Money cannot buy happiness but can play a crucial role in arranging the material things that can make our life easy and happy. In India, out of 139 crores, about 23 crores people live below the poverty line (BPL). Many people, among these, find it difficult to arrange even a basic meal.
Importance of Investment
While we are young, we can work and earn money and fulfill our dreams. However, with increasing age, we may not have the same capability to work. Also, times never remain the same, as we all have seen in the last year and a half. Due to Covid, many people lost their jobs or were forced to work on 50% of their salaries. Then there are some big-ticket expenses like buying a house or a car, children’s education and marriage, or some medical emergency. One needs to plan for that. And that planning has to start early.
Everyone wants to fulfill their dreams and lead a quality life. Investment plays a critical role here. Investments are long-term savings that a person makes. These savings provide financial security for self and family and help grow that money and make our future secure.
The following points highlight the importance of making investments:
- Growing your money: Investing is a small step towards a better future. One can be selective in this approach and choose the most appropriate option to grow wealth over time and get a good investment return.
- Saving for a rainy day: It’s unfortunate, but true, that times never remain the same. The recent lockdown is an example of that. Investments are a good idea to sail across these challenging times. Apart from providing a regular income, the investments provide financial security and peace of mind during days of hardship.
- Helps to achieve financial objectives: There is no end to human desires. As we grow in life, we aim for even higher targets. Investing sensibly helps us to achieve our financial goals.
- Getting Tax benefits: As per the Income-Tax Act, 1961, making investments in schemes like Unit Linked Insurance Plan (ULIPs), Public Provident Fund (PPF), and other such options help investors get a rebate on the income tax.
- Defeat inflation: Though not absolute terms, investing your money can decrease its value. This decrease is due to inflation in most economies, where the value of currency decreases over a period of time. This inflation reduces the purchasing power of currency over a period of time. So, to match up and even beat inflation, it is important to invest now.
Types of Investments
Investments and risks go hand-in-hand. Every investment involves some amount of risk. Depending upon the investment tool, the degree of risk involved varies. This allows investors to invest as per their risk appetite.
High-risk investments: In the words of famous entrepreneur and investor ‘Robert Arnott’, “What is comfortable is rarely profitable”. This quote holds for investments as well. High-risk investments are characterized by higher returns but also with a higher risk of losing capital. Most shares come under this category.
Medium risk investments: These investments give a decent return with a lower amount of risk comparatively. Some of the medium-risk investment options are debt funds, index funds, among others.
Low-risk Investments: These investments come with low risk. However, the returns on such investments are also low. It is most likely to be affected by inflation in the long run. Government securities, Bank FDs, come under this category.
Financial vs. Non-financial Assets
Anything owned by a person or a company and having an economic value is an asset. This asset may be financial or non-financial in nature. A financial asset is a liquid asset that can quickly be sold and converted to cash using a simple process. These assets derive value from contractual or ownership claims and are subject to change due to market interest rates and price fluctuations. Cash, bonds, stocks, bank deposits are some examples of financial assets.
On the other hand, Non-financial assets are those assets that cannot be traded on financial markets. Their value is derived out of physical worth and not from a contractual claim. These assets may be both tangible & intangible in nature.
The selling process for these assets is a little complicated as the buyers and sellers are not available readily. The tangible non-financial assets get impacted by depreciation. Real Estate and vehicles are examples of tangible non-financial assets, while Goodwill, Intellectual Property, Copyright, Patents are examples of intangible non-financial assets.
Top 10 Investment Options
As rightly said by American writer-philosopher ‘Benjamin Franklin’, “An investment in knowledge pays the best interest”. It pays a lot to have complete information about various investment options.
Depending upon investment goals, individual preferences, risk appetite, and other factors, one can choose the investment option best suited to their needs.
1. Direct Equity: For investors looking for a long-term investment with a higher rate of returns, direct equity is the best option. By investing in direct equity, the investor buys the shares of a company and gets a certain percentage of ownership in that company. Here, it becomes important for an investor to know market conditions and how the company is performing.
2. Equity Mutual Funds (EMF): These are also known as stock funds, managed by investment management companies. These companies invest your money in the share market, as a result of which the EMFs carry high risk. These are market-linked securities. If you hold investments for more than a year, the return gets tax exempted.
3. Debt Mutual Funds: Also known as bond funds, these are fixed-income securities. Investment is made in corporate and government bonds, corporate debt securities, treasury bills, among others. These funds give a steady interest income, are less risky than equity funds, and are ideal for investors looking for a regular income.
4. Pension Plans: Also called retirement plans, the pension plans offer the dual benefit of returns and insurance cover. These plans provide financial stability and security to an individual during old age. These are ideal for people working in the private sector and around the age of 35 years.
5. Public Provident Fund (PPF): Investing in PPF is the best option for those whose priority is the safety of their money. It is a long-term scheme (usually 15 years) that offers a reasonable rate of interest and returns on investment. One can start with a minimum of Rs. 500 and up to a maximum limit of Rs. 1.5 lakh in a financial year.
6. Fixed Deposits (FD): Investing money in fixed deposits is quite common in India. As an investor, one may choose to put his hard-earned money as a fixed deposit for a period, ranging between 7 days to 10 years. These FDs offer a low return but are very safe and flexible. The FD is a very popular investment tool among senior citizens and people with very low-risk appetites. Interest is paid quarterly or monthly, which is very convenient for those seeking regular income.
7. Senior Citizen Saving Scheme (SCSS): It is the most appropriate investment choice for senior citizens of India. SCSS is a simple, safe, and reliable scheme for people above 60 years of age. One can invest up to a maximum of 15 lakhs. It offers a decent rate of returns.
8. Pradhan Mantri Vaya Vandana Yojana (PMVVY): This is a government retirement and pension scheme targeted at senior citizens – i.e. people over 60 years of age. The scheme is run and operated by the LIC of India. With a policy term of 10 years, the investor gets a guaranteed pension in this case. The interest rate is 7.4%, and the mode of the pension payment is monthly, quarterly, half-yearly, and yearly.
9. Real Estate: It means investing in tangible and immovable properties and transferring them to generate profits. If one does his homework correctly, this investment option can give maximum output with the least risk.
10. Gold: Gold is special to all of us. Being close to everyone’s heart, buying & investing in gold is much more than merely an investment.
Gold as a Wealth Preserver
A good investment not only saves money for the future but also helps create wealth. Gold is one such investment. It provides complete peace of mind and mental satisfaction to people.
Gold in the Modern Economy
Gold is a precious metal. The prevailing gold prices are a good indicator of a country’s economic condition. Low gold price means that the economy is healthy and vice versa.
What is Digital Gold?
Digital gold is the latest and growing way of investing in gold. It is a simple and convenient way of buying gold online without worrying about its storage and safety.
How Does Digital Gold Work?
Investing in digital gold means backing your purchase (each gram of gold) by an actual 24 karat physical gold in a safe vault.
The Boom of Digital Gold
In these pandemic hit tough times today, where social distancing has become mandatory, it is not advisable to move out & buy gold in physical form. Thus, investing in digital gold can be seen as a good opportunity.
Pros and Cons of Investing in Digital Gold
- It is simple and convenient to buy online.
- One can start with making small investments.
- Investors don’t have to worry about the price and purity of the gold.
- Digital gold is safe, and there is no storage cost.
- Digital gold has higher liquidity and hence is easily convertible to cash.
- Digital gold is subject to a 3% GST on all transactions.
- Some digital trading companies charge handling costs and insurance charges, that’s about 2-3% of the transaction value.
- Some companies offer a limited storage period to the investors.
- Most companies selling digital gold have an investment limit of Rs. 2 lacs per day.
Buying Gold with OroPocket
For someone looking to invest in digital gold, there are several options. However, given the value-added services and other benefits, OroPocket is fast emerging as the trusted investment platform for investors, where they can invest their hard-earned money. However, OroPocket is set apart for its unique features.
Benefits of Buying Gold with OroPocket
Start Small: With OroPocket, the investor gets the freedom to invest in gold with an amount as low as Rs. 1.
Simple, convenient, and transparent: Trading with OroPocket means investing with complete integrity and transparency. The company uses Blockchain technology, which allows the investors to verify the integrity of their investment independently.
Quality assurance: With OroPocket, one gets the guarantee of buying 99.9% pure 24 karat gold.
Regular audits: The Company has its digital vaults in UK, Singapore, Switzerland, and India. Independent auditors open these lockers every day to physically verify the 1:1 backing of the customer’s investment. Thus investors get a sense of security in their investments.
No hidden costs: The only fee charged from investors is a flat fee of 0.25%. No other amount is charged from investors in the name of storage or insurance charges. This makes OroPocket a pocket-friendly option for investors
Customer-friendly: OroPocket believes in providing excellent customer satisfaction. The customers can get in touch 24/7 through call, chat, or e-mail.
We all today are a part of a competitive world, where time is money. So it won’t be wrong to say, (considering the facts mentioned above and benefits of investment), the early we start investing in life, the better it is. There are various investment options, and each comes with varying degrees of risk. Depending upon investment objectives and risk appetite, one can choose the best investment. When looking to invest in digital gold, OroPocket is one of the best platforms that offers customers a convenient way of investing in digital gold.