Newbie in the world of investments, find here few low risk investments you can do
New Delhi: A person can start investing even with five hundred rupees per month. Those who have just started earning, they can start investing from Rs 1,000 per month according to their risk profile. If a person invests 1000 rupees in equity mutual funds every month from the age of 25, then he can easily prepare a fund of Rs 50 lakh before retirement at the age of 58 years.
The question is how will you make these investments, how to choose investment options, in which you can start investing with just one thousand rupees per month.
People who want to take little risk the there are two investment options. These are Public Provident Fund (PPF) and Recurring Deposit (RD).
Public provident fund
PPF is a much better long-term investment option for those who prefer low-risk investment options. It provides guaranteed tax free returns. PPF offers 7.1 per cent interest rate for the July to September quarter. If you invest Rs 1,000 every month in a PPF account, then after 15 years you can create a fund of Rs 3.25 lakh. The amount invested by you in this will be 1.80 lakhs. At the same time, if you allow this investment to continue for 30 years, then you can have a total fund of 12.36 lakhs at an interest rate of 7.1 percent.
In this investment option, you can earn a good amount by depositing a certain amount every month. Most banks offer RD for their customers. There is no lock-in period in this investment option. That is, you can withdraw your money at any time. The major banks of the country are paying interest of 3 to 6% on RDs of one to five years duration. Some small finance banks and co-operative banks are also offering 9% interest rate on RD. Interest earned on RD is taxable as per the tax slab of the customer.
Investment in shares
One can build a good portfolio in the long term by investing Rs 1,000 per month in stocks. Systematic Equity Plan (SEP) can be used for this. Through this, you can invest an amount in shares of your choice every month. In this way you can create a portfolio of 20 Nifty shares by investing Rs 12,000 every year through SEP in 20 years.
Investment in Equity Mutual Fund
Investment in equity mutual funds through SIP can be started from just Rs 500. If you do not even understand the stock market, then you can simply choose an ETF that tracks the Sensex or the Nifty. With this type of investment, you can easily get 10 to 12 percent CAGR returns in the long term. The same, if you can take some risk, you can also go for SIP in a diversified largecap fund.