There are three broad categories of investment services that you could choose from:
- Low risk, low return, guaranteed income
- Medium risk, medium return, predictable investments
- Balanced Risk, medium Term portfolios
Each of these options has its own characteristics and would suit individuals based on their Risk
appetite and the stages that they are in their life-cycles.
Your investment plans depend on your income needs and on your own appetite for risk, whether you would want your investment income to remain safe and secure, or if you are willing to take some amount of risk with investment services. Fortunately, there are different investment plans available to go with different stages of life and in line with various levels of individual risk appetite.Low Risk, Low return, Guaranteed Investment Income:
This is for people who would want to play it safe, have medium to long term investment plans, and are in no hurry to make money. You could opt for such investment services as:
- Post Office Monthly Income Scheme
- Senior Citizen Saving Scheme
Post Office Monthly Income Scheme includes investments put in place by the Government of India to reach out to the larger public. This scheme of investments is normally of 6 years in duration, and could generate reasonable income over the period, along with a Bonus
component at the end of the term.
There are also other schemes such as the Senior Citizen Saving Scheme for those above the age of 60, the Fixed Deposit schemes at banks that are again of medium to long term duration, and Government bonds that are typically long term, spread over a 20 – 30 year period. These are safe havens in investments, low risk and phased out investment plans.Medium Risk, Medium return, Predictable Investment Services:
The second category of investment plans are of a medium term and could either be standalone investments or serve as supplements to the guaranteed part of investment income. Typical options in this category would be:
The two sources of investment income in this case would be interests and dividends. Corporate bonds give you an investment income in the form of interests, while stocks provide you with dividend income. You could opt for instruments such as money market funds, bonds as well as Certificates of Deposits for your investment services, or you could opt for dividend paying stocks, or you could focus your investment plans on funds that invest in such instruments. Balanced Risk, Medium Term Portfolios for Investment Income
The final category of investment services would include not just one, but a portfolio of investment plans. There are two objectives to having a portfolio of investments:
- To ensure investment appreciation with time to make up for inflationary effects
- To ensure longevity of investments to provide for investment income through the entire life span
Investments in the form of portfolios are nothing but a wise mix of investments in cash, fixed investment income and investments in equities. While the fixed investment income and investments in cash play the balancing act of providing safety in your investment plans, the equity part of the equation is geared to ensure proper appreciation in value of your investments, to stay ahead of inflationary effects that could potentially debase your investments in real terms.
When your investment plans
are about creating an investment portfolio, you also need to take care of a few basics in terms of withdrawal rates – they refer to the rates to which you could withdraw from your investments to meet your current financial needs, without leaving a negative impact on the long term investment income or on the value that you could generate out of your investment plans.
Alternately, you could also opt for investment services such as the Retirement Investment Fund or other such long term investment services, which are all about creating a portfolio of investments to manage your investment income over the long term. The idea is to have a good balance of risk and returns, with calculations of safe withdrawal rates and the ability of the investment income to last the entire duration of the investments in place.