Constructing a bright future for yourself and your family is akin to nurturing a banyan tree. It requires time, regular little efforts, and the ideal environment. In financial terms, that “environment” is your long-term investment plan.
If you reside in India or are an Indian living abroad, you are fortunate to have access to some of the best methods that help you grow your money safely. Here are a few straightforward approaches that you can start using today to make your money work just as hard as you do.
The “Safe and Steady” Plan: Public Provident Fund (PPF)
A PPF is somewhat like a piggy bank protected by the government. This plan is among the most popular in India because it is very safe.
- The Procedure: You pay a small amount annually (as low as ₹500).
- Advantages: The interest earned and the amount withdrawn at maturity are not taxable.
- Target Audience: Non-risk takers. For instance, it can be used for funding a child’s education or planning a relaxing retirement.
The “Money Multiplier”: Mutual Funds (SIP)
If you aim to boost your assets at a faster pace, then you may have to go the stock market route. But that doesn’t mean you have to become a financial guru. A Systematic Investment Plan (SIP) is the simplest way to turn regular monthly savings into a substantial sum.
- Operation: Every month, a fixed sum (let’s say ₹1, 000) is tucked away into a portfolio of companies.
- Compounding Phenomenon: Just 10 or 20 years of investing regularly can result in a considerable accumulation of wealth, as you make “interest on your interest.”
Suitable for: Those starting their careers or parents willing to give a 7 to 10-year time horizon at a minimum.
The “Retirement Buddy”: National Pension System (NPS)
We all look forward to our “golden years”. The National Pension System (NPS) is a great tool, which enables you to accumulate a pension fund for your retirement phase, and you can draw a regular monthly pension from the corpus which is built during the working years.
- Why it’s cool: Extra tax benefits, partly investments in equity, which is good for growth, while the balance is invested in safe government securities.
- Best for: Those who wish for regular income after retirement.
Life Insurance for NRI: Protecting Family from Afar
When you live in a different country, you have a completely different set of needs/personal circumstances. You earn in foreign currency, but most probably your family and your emotional bonds are in India. So the question of a life insurance plan for NRIs gets very important here.
Plan purchased in India is definitely less expensive compared to the equivalent ones in US, UK or Dubai. What happens is that you live in one country and your family lives in the other. Your family should be financially secure in your absence without any legal or currency difficulties.
There are more and more insurers who are offering “Tele-medical” check-ups these days which means you can complete you policy medical procedures via a video call, without necessarily flying to India.
Which Plan is Right for You?
Your selection of the perfect long term investment plan should be guided only by your current age and the things you want to do for your family. In case you are dreaming about owning a house, a Mutual Fund (SIP) would be an excellent option since that type of fund gives you an exposure to medium risk while offering better growth possibilities over the long run.
When it comes to a child’s marriage, majority of Indian families conserve their savings either in PPF or Gold Bonds, primarily because these options expose them to very low risk, thus securing their savings for the future. In case you are making plans for your comfortable living after retirement, the National Pension System (NPS) and other pension schemes would be your perfect partners as they fall between low and medium risk profiles.
Last but not least, for rendering your entire family safe and secure, a Term Life Insurance is what you must have. This type of insurance is the lowest risk option but at the same time it is the most efficient in making sure that your family is always taken care of. Moreover, life insurance for NRI (Non-Resident Indian) are available for such individuals who, even though they live abroad, want the same peace of mind for their family back home through life insurance.
Simple Rules for Success
Here are the three basic rules that you need to follow to ensure these plans will really work for you:
- Start Early: The bigger growth is with a small amount started at 25 only vs. a big amount started at 40.
- Be Consistent: Even if the market is down according to the news, do not stop your investments. We all need to keep our ‘plants’ watered all the time.
- Don’t Touch It: A long-term investment means a minimum of 10 years. So, keep your money invested in order for it to grow.
Conclusion
Investing can be very simple and not terrifying at all. You don’t have to watch the financial channel every day or learn complicated math. Just by choosing a safe PPF for stability and a mutual fund for growth, you are securing a life of comfort for yourself.
And our brothers and sisters abroad, don’t forget that life insurance for NRI is the best security gift that you can send back home.
