Beginner’s Guide To The 8 Best Investments For 2024
If you are new to investing, you may be puzzled by the various possibilities available in the market. There is something for everyone, whether you are looking for aggressive returns or wish to keep your returns stable. This post will provide you with a list of investment opportunities that can provide consistent returns with minimum risk.
Best investment options for beginners
1. Bonds
Investing in bonds involves lending money to an issuer, either a government or a corporation. In exchange, the issuer offers periodic interest payments and the face value at maturity.
The interest rate for bonds generally ranges between 8% and 12%. However, you are advised to check the credit quality assigned to bonds by credit rating agencies. A bond with an unusually high rate of interest is seen as risky. It is assumed that the company has unstable financials and offers such a high rate to attract clients.
2. Unit Linked Insurance Plan (ULIP)
In a ULIP, part of your premium goes towards life insurance coverage, and the rest can be invested in funds of your choice. You can choose the weightage in equity, debt, or hybrid funds based on your personal goals. Over time, when your needs evolve, you can switch between funds to align them with your situation.
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It is important to note that ULIPs have a five-year lock-in period to encourage long-term investment discipline.
3. National Pension System (NPS)
NPS is a government-backed plan that aims to offer financial stability during retirement. It has two types of accounts: Tier I and Tier II. The former is the primary pension account with tax benefits, while Tier II is a voluntary savings account without any tax benefits.
The Pension Fund Regulatory and Development Authority (PFRDA) regulates the scheme. NPS allows you to choose your fund manager and investment options. You can also decide how much to contribute and how often.
When you retire, NPS allows you to withdraw a part of the corpus. You can use the remaining amount to purchase a regular annuity.
4. Public Provident Fund (PPF)
PPF is a long-term government-backed investment option with a 15-year lock-in period. After this tenure is completed, you have the choice to extend it in blocks of five years. The current PPF interest rate is 7.1% annually and is subject to quarterly review.
You can start investing in PPF in a lump sum or instalments with as little as Rs 500, with a maximum yearly capping of Rs 1.5 lakh. Your contribution to this scheme is eligible for tax benefits under Section 80C.
5. Senior Citizens Savings Scheme (SCSS)
As the name implies, this scheme is for individuals aged 60 and above. Early retirees can also invest, provided they do so within one month of receiving retirement benefits. SCSS offers an annual interest rate of 8.2%. However, the rates are subject to quarterly review.
The scheme has a minimum and maximum investment limit of Rs 1,000 and Rs 30 lakh, respectively. You can invest in the scheme for five years, and on maturity, you can extend it for another three years.
6. Sukanya Samriddhi Account (SSA)
The government launched the SSA scheme to promote the Beti Bachao Beti Padhao Abhiyan. You can open an account under the scheme at any nationalised bank or post office by depositing a minimum of Rs 250 and a maximum of Rs 1.5 lakh every year.
SSA guarantees an 8% annual return. Withdrawal is permitted when the girl reaches the age of 21 or at any point after the age of 18 if she is married.
7. Sovereign Gold Bond (SGB)
This government-backed scheme has gold as its underlying security. The minimum investment is equal to the value of one gram of 24K pure gold. The scheme not only provides capital appreciation through increase in the price of gold, but also provides 2.5% interest, payable semi-annually.
SGB investment is available for a maximum of eight years, with a five-year lock-in period. The maximum amount you can invest in this scheme as an individual is 4 kilograms.
8. Mutual Funds
Mutual fund schemes are investment vehicles that collect money from various investors to create a large pool of funds. This pool is then invested across diverse assets, such as stocks, bonds, and other securities. The returns are market-linked, and you benefit from the professional management of experienced fund managers.
Conclusion
As a beginner, investing requires careful consideration of your risk tolerance, existing liabilities, and future goals. If you have a low-risk appetite, you may opt for government-backed securities that carry minimal risk and offer assured returns.
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