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Top 5 Investment Plans in 2020

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This year, 2020, has been a crazy ride for investors - the annual budget in the march to the COVID-19 pandemic causing the most unexpected of things to happen to the financial market. As the economy took a downturn, some funds closed down and a lot of people lost money - even if they were assuredly a “safe” investment. This has caused a lot of people to lose faith in mutual fund investing, even though some financial experts did see this coming.

While it is true that markets took a big hit due to the pandemic, it is unwise to lose faith in the investment itself. It is important to remember the need for investing - money left in the bank after your daily expenses depreciate in value every month if you do not invest it. There is now simply a need for investors to be more involved in their investments and reallocate assets accordingly. It is a great idea to talk to your financial advisor to re-adjust your risk-averse vs risky investments. So amongst this chaos, here are some of the best investments plans that can help you through these tough times:

Mutual Funds (MFs)

Mutual funds are in a doubtful light for investors right now. With the volatile state of the market, they are a tough sell. But, the returns from mutual funds are nothing to sneeze at. Even now, investing smartly in mutual funds gives returns that are far outmatched by other safe investments. The risk with mutual funds is higher right now, but the returns are high as well. Investors looking for a moderate to high-risk investment willing to take the time to look at the state of their investments from time to time are sure to profit from investing in mutual funds right now - especially with the rise of hybrid mutual funds - investors can guarantee some security along with some risk.

Public Provident Fund (PPF)

Public Provident Funds are government-backed schemes that invest a part of your income for a minimum of 15 years. This is a long term investment plan that is sure to ride out this wave of the downturned market. Being government-backed makes this plan extremely safe and guarantees a decent return on investment. While the returns won’t be as much as you would get with other plans, the investment and the interest on the investment is completely tax-free. This makes it an excellent choice for risk-averse investors. The current interest rate is 7.9% and is revised quarterly by the government.

Kisan Vikas Patra

Kisan Vikas Patra is a small saving certificate scheme launched in 1988 by the Government of India. The scheme aims to encourage savings & investments for long term goals by the investors(earlier only farmers were eligible to invest). The scheme has been designed in a way that it doubles the investment amount in a pre-defined period of time. Currently, the KVP doubles the investment made by the investors in 124 months(10y 4m) with an interest rate of 6.9% which is compounded annually.

Fixed Deposits (FDs)

FDs are bank deposits that are locked in for a previously agreed time period. The bank provides interest rates for your investment and there is a penalty to be paid for withdrawing money before the time period is over. This is a classic low-risk low reward plan that basically guarantees low returns.

National Pension Scheme (NPS)

National Pension Scheme is one of the best long term government-backed schemes that let the investor choose whether he wants to actively choose where to invest or auto-invest. This scheme is available to everyone between the ages of 18-60 and it matures when the investor is of 60 years of age (can be extended to 70 yrs). The interest on investment is tax-free if you opt for lump-sum payment upon maturity. The NPS investment can be taken out (up to 25%) after 3 years of creating the account.

Post Office Time Deposits (POTD)

Post Office Time Deposits are an alternative to the banks’ fixed deposit for investors looking for a fixed income. It is safer than the FDs because it is independent of the bank and backed by the government. It is an excellent short term investment option that is safe and guarantees returns. The interest rates are revised quarterly by the government and are currently 5.5- 6.7% depending on the investment time period.

While these are not the only investment options, these are the best for investing in right now depending on your risk-taking capability and your investment time period. Investing money is crucial now more than ever. The pandemic has taught us how important it is to have a financial safety net in case things go south. With the state of the market is unclear this is your chance to get out in front of this financial dip. 

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