Learn, Earn

Saving is winning only half the game. You need to invest smart too to make your money work for you. Sneha Mahale helps you choose the right investments

- Sneha Mahale

Kinjal Shah, 26, a real-estate agent, wants to expand her portfolio. She says, “My parents encouraged investment in fixed deposits, PPF and government bonds. They were safe options that offered fixed returns. But I am open to taking a few risks, and invested in a few stocks recently.”

Before we begin, let’s get the obvious out of the way. Having cash lying around or parked in a savings account isn’t earning you anything. But with so many investment options to choose from, how do you determine which one is right for you? Investments are a function of your risk appetite, which, in turn, depends on your age, experience, and, of course, capital. Kanika Kapur, Chief Investment Strategist, Spin Wealth Consultants, says, “The investment has to give you good returns and have a risk level that doesn’t make you lose sleep over it. Because the higher the risk, the higher the return.”

Like most investments work on the risk-reward ratio, most investors too fall between the conservative-aggressive spectrum. If you would like to take a calculated approach to saving, opt for safe vehicles, which offer lesser, though assured returns. On the other hand, if you want to place your bet on faster growth, reach out for relatively volatile options that offer better potential returns. The ideal place to be on the spectrum though is somewhere in the middle, with a balanced portfolio.

We lead you through the maze with this handy guide.

If slow and steady is your game, then opt for the following options. While they are relatively safe, the rate of return is usually on the lower side (4-9 percent).

Public Provident Fund (PPF) 

If you want to invest your small savings, earn a higher interest than what banks offer, and save tax at the same time, then open a PPF account. With a lock-in period of 15 years, it is a conventional instrument to build your retirement corpus.