Growing up, you might dream of becoming rich and affording extravagant items like advanced gadgets, automobiles, and so forth. When you start earning, you might look forward to saving a major proportion of your income to fulfill your dreams. After saving your money every month, you might end up accumulating funds to live comfortably in the future.
Although savings can be crucial, it would not allow the productive growth of your hard-earned money. Since you might park all your funds in banks, it would lie in the corner of your lockers. Therefore, you should invest your money after you receive your first salary into instruments, which offer a high return on investment as well as allow the growth of your savings. Investing can let you maximize your wealth, which can eventually help you to fulfill your long-term goals.
Before you put your hard-earned money, let’s go through the top five types of long-term investment tools with the primary objective of wealth creation:
- Unit Linked Insurance Plan (ULIP)
A ULIP plan is a dual-benefit financial product with a combination of investment and insurance. When you park your funds in a ULIP plan, you can participate in the capital markets, while you get to secure your family financially. Moreover, you can choose between equity funds and debt funds based on your risk appetite and investment goals. For instance, if you can bear the market risks, you should opt for equity funds to receive high returns and vice versa. However, when the market is down, you should shift your money to debt funds to secure it from the market fluctuation.
- Life Insurance
Typically, a life insurance policy is a protection plan that can provide life coverage to your loved ones in your absence. However, there can be specific insurance products, which can allow you to double your money to create a substantial corpus. An endowment plan can be one such insurance policy that can mature after 25-30 years. An endowment plan can help you to save regularly so that you can build a large corpus for yourself before the policy matures.
- National Pension System (NPS)
The NPS system can be compulsory for the central government employees. If you are not a central government employee, you can invest in the NPS voluntarily. When you select the NPS system, you can receive returns ranging between 8%-10% every year. For instance, let’s assume the rate of return to be 10%. If you invest Rs. 10,000 every year, you can build a corpus of over Rs. 3.8 crores after 35 years. You can withdraw 60% of your corpus after your retirement. The remaining 40% would go towards your annuity plan.
- Public Provident Fund (PPF)
The PPF is a government-backed investment plan, which is suitable for every conservation type of an investor. It can have a lock-in period of 15 years that allows you to accumulate wealth until the maturity period. After your PPF account matures, you can extend it for an additional five years. While you can invest a small amount of Rs. 500 every month, the maximum limit of investment under PPF can be Rs. 1, 50,000 per year. Investing a lump-sum amount of Rs. 1,50,000 can help you to generate approximately Rs. 44 Lakh for 15 years. Additionally, you might receive guaranteed returns on your investments.
- Real Estate
A house can be a lifelong commitment. Moreover, you can receive many benefits when you have your property, which is as follows:
- You can claim tax breaks on your principal amount as well as the paid interest.
- You can invest in a house with an EMI payment, which can be equal to your rent payment every month. That way, you have your asset even after a few years, which can simply appreciate with time.
- You can sell your property when you need cash urgently or transfer it in the name of your children in your absence.
To sum up, when you look for the right types of investment, you might come across a diverse range of options, apart from the five instruments given above. Before choosing an investment vehicle, you should consider your investment goals and risk appetite. Moreover, compare several investment options and select the one tool based on your needs and preferences.
