7 Best Investments for Beginners

New Delhi : With a plethora of options available, choosing the right investment option can be challenging. Explores 7 excellent investment choices for beginners, each catering to different risk appetites and financial goals.

Fixed Deposits (FDs)

FDs offer a safe and secure option with guaranteed returns. You deposit a specific sum for a predetermined tenure, and upon maturity, receive the principal amount along with interest. FDs are ideal for risk-averse beginners who prioritise the security of funds and predictable returns. However, interest rates on FDs are generally lower compared to other options. You can apply for these easily through platforms like Bajaj Markets and compare offers from various financial institutions to find a deposit scheme that suits your requirements. Visit the website to check different options.

Recurring Deposits (RDs)

Similar to FDs, RDs promote a disciplined savings habit. You commit to investing a fixed amount at regular intervals (monthly, quarterly) for a chosen term. This instils financial discipline and helps build a corpus gradually. RDs offer slightly higher interest rates compared to lump sum FDs. They are suitable for beginners who want to save regularly and benefit from the power of compounding.

Public Provident Fund (PPF)

Backed by the Indian government, PPF offers a safe, long-term investment option with attractive tax benefits. Investments in PPF qualify for tax deductions under Section 80C of the Income Tax Act, 1961. Additionally, interest earned and the maturity amount are also tax-free. However, PPF comes with a lock-in period of 15 years, making it less suitable for short-term goals.

Equity Mutual Funds

Mutual funds allow investors to pool their money and invest in a diversified basket of stocks, bonds, or other assets managed by a professional fund manager. Equity mutual funds offer the potential for higher returns compared to FDs or RDs, but they also carry a higher degree of risk. However, diversification within the fund minimises individual stock risk. Consider starting with a Systematic Investment Plan (SIP) in an equity mutual fund to invest regularly and benefit from considerably.

Debt Mutual Funds

If you are comfortable with slightly more risk than FDs but want to prioritise the security of your funds, debt mutual funds could be a good fit. These funds invest primarily in government bonds, corporate bonds, and other fixed-income instruments. Debt funds offer stable returns with lower volatility compared to equity funds. They are suitable for investors seeking steady income and capital appreciation over a medium or long term.

Gold

Considered a safe haven asset, gold has historically served as a hedge against inflation. You can invest in physical gold through coins or bars, or opt for digital gold offered by various platforms. Gold Exchange Traded Funds (ETFs) are another option, allowing you to invest in small units backed by physical gold. 

National Pension System (NPS)

NPS is a government-sponsored pension scheme designed to provide financial security after retirement. Contributions to NPS qualify for tax deductions under Section 80CCD of the Income Tax Act, 1961. The scheme offers a mix of equity and debt instruments, allowing you to customise your investment mix based on your risk tolerance. NPS caters to long-term financial goals and comes with a lock-in period until retirement. You can easily apply for these online on Bajaj Markets and other financial marketplaces. 

Remember

Here are some points to keep in mind when looking to begin your investment journey:

• Risk and Return: Always consider your risk tolerance before investing. Higher potential returns usually come with greater risk.
  
• Investment Horizon: Match your investment choice to your financial goals. Short-term goals require easily accessible options, while long-term goals allow for riskier instruments.
  
• Diversification: Do not put all your eggs in one basket. Widen your portfolio with investments across different asset classes to mitigate risk.
  
• Financial Planning: Seek guidance from a qualified financial advisor for personalised investment strategies
  

By understanding these investment options and aligning them with your financial goals and risk profile, you can embark on a successful investment journey in India.