The year 2020 witnessed a pandemic that affected many individuals and industries. As economies worldwide try to recover from the aftermath of the COVID-19 pandemic in 2021, you as an investor might be wondering where you should park your savings to earn attractive returns.
Many investors are always on the lookout for avenues that involve low risk and high returns, but this idealistic combination doesn’t exist in the real world. In reality, risk and returns go hand-in-hand. Selecting an investment instrument to park your savings should be based on your investor profile and appetite for risk.
So, if you are wondering where should you invest your money in 2021, here are a few options to get started –
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Fixed or recurring deposits: Deposits are considered safe investment instruments by many. Such deposits carry minimal risk and offer assured returns at a predetermined rate of interest. American investor and entrepreneur Robert Arnott’s words – “In investing, what is comfortable is rarely profitable” – hold particularly true when it comes to the returns you can gain here. As these instruments have less risk involved, they do not gain returns at an attractive rate.
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Unit Linked Insurance Plans (ULIPs): There are dual benefits of investing in ULIPs – financial security via insurance and wealth creation through investment. ULIP is an insurance plan that invests a major portion of your premium amount in several asset classes to generate returns for you. However, there is a lock‐in period of 5 years, but they also offer tax benefits under Sections 10 (10D) and 80C of the Income Tax Act.
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Equity investing/trading: This type of trading is when you invest your money in buying a company’s shares based on your research and analysis. The risk involved here is high, but the returns can also be higher than quite a few asset classes. You can reduce this risk by creating a well-balanced portfolio of shares.
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Gold: Buying gold in physical form has been one of the popular ways to invest in this precious metal. However, investors now have the choice to think beyond physical gold. Investment instruments like Gold Exchange Traded Funds (ETFs), gold mutual funds, Sovereign Gold Bonds (SGBs) are some alternatives to owning physical gold and, depending on the duration of your investment, can attract better returns.
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Mutual funds: These are pooled investment vehicles wherein an asset management company raises the capital through various investors. Managed by experienced and professional fund managers, these funds invest in an umbrella of financial instruments. These come in several types and cater to investors with varied risk appetites. You as an investor also have the option to choose the method by which you would want to invest in a mutual fund scheme – either by way of a lumpsum payment or through a Systematic Investment Plan (SIP).
Mutual funds offer diversification to your portfolio so that you can mitigate risk and manage volatility of any asset class. Whether you have a long-term or a short-term financial goal, are open to take risks or looking for a safe investment option, there are mutual fund schemes for almost every type of investor and objective.
When exploring mutual fund scheme options or evaluating shares to invest in, it is advisable to seek expert guidance so that you make the right investment decisions based on your financial goals, age, investment horizon, financial standing and risk appetite.
Reach out to one today!
