they also trade in share market, so in emergency, one can offload them there. Many investment companies and Mutual Fund houses buy these bonds from market and sometimes their prices is very lucrative to sell them by the holder.
    One more option for a gradual and sustained savings is investment in Post Office schemes. In Post Office even in this low interest arena they are paying something near 7-7.5% in many of their schemes and it is highly recommended to go for some of those schemes. Now they have also got computerisation and it is no hassle to go to Post Office for such investments. One good thing about the Post Office investments like NSc and KVP is that if you do not encash them in time on their maturity then they will continue to earn some little interest about 3-4% during the delayed period so investor gets some return even in that condition when he cannot go to Post Office in time at the time of maturity of those investments.

    Thoughts exchanged is knowledge gained.

  • First of al the legal heirs ( your mother, yourself and siblings if any) should sit together and discuss and come to a consensus as the amount is a right for all of you. To avoid any future disputes, you may equally divide the amount among yourselves or come to a very clear understanding (and/or agreement) as to how the amount will be divided among you or if commonly pooled and invested who will handle those transactions. If there is any minor, then you should be more careful. In that case the portion eligible for that member is to be safely kept as a fixed deposit to mature when the minor attains majority.
    As it is your father's hard earned money, I would suggest that safety of the same is more important and valued. Return comes next only.
    The money should be diligently spread in various ways optimising safety and return.
    At least half of the amount may be kept as fixed deposit in established banks, Public Provident Fund account etc. This is for safety. It is preferable to keep in one or two separate entities.
    From the remaining half, a portion should be kept in established and popular Mutual Funds. The Funds investment may be spread across Debt Funds, and Equity and also Dividend and Growth options.
    Portions can be invested by buying gold, and if possible and available a portion can be invested in a good land plot or flat n easily marketable and developing area.
    Some amount may be invested in Insurance linked products which give fixed or regular return also. In this regard some annuity type of investments may be considered.

    Bu it should be kept in mind that 'all eggs should not be kept in one basket".
    Whether the investment is to be in common and join names or separate individual names is to be decided by considering the total amount, and due portion for each person. It should be by a proper understanding and trust among the members.
    Some points to be considered are if mother is old then her portion should not be invested in risky ventures, but kept in safe and regular return investments like Bank deposit, Post Office FD, NSC, Senior Citizen Deposit schemes etc.

  • Make the received money in four part, like four 25% (percent).

    First part invest in Gold or its ornament. Wait for the price value. It will gradually increase and need patient.

    Second part, divide and donate money to poor relatives, poor neighbors, or needy, or family of the poor girl who's marriage is fixed in the near future or some part to nearest small and service-oriented charity center.

    Third part invest in a land or flat from genuine seller checking the document very carefully and manage it well afterward without missing follow up or usage.

    Fourth part, do small business what you know or try to invest in a small trading for revenue generation and better returns. Start it simply with more vigilant to gain knowledge and revenue.

  • While investing the hard earned money of your father, you will have to look other avenues such as your requirements of funds at the later stages for meeting educational expenses of your children or the marriage settlement of your daughter or meeting the medical expenses of your old mother. Keeping all these parameters in your mind, you will have to invest your money so that it meets all these requirements with the appreciation of your money invested so that emergencies are tackle effectively. At the same time, keep this thing in mind that entire money is not to be invested in one basket considering the risks of erosion of your capitals in some unforeseen circumstances.
    You may look for these instruments for the safe investment of your capitals and can provide you relief for your prudent planning.
    1) LIC Pradhan Mantri Vay Vandana Yojna - In case of your investment for your mother having attained the age of 60 or more, you can invest up to Rs 15, 00000/- for the tenure of ten years where your mother would be earning interest at the prevailing rate of 7.4 per annum. She would get a pension monthly, quarterly or yearly according to her preference for the same. In that way, she would get a monthly pension of Rs 9313/- per month if chosen for the monthly pension. This money is to refunded after the expiry of term and it appears attractive in the sense the earnings are better than the Fixed Deposits of the banks where the current interest rates have drastically fallen prevailing 5.9 percent for ten years for senior citizens.
    2) Health Insurance Plan for the entire family on yearly basis - Keeping in view of escalations of prices of medicines, consultation charges of the doctors/ specialists and burgeoning expenses of Kidney ailments, Heart Surgeries, Bone replacements etc, it is always better to have a medical insurance to save your money in the hours of your medical expenses if a matching insurance cover has been undertaken from premier insurance companies such as ICICI Lombard, Star Insurance, United Insurance India, HDFC Health Insurance etc. An ideal insurance of ten Lakhs would be ideal.
    3) Look for the Fixed Deposits of the Companies - There are several companies offering you interest ranging from 8.3 to 8.9 percent per year such as L&T, Tata Finance, Tamilnadu Electricity Board where your earnings could be higher than the fixed deposits of the Nationlised Banks. However, you will have to look for the financial health of such companies apart from its reputation.
    4) Investment in the Gold Bonds - While we have seen the substantial surge of gold prices currently and is anticipated that such a trend will sustain even in the future, it would be always better to divert some funds in the Gold Bonds floated by SBI and other government securities to reap the benifits in the times ahead.
    5) Go in Balanced Debt Funds in the Mutual Fund Areas - You will have to look for some banking debt funds having offered huge dividends in the long run such as ICICI debt funds, HDFC Debt Funds, Reliance Debt Funds etc. However, you may take advice of some reputed financial consultant prior to investments for the better management of your fund.
    6) Post Office Fixed Deposit Scheme - Their returns are better for the people of senior citizens currently being 7.4 percent. You can keep some money for your mother.
    7) Investment in the real estate- Though the parent market in this area is not encouraging but keeping in view of surge of population and their requirements for flats in major cities would certainly go up. Hence look for such mutual funds offering you attractive growth in the long run.
    8) Keep some money in Fixed Deposits of Nationalised Banks - Though the present rate of interest is not promising but keeping some money on such banks for short tenure would take care of your eventualities.

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