Top Investment Avenues To Build A Corpus!

Often, you will spend so much time analyzing investment choices that you will decide not to invest at all. And when it comes time to invest it, it could be for all the wrong reasons. However, it is critical that you invest intelligently in order to make your hard-earned money work for you and become a passive source of income.

The most crucial reason for investing is to achieve a specific objective. An investment for retirement, for example, is structured differently than one for wealth creation, kid education, or home purchase. Once the aim of the investment has been determined, selecting a product becomes rather simple.

Various Investment Options for Building a Corpus

A few different types of investments are listed below, along with their risk profiles:

1. Stocks 

Stocks, often known as shares or equities, are perhaps the most well-known and straightforward investing option. When you buy stock, you're purchasing a piece of a publicly listed company's ownership. When you acquire a stock, you hope that the price will rise so that you can sell it for a profit later. The risk, of course, is that the stock's price will fall, causing you to lose money.

2. Bonds

You're essentially lending money to an entity when you buy a bond. This is usually a company or a government agency. Municipal bonds are issued by local governments, whereas corporate bonds are issued by companies. The lender receives interest payments while the money is lent. You get your principal back after the bond matures – that is, after you've held it for the contractually specified amount of time. Bonds normally have a lower rate of return than stocks, but they also have a lower risk profile. Of course, there is some danger involved. The corporation from whom you purchase a bond may go bankrupt, or the government may default. Treasury bonds, notes, and bills, on the other hand, are regarded as extremely safe investments.

3. PPF (Public Provident Fund)

PPF (Public Provident Fund) PPF, which is supplied by the Government of India, is one of the safest and oldest investment options and can be opened at any nationalized or private bank, as well as post offices. PPF accounts can be created with as little as Rs. 500, and investments up to Rs. 1.5 lakh are tax-free each year. The interest rate on PPF accounts is compounded annually, and the government revises it each year. PPF investments benefit from the triple Exempt-Exempt-Exempt (EEE) benefit, and the full corpus of a PPF, like ULIPs, is tax-free on maturity. However, one of the most significant disadvantages of PPF is the 15-year lock-in period, however partial withdrawals are possible beginning in the sixth year.

4. Unit linked insurance plans (ULIPs)

Unit linked insurance plans (ULIPs) issued by life insurance firms are great insurance-cum-investment plans that serve the dual aim of providing life insurance as well as the possibility for long-term wealth growth. The premium paid for a ULIP is invested in the market, allowing the investor to gain market-linked returns while also ensuring a fixed payment in the case of death. Policyholders can opt to invest in stocks or debt funds according to on their risk tolerance. Aggressive investors with a high-risk tolerance can choose equities funds, while conservative investors can choose debt funds or a combination of the two.

Conclusion

There are numerous investment options available. Some are suitable for novices, while others need a higher level of expertise. Each sort of investment has a particular risk and reward profile. Before deciding on an asset allocation that meets their objectives, investors should think about each sort of investment.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.