The benefits of building an investment portfolio can be far-reaching. It will not only help secure your future, but the returns can last for several generations!

Thus, it becomes crucial for you to cherry-pick the best investment plan to guard your initial investment and grow it to the next level by careful selection of the right financial products. While the investor portfolio may introduce some risk, it also gives you more control over your financial future.

Simply put, investments today are significant because just earning money will not be enough. You work hard to make an earning, but is it going to be enough to lead a comfortable life or fulfill your future goals? You need to make sure that the money you save is not just lying around in the bank account. By investing it in the best investment plan (based on your needs), you will be able to earn good returns from it.

But the question is, how can you plan your investments to ensure that it meets the said purpose?

For starters, you need to figure out the right products that fit your income profile and needs. Some things that will help you get a head start include:

  1. Choosing your investments carefully after adequate due diligence
  2. Not falling for schemes that promise high returns in a short amount of time
  3. Reviewing your short term investment plan periodically
  4. Considering the tax implication on returns from your investments
  5. Avoiding investment in financial products that you don’t understand

However, with so many different types of investment options, it is common for a first-time investor to feel overwhelmed. It is advisable to take your time in building your best investment plan because making the wrong choice can lead to financial losses. To help, here are key factors that you must keep in mind when looking to invest in financial products.

Start Investing at An Early Age

Younger investors have fewer responsibilities and benefits of time to reap the most out of investments. In your 20s and early 30s, you can get a headstart towards long-term financial stability by planning your investments. With long work life ahead of you, it is not only possible to invest in a short term investment plan but also long-term products that can increase your income as well as returns. Furthermore, the early you start investing, the more investment span you have, and you can maximize your returns with long-term equity-based investments. But if you are above 40 and looking for something safer, then fixed deposits can be the right choice for you.

Keep Your Goals In Mind

Define your investment goals if you want to have the best investment plan. Your goals could be short-term or long-term. Your short term investment plan can be made up of safer investments, and return-oriented investments are best for long-term goals.

Choose Investments As Per Your Risk Appetite

Another essential thing to think about when choosing an investment option is to look at your own needs and risk profile. You must take your income and number of dependents into account to come up with the best investment plan suitable to your needs.

At the same time, you need to make sure that your investments are based on your risk tolerance. In other words, it is advisable to invest in high-risk equity investments only if you have a high-risk tolerance towards market-linked volatilities. In case, you are a risk-averse investor, it is better to stick with less risky debt instruments.

There is no one-size-fits-all investment approach for a balanced financial portfolio. Instead, you must personalize your investments to suit your needs and requirements.

Here are some popular options that are necessary to make your portfolio the best investment plan.

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Life Insurance

Life insurance, especially term life insurance is one of the safest investment types in the long run. Life insurance is a crucial addition to your financial planning because it provides a lifetime’s worth of security and tax-saving benefits under Section 80C on a year-on-year basis. Essentially, a term insurance plan secures your family’s financial future in case of your demise. Online term insurance plans offered by insurers such as Max Life Insurance allow you to choose the right policy by careful evaluation of benefits against the payable premium.

Health insurance

Health is in this fast-paced world is often compromised due to hectic lifestyles and poor eating habits. This is the reason health insurance is a must-have in your investment portfolio to help you pay for exorbitant hospitalization bills. With medical inflation at an all-time high, you can protect your savings in dire times and rely on your health insurance to help you pay for the treatment costs.

Mutual Funds

Mutual funds have been around for a long time and have gained popularity for being a sought-after product in the best investment plan. These investment vehicles pool the investors’ money and invest in a way to earn optimum returns.

For instance, equity-based mutual funds invest in stocks and equity-linked instruments, while debt-based mutual funds invest in bonds and papers. With mutual funds, you can earn tax-saving benefits and redeem your investments at any time.

Savings Schemes

When you are aiming for the best investment plan, don’t forget to side aside funds for emergencies and secure your retirement. Investments are a smart way to grow your money and can help you achieve those short-term and long-term goals. This is why saving schemes such as ELSS and ULIPs make an essential part of your financial portfolio.

Equity Linked Savings Scheme is one of the best short term investment plan because it has a lock-in period of only three years. You can also get tax benefits of up to Rs 1.5 Lakhs as per section 80C of the Income Tax Act.

Unit Linked Insurance Plans, on the other hand, are long-term financial products that offer high returns if you have at least 8-10 years for investment. They have an insurance and investment component that allows you to choose how you want to invest your money as per your tolerance for risk. With the right asset classes and long tenure, you would be able to create some severe wealth during the investment period!

Government Sponsored Schemes

There are many government schemes launched by the Government of India that help in strengthening your financial stability. All these schemes are ideal for long-term benefits, tax exemption, and attractive rates of interest.

National Pension Scheme and Public Provident Fund are among the most popular government-funded schemes that are entirely tax-free and earn you high interest for the time you remain invested.

Now that you know everything about investments and how to create the best investment plan, it is time to start assessing your future goals and choose your investment instruments wisely.