A desire to purchase a car or a house is always there on our mind, but at the same time, planning your child’s education or your retirement is as important to think about. But the most important question that comes in the mind is: How to invest money and most importantly Where to invest money? Indulging in the habit of investing money to meet certain goals is worth adapting for. Setting short-term investment and long-term investment goals is necessary to diversify your bank balance properly by investing in various instruments and indulging in goal based investing. This practice will give you all the insights you need before you ever ask yourself: How to invest money? And where to invest money?
What are Short-term Investment goals?
Short-term goals are the one’s which are required in a short duration of the time like purchasing a vehicle or repairing the house. Investing money for such instances are raised within short span of time to accomplish these tasks within your estimated period.
What are Long-term Investment goals?
Long-term goals as the name suggests, are the goals for longer duration. Goals like planning for your retirement or your child’s college education are categorized into Long-term goals. The money saved is set aside on a regular basis to meet the requirement for the future.
Types of investments for Short-term goals
- Systematic Investment Plan [SIP]
Start investing in mutual funds by the means of SIP with a fixed sum of your preference and at the regular intervals amount is deducted and invested in mutual funds. This will help you to serve your short-term goals. SIP can be started with as low as Rs. 500, and for the tenure of minimum 1 year.
- Equity Linked Savings Scheme [ELSS]
In ELSS, investments are carried are by linking with Equity. ELSS has the lock-in period of minimum 3 years. It can be extended for the long-term goals. It gives maximum returns as it directly linked to the stocks, but it carries higher risk.
Types of investments for Long-term goals
- Public Provident Fund [PPF]
PPF is the most common vehicle for investing money to save for your retirement. It is a non-taxable, interest earning savings account. It has a lock-in period of 15 years and with minimum investment amount accounting to Rs. 500/ annum.
- Unit Linked Insurance Pan [ULIP]
ULIP is a combination of insurance and investment vehicle – stocks, bonds or mutual funds. It has a lock-in period of minimum 5 years.
- Tax Saving Fixed Deposit
Tax Saving FD’s are the investment instruments offered by banks and non-banking financial institutions, having a lock in period of 5 years. Depositor can claim a tax deduction under Section 80C of the Indian Income Tax. These FD’s can be held either in ‘Single’ or in ‘Joint’ mode. The interest on tax saving fixed deposit can be reinvested on a monthly or quarterly basis.
- Bullion Market
Bullion Market is known as the market for trading gold and silver. High risk is involved in storing the physical gold, but the Digital Gold option of – Gold ETF has no risk associated to it as the gold held is in the electronic form. The returns on the Gold ETF is lower than that of actual gold.