There are two parts to planning your investment for a sound financial future – one, where you decide on the bigger picture of how you would want your investment to be, and two, when you decide on the instrument that you would choose to execute your plans. When you have got the basics right, you could then compare plans and go about deciding on the best plan that is right for you.
The bigger picture – risk, returns, and the timeframes: The first aspect associated with your plan have to be with the kind of Risk
that you are willing to take, the amount of returns that you plan to make, and the timeframes that you have set for yourself to make things happen. Are you willing to go the long term, which would be over and above 7 years in duration, would you want to keep it mid-term, as in about 4 – 6 years long, or have you set your sights on the short-term? This basic thinking would make you focus on the category that would be the most appealing for you.
And it is a similar case when it comes to risks and returns – they are partners in business but they do not always go the same way. As you would realise when you compare these plans, those that are high in risk tend to have higher scope for returns, and vice versa. However, that is not to mean that all high risk investment
s are invariably subject to high returns – investment plans are, as the disclaimer goes, always subject to market risks. The clearer you are in what you want, the better you fare.
Which investment plan? There are many options available for the novice as well as the shrewd investor. Starting with the traditional ones to the successful online plan, there are many instruments that could serve your purpose.
Investment Insurance: This is a combination of investment and insurance. Some may consider this the best plan, since it serves two purposes in one. On the other hand, you may not get the best returns on investments, since there is also an element of insurance Coverage
in this option.
Unit-linked plans: For those who have chosen to ride with the market and take it in their stride, there are unit-linked plans. Their returns invariably go with the fluctuations in the market, even as they provide the advantage of insurance. This is also a good option if you have your sights fixed on the long term.
Online plans and other options: There is a whole range of options available for those who look for varieties, right from mutual fund investments through bank fixed deposits, Public Provident Funds (PPF) and other investments such as National Savings Certificates. You would only have to do your research and compare these plans to decide what is right for you.