While investing your hard-earned money, you should balance the safety of your funds with high returns from your investments. This can only be possible when you select an investment option based on your financial goals and earnings. Investing in safe financial tools like life insurance, savings accounts, FDs, etc., can help you earn guaranteed returns at low risk.
Read on to explore some more safe investment options that will help you plan your life’s milestones in an innovative and secure way!
Top 10 Financial Tools That Help Set Your Life’s Milestones
Here are some of the best financial tools that can help you achieve your milestones in life:
1. Fixed Deposit
A fixed deposit is a low-risk investment tool that provides better returns than a savings account. FD involves an investment of a lump sum for a fixed tenure with a bank. The deposited amount will earn you interest at a fixed rate, which is decided upon while opening the FD account.
You can receive this interest monthly, yearly, quarterly, or half-yearly. Fixed deposits offer guaranteed returns, making them one of the safest investment plans.
2. Health Insurance
Health insurance is a crucial financial tool that safeguards you from unforeseen medical emergencies. Policies allow you to access top healthcare facilities without bearing out-of-pocket expenses. They offer peace of mind that you are financially covered against health issues and can opt for the required medical treatment according to your health needs.
3. Life Insurance
Individuals needing to look after their family should consider a life or term insurance policy a must-have financial tool. It covers the policyholder’s family financially if they unfortunately pass away during the policy period.
Such plans offer financial security and peace of mind to the policyholder, who can rest assured that their family’s needs will be taken care of even in their absence.
4. Guaranteed Return Plan
A Guaranteed Returns plan is a savings plan that comes with life insurance coverage and allows long-term savings. You can save a fixed sum in a guaranteed return plan at regular intervals and expect a guaranteed return from the financial corpus that has been saved over time. Depending on your financial needs and goals, you can choose the payout option as regular income, lump sum, or whole-life income.
5. Mutual Funds
A mutual fund is a regulated investment company that pools money from many investors to buy a diversified portfolio of assets like stocks and bonds. Each unit represents partial ownership in the fund’s holdings, and investors purchase or redeem them directly from the fund or through professionals.
6. Public Provident Fund
A PPF, or public provident fund, is a long-term investment plan that offers stable and high returns. This investment tool is preferred by individuals who wish to keep their principal amount safe. The money deposited in the PPF account monthly is compounded to ensure you get higher returns.
7. Credit Cards
Credit cards are one of the essential financial products that enable secure and convenient purchases without spending any cash. Individuals with a decent credit score can get credit cards from their bank and earn reward points. You can redeem these points to avail of multiple benefits and discounts on your purchase.
8. National Pension System
The National Pension System (NPS) is a voluntary, government-backed retirement scheme in India that lets individuals invest in assets like equities, government bonds, and corporate debt. It offers flexible investment options and tax benefits and ensures a regular pension income after retirement, helping secure financial stability in later years.
9. Real Estate
Investing in real estate is a long-term investment that offers you financial benefits through capital appreciation and rental income.
10. Gold
Gold is a secure investment option that helps diversify your portfolio. Whether you invest in gold bonds or physical gold, you will stay protected against inflation.
Things to Consider While Selecting the Right Financial Tools for Smart Investment
Here are some of the factors that you must consider before investing in a financial tool:
1. Decide a Budget
A detailed budget is essential for managing money well. You can spot where to reduce spending and boost savings or investments by closely tracking your income and expenses. Budgeting apps or spreadsheets make this easier and help you clearly understand and improve your financial situation.
2. Opt for a One-time Investment
If you have a lump sum to invest, options like fixed deposits (FDs), lump-sum mutual funds, or single premium insurance policies can be effective. Depending on the investment type and duration, these choices often offer higher returns than regular savings accounts, making them suitable for maximising your one-time investment.
3. Choose a Long-term Investment Plan
Long-term investments like Public Provident Fund (PPF), National Pension System (NPS), and Equity-Linked Savings Schemes (ELSS) are designed for significant growth over time. These options help build wealth, offer tax benefits, and are essential components of a strong investment plan for future financial security.
4. Acquire Knowledge on Investment Options
Knowing about different investment options helps you make smart financial decisions. You can boost your understanding and confidence by reading financial blogs, attending workshops, or consulting financial advisors. These resources provide valuable insights, enabling you to manage your money wisely and achieve your financial goals more easily.
5. Retirement Plans should be a Priority
Securing your financial future requires starting retirement planning early and making strategic choices. Investing in options like the National Pension System (NPS) or pension plans helps build a retirement corpus, ensuring you receive a steady income after you stop working and allowing you to maintain your lifestyle without financial worries.
Applying these money management strategies can significantly enhance your financial health. Consistently budgeting, diversifying your investments, and keeping up with tax rules and financial products are essential. The foundation of financial success is regular planning, making informed choices, and being flexible enough to adjust your approach as your financial situation and goals evolve.
