A wise man once said, “Make your money work for you, instead of working for it.” The old adage has held true till date because it aptly highlights the importance of financial planning. Financial planning is more than just monthly or yearly budgeting. It takes into account not only a person’s current needs, but also his future requirements. Still financial planning is a low priority for a majority of people as they perceive it to be a complex task. On top of this, many assume that planning for a safe future stops them from fulfilling their immediate needs. This is not the right attitude as financial insecurity can become a serious source of stress later. Therefore, it is imperative to go for financial planning, which should be accompanied by saving and investing for the future, keeping one’s life goals in mind.
Here are some of the best investment avenues which are not only safe, but may also help meet your financial goals:
# Employee Provident Fund (EPF) and Public Provident Fund (PPF)
EPF and PPF are long-term investments that are beneficial for a person post retirement. They are highly secure and assure guaranteed returns at 8% (PPF) and 8.5 %( EPF) annual interest, respectively. Investing small amounts today will create a big enough corpus by the time of retirement. Apart from interest, an EPF also ensures a good growth during the maturity period. As for PPF, it helps people with low earning potential since a minimum deposit is just Rs 100. It can be opened at any branch of designated banks, financial institutions and the Post Office.
# Post Office Term Deposit (POTD) Scheme
Just like EPF and PPF, a post office term deposit also provides assured and risk free returns, at 6.80% to 7.60% interest rate. The scheme is provided by the Indian Postal Service and administered by the Finance Ministry of India. POTD is one of the most secured, capital plus inflation protect monthly investment option. The lock in period is 1-5 years and the minimum deposit is just Rs 200. POTD is a great tax-saving instrument as well. The best part is that it provides account flexibility; allowing transfers across post offices. It also lets multiple individual and joint accounts to be operated.
# The National Pension System (NPS)
The NPS is a Government-sponsored pension scheme and a popular saving tool. It is an easily accessible, low cost, tax-efficient, flexible and portable retirement savings account. A key benefit of NPS is that it helps people working in unorganized sectors prepare for retirement. NPS provides tax-free withdrawal up to 40% of the retirement corpus (60 years), as well as an extra tax benefit of Rs 50000 over and above Section 80(C). As on June 30, 2017, NPS had a subscriber base of about 1.07 crore and asset under management (AUM) of Rs 1.90 lakh crore.
# Mutual Funds
Mutual funds are an ideal investment vehicle for any person who does not know much about investing or is doing it for the first time. Suitable for all ages, MFs can be chosen based on individual financial goals and the investments are simplified in to monthly SIPs (systematic investments plans). An advantage that MFs have over more traditional instruments is the absence of a lock-in period. This provides consumers the flexibility to redeem money whenever it’s needed. Other advantages include professional management, portfolio diversification, liquidity, transparency and cost effectiveness. Investing in the right mutual funds can lead to the best possible returns.
Every person needs to make financial planning his top priority today and save for the future. Else, it will have serious repercussion later not only for him, but also for his family. After all ‘Money grows on the tree of persistence.’