Top 4 Investment Options for Beginners

"Don’t work for money. Make money work for you." We’ve all heard this advice at some point in our lives. Perhaps this is why you considered investing in the first place.

But with so many available options, how do you know which one to pick? Which investment option will get you good returns with minimal risks? If you’re seeking answers to all these questions, you’ve come to the right place. This article will look at the most popular financial products for beginners to invest in.

1. Term Deposits

Here, you lock in a lump sum for a fixed period with a financial institution. In return, you earn a fixed interest rate higher than that of a regular savings account. The best part? Your returns at the end of the term are fixed and remain independent of the stock market performance. Simply put, your returns are guaranteed.

Today, most banks let you choose how and the frequency of the interest payouts. And if you want tax relief, you can opt for a 5-year tax-saver FD.

2. National Savings Certificate (NSC)

NSC is a government-backed product and is safer than other market-linked investment instruments. That’s because the government sets the interest rates for these instruments. They get revised quarterly, and the returns get compounded annually. Moreover, starting an NSC is incredibly easy since the eligibility requirements and documentation are minimal.

Note that the minimum tenure is five years, and the minimum amount is INR 1,000. And you can claim tax benefits under Section 80C of the Income Tax Act.

3. Public Provident Fund (PPF)

PPF is another government-backed instrument offering guaranteed returns at interest rates that are revised every quarter. Moreover, it requires periodic payments, and your funds remain locked for 15 years. Note that the minimum annual investment amount is INR 500, and you can claim tax benefits as specified by Section 80C of the Income Tax Act.

4. Mutual Funds

A mutual fund is a vast pool of money from many investors invested in a range of stocks, bonds, and other debt. Given they directly invest in multiple market-linked avenues, their returns depend on market fluctuations. That said, you can invest in lower-risk mutual funds or diversify your investments to reduce risks.

Final Word

These are some low-risk products to help dip your toe in the investment world. Before investing, you should ensure the terms and conditions of the specific product and see if it meets your needs. Happy investing!

“Prakhar is a, writer, and author of the new novel We Were Already There.” If your work has won any prestigious awards or earned bestseller status, make sure to mention that here, too.