by Mr. Rakesh
Nangia, Nangia & Co
One of the main aims
of investing is to secure one’s financial future. Though investments in
traditional instruments, like savings bank accounts & fixed deposits, are
secure, they give limited returns that cannot even match inflation. It is
important to scout for investment opportunities that match one’s expectations
in terms of risks and returns.
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| Mr. Rakesh Nangia, Nangia & Co |
All investment
instruments require some degree of understanding, whether it’s the risks
associated, potential returns, the timing of such returns and repayment of
investment.
Most people invest
their money without doing enough research, which exposes them to the risk of
making a loss. Investments in real estate and metals (such as gold and silver)
are easy, but one bad session can wipe off the entire investment.
Broadly speaking,
risky instruments, like pure equity, offer higher returns and secure
investments offer limited growth. There is no straight-jacket formula to invest
towards a secured future and, like, the investment decision depends on various
factors, including the investor’s risk appetite. It, therefore, becomes
important to first understand where are you investing.
Besides, it is
important to be prepared for contingencies by having in place the necessary
safeguards. Education of children, their marriage, foreign trips & home
purchase are areas where the timing of returns is crucial.
At the same time,
life insurance is an important element of an individual’s plans. Medical
insurance, too, plays a vital role in dealing with financial contingencies
arising from health-related expenses.
There are certain
options that can reduce your investment costs, such as bonds and commercial
property. Holding a portfolio of investments with a low level of correlation
can help you diversify the risks.
While there is a
possibility that the value of assets will be hit by inflation, shares, bonds,
property and cash react differently in varying conditions, and opting for more
than one asset can help you ensure better and comparatively stable returns.
To put at rest financial
worries in retirement, start early. Equities & equity-linked instruments
make sense if the time horizon is long. Some retirement plans offer the
combined benefits of insurance and investment.
While returns are
important, it is equally important to analyse the tax ramifications of each
instrument to evaluate the post-tax returns. Some investment options, apart
from offering higher returns, also offer immediate short-term advantage in the
form of a lower taxburden.
These include
investments in Public Provident Fund (PPF), National Savings Certificate (NSC),
bank / post-office tax savings deposits, home loan principal repayment, Rajiv
Gandhi Equity Savings Scheme, health insurance premium, interest paid on
education loan etc. The tax benefit for each of these varies.
Do careful investment
planning for your hard-earned money to ensure a secure future.
About the author..
The writer is Rakesh
Nangia managing partner, Nangia & Co. With inputs from Nikhil Goenka
Contact
Mr. Rakesh Nangia (Leading
Financial Consulant & India Entry Strategist)
E- mail: nangia@nangia.com
Web Site : http://www.rakeshnangia.com/
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