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8 Smart Investment Tips to Help You Find the Best Investment Plan

Investment is a game of informed decisions and timing. You can create wealth if you have the necessary information and invest at the right time. But making smart investment choices is easier said than done. Market volatility and unpredictable events can make even the most lucrative investments fall flat.

The trick is to ask the right questions and stay relevant to the current market scenario. What are the best ways to invest money? How much risk can I afford to take? Where should I invest money? What is my objective in making an investment? Like millions of other investors, if you are looking for an investment avenue where you can park your money for a long time and build a financially stable future – it’s time to learn how to invest smartly.

Smart Investment Tips - What Are the Best Ways to Invest Your Money?

Smart investing might seem like rocket science, but it really isn’t. All you need to do is make educated decisions about your money and choose the right investment plan. Here are some tips that can help you choose the best investment avenues for your money:

1. Start Investing Early

Starting early is the most straightforward yet most profound advice you can follow. Investing early enables your money to grow exponentially with compounding interest. Even if you begin with a small amount, starting early will help you reach financial security and create wealth for you in the future.

2. Invest Consistently

There are no shortcuts to wealth; the best way to create wealth is to invest a small amount consistently. Decide a small amount you can invest monthly or quarterly and maintain financial discipline. The longer you stay invested – the better returns you can expect.

3. Don't Only Go After the Highest Return

It is always tempting to opt for investment opportunities that offer high returns in a short time. However, it is not always the best strategy to chase high returns to achieve your investment goals. Usually, investment avenues with high returns also pose high risks. Choose a high-return investment only if you can afford the risk.

4. Diversify

As the old investment adage goes, ‘don’t put all your eggs in one basket.’ Smart investments are always part of a diverse portfolio. It helps to mitigate risk and get a favourable return on your investment. The objective is to safeguard your money if a single product does not deliver the expected return. A diverse portfolio also protects your money from market volatility.

5. Look for a Savings Option

From your early earning days, it is essential to start investing smartly in a tax-saving option. Whether you fall in the tax bracket or not, include a tax saver in your portfolio.

Here are some savings options to consider –

  1. Freo Save Savings Account
    Freo Save’s zero balance digital savings account gives you all the benefits of a traditional savings account and more. You can earn interest of up to 7%* on your savings and benefits and access other Freo products like Freo Pay – a shop now, pay later app and MoneyTap – India’s first app-based credit line. You also get a virtual card that is super convenient, and a lot of new features are coming soon.

  2. National Pension Scheme (NPS)
    The NPS is open to all investors and mandatory for all government employees. NPS works like a retirement plan; you can deposit as little as Rs.500 per month or Rs.6000 per year for tax savings.

  3. Public Provident Fund (PPF)
    The public provident fund, or PPF, is one of the most risk-free investments in India. Backed by the government of India, it offers tax benefits under 80C of the income tax act and an attractive interest rate. However, it comes with a 15-year lock-in period, so it might not be suited for short-term investors.

  4. Equity Linked Savings Schemes (ELSS)
    ELSS is a good low-risk, high-return investment option. It is an equity diversified fund in which most of the fund corpus is invested in equities or equity-related instruments.
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6. Create Your Own Investment Plan

Research the different investment options available to you and create your own investment plan. Think about how many years you have before retirement and invest in building a corpus. Sometimes good research and planning can lead to smart investment ideas. Be patient with your investments, as they take time to produce healthy outputs.

7. Invest Your Tax Refund

You may or may not achieve your savings goal in the year. But when you receive a tax refund, you can add that money to your annual savings to give your investments a boost. A hefty tax refund will substantially add to your yearly investment amount.

8. Track Your Investments

Keep a close watch on your investments and analyze their performance over time. Listing your investments in a spreadsheet and reviewing them will help you understand which avenues are giving you a better return and which are failing. Then, you will be well informed to make amends as you go.

Managing your personal finances is about keeping tabs on your income, spending, savings, and investments. Tracking your savings and investments is an essential aspect of a smart investment plan. Make a monthly expenditure report to discover new opportunities to save money. It will help you enhance your saving strategies and maintain your needed liquidity.

No matter where you are in life or how old you are, there is no wrong time to begin investing. Plan your financial future and use these smart investment tips to build a high-performing investment portfolio.