Wealth management is simply managing one’s wealth. It is a combination of investment management and other financial decisions regarding taxes and future planning. Investment essentially means the devotion of assets, more often than not, money, with the aspiration and expectation of obtaining an additional income or profit in the future. By investing, you are not only saving for the future but accumulating more wealth on top of your savings. Therefore, investing is essential in wealth management systems.
Investing is key to managing your wealth as it provides financial stability in the present and the future. The returns from investments help you stay afloat during inflations in a way that savings can’t.
If you are not well acquainted with the current investment plans in the market, here are 5 of the best plans to get you started.
Investment plans are financial assets that yield an opportunity to generate wealth and reach one’s financial goals. Investment plans are usually driven by investing relatively small amounts periodically rather than a large sum once. Investment plans help create a culture of personal financial responsibility, which helps the investor acquire wealth in the long term and meet their fiscal objectives.
Unit Linked Insurance Plan (ULIP)
UILPs are regarded as one of the best investment plans in India. Their purpose is twofold; they provide an option for investment and insurance. ULIPs also provide the opportunity for tax exemptions. Investments made into ULIPs cannot be redeemed or sold until 3-5 years. A fraction of the premium is used for insurance, while the other fraction is used for investing in market investment instruments such as shares.
Public Provident Fund (PPF)
PPFs are a safe and long-term small savings investment plan in India. The invested money is locked in for 15 years. The money invested into PPFs is tax-exempt, and so is the amount received on maturity. You earn compound interest at the rate of 7.1% currently. The minimum amount that has to be invested in the plan is Rs. 500 per annum, making it one of the best investment plans for people with low income and savings. PPFs are backed by the government and hence considered low-risk investments with a healthy rate of returns.
A Mutual Fund is an investment plan with high returns in the long term. The fund consists of money collected to buy securities, i.e., shares, bonds, etc. The funds are driven by managers who administer the fund’s assets and try to make profits. Investments in Mutual Funds are also exempt from the wealth tax. Investing in market-linked instruments makes Mutual Funds high-risk but with a high rate of returns. For example, VTSAX.
Bank Fixed Deposits
Fixed Deposits offer fixed returns throughout the investment. The rate of interest on the capital depends on the bank. Fixed Deposits offer a range of tenures from 7 days to 10 years. Investing in Bank FDs is low-risk as it is not affected by market fluctuations.
Direct equity is one of the best investment plans over a long period. The returns it offers are higher than any other option, but most investors see it as a high-risk investment. While investing in direct equity, a few things should be kept in mind, such as analyzing the stock you are purchasing and the time when you sell the stock.
This was just a baseline introduction of a few of the available options for investing. There is much more to learn about investments and other wealth management systems. OAWA is an educational institution that educates people about wealth management with educators who are experienced investment professionals and academics. Our course on wealth management is the first of its kind. If you want to know more about the topics discussed, visit here.