Investment is one of the best ways to fulfil your family’s and your aspirations by maximising your income. It involves the allocation of small amounts of money over a period of time to gain profit and grow your money. However, investments are subject to market risks and depend majorly on multiple economic factors.
What is the meaning of investment?
Investment refers to putting your money in an asset with the aim of generating income. Financial investments come in different forms, such as mutual funds, unit-linked investment plans, endowment plans, stocks, bonds and more. However, the primary goal behind all investments remains the same, i.e., to increase the value of your invested money.
How do investment plans in India work?
In India, investments are categorised as short term and long term, which has an implication on their taxability. Short term investments require an asset to be held for 1 to 3 years, for example, a recurring deposit, mutual funds, and more. Anything beyond this is a long term investment, such as insurance plans, Public Provident Fund, fixed deposits, National Pension Scheme, and more.
Why should you invest in investment plans?
The need for investments cannot be stressed enough. While systematic savings can ensure that you have enough funds for a financial emergency, investments make sure that you do not lose out on the value of your money.
Inflation can reduce the worth of your money with time. A commodity that costs ₹ 10 today can cost ₹ 50 five years from now. Therefore, simply saving your money is not enough. You need to invest it so that your funds grow with time.
Investment plans can offer you high returns over time to build wealth and cater for your long-term objectives.
Types of investments based on the risk profile
Low-risk investments: The risk is negligible, but the return on investment may also be less than medium and high-risk options. These include instruments like government bonds, corporate bonds, treasury notes, and more
Medium-risk investments: The rate of return is moderately high here
High-risk investments: These investments offer the maximum potential for growth. These include instruments like mutual funds, ULIPs, equity, and more
Long term investments offer a lot of advantages. Firstly, the amount of interest (return) you receive at the end of a term is substantially more than the short-term investments. With a longer period of investment, your money grows in value over the years. Moreover, long term investments keep you safe from the volatility of the market. When you stay invested for a longer time, you can ride out the fluctuations in the market.
Long term investments align well with big financial goals, like funding for your child's education or wedding, buying a house, or saving up for retirement. They give you time to build your wealth slowly and steadily with short term tax benefits and allow you to save for significant milestones in life without hampering your current goals and lifestyle. However, every long-term investment option must be chosen carefully. You must understand the risk factors attached to an investment plan before making a decision.
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The article clarifies what is a Non-Banking Financial Company (NBFC), what are various kinds of Non-Banking Financial Company (NBFC), regardless of whether the Reserve Bank manages every cash-related affiliation, what are the advantages and besides compliances that should be possible by non-banking monetary affiliations.
NBFC is an affiliation chosen under the Companies Act, 2013 of India, occupied with credits and advances, procurement of offers, stocks, insurances, enlist buy affirmation business or chit-store business, yet evades any substance whose focal business is agribusiness, present-day action, buy or offer of any item (other than protections) or passing on of any help and course of action/buy/improvement of the steady property.
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That is the clarification, the Indian economy is on the decrease because of the breakdown of cash-related relationships in India as far back a couple of years.
Are there various types of NBFC?
