You just got that BIG bonus you deserve but plucked up the courage not to treat yourself that 150 inch plasma television and save for a rainy day. You already have some systematic investment plans that you are steadily investing into, if not start now. Here are some tips. Now, let's look at options to park that big chunk of money you got.
1. Pay off a debt
Make a list of all of your debts and their interest rates. This includes housing loans, credit cards and student loans. If the interest on the debt is high you should pay off this debt before investing the money.
2. Park your funds into a fixed deposit
A person can invest an amount for a fixed duration. The banks provide interest rates depending on this loan amount and the tenure of deposit. Pick a bank that offers the highest interest rate and invest your lump sum.
3. Invest in the stock market
Indian private equities promise satisfactory returns and have more than 365 equity investments firms functioning under it. Investing in the share market yields higher profits. Influenced by unanticipated turn of market events, stock market to some extent cannot be considered as the safest investment options. Do, remember that even old experienced hands have lost out on massive sums of money with one miscalculation, so tread carefully.
4. Invest in Mutual Funds
A mutual fund company pools the money of many investors and invests it for them in a collection of securities by purchasing stocks, bonds, money markets and/or other securities. Mutual funds are subject to market risks so be prepared in case you find your NAV lower than the sum invested. Conduct a thorough research on the best mutual fund and select a well balanced fund (in case you are risk averse) before you invest. The advantage you have when investing in a mutual fund is that an expert makes the investments for you.
5. A good down payment for real estate
Everyone should think of their home as an investment and if you have a sizeable enough chunk to make a down payment for a house. This is probably the largest and best asset to look at. Investing in real estate has become increasingly popular over the last fifty years and has become a common investment vehicle. There are, of course, blemishes on the face of what seems like an ideal investment. When you invest in real estate, money is made or lost behind the scenes, not when the final deal is made.
6. Invest in government securities
These are government debt obligation backed by the credit and taxing power of a country with very little risk of default. This includes short-term Treasury bills, medium-term Treasury notes, and long-term Treasury bonds. Government securities are one of the safest in the market. G-secs can be bought either in the primary market (through RBI auctions) or from the secondary market. G-secs are available for tenure of three months (counting T-bills) to 30 years.
7. Investments in National Saving Certificate (NSC)
National Savings Certificate is a post-office savings scheme, backed by the government. The minimum amount of investment is Rs 100, with no upper cap. NSCs are sold in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000. The rate of interest is 8 percent per annum compounded half yearly. The amount invested in NSCs is eligible for tax deductions under Section 80C; however, the interest you earn would be taxable.
8. Investments in Public Provident Fund (PPF)
PPF is a government-guaranteed fixed income security. It provides regular savings by ensuring that contributions (which can vary from Rs.500 to Rs.70,000 per year) are made every year. An interest rate of 8% p.a. (compounded annually) is credited to the PPF account at the end of each financial year. The account matures in 15 years from the date of initial investment. One can then exercise an option of continuing the account for an additional block of 5 years or closing it.
