How to Choose Your Ideal Investment Plan With Ease?

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How to Choose Your Ideal Investment Plan With Ease?

We are long past the days when we could manage our expenses on one paycheque. Now, if we have to manage our expenses of the present and create a strong financial stance for the future, we need additional income. It’s not possible for us to pick another side hustle or indulge in moonlighting. This is where investment comes in. It multiplies your money and helps generate wealth that can come to your rescue in the future.

But investment isn’t a piece of cake. One of the most challenging parts about it is deciding which investment plan to choose. So, what do you do in this case?

Blindly follow the investment advice of fellow investors?

Blindly follow the investment advice of fellow investors

Source: Shutterstock

No. It is the last thing you should do. What works for somebody might not work for you. There is no universal best investment plan. But it varies, is subjective and depends on the factors that we are going to discuss in length today.

So, sit back and relax while you read ahead all the tips you can use to choose your best investment plan with ease.

1. Consider your Risk Appetite:

Why do you think choosing the best investment plan cannot be a random decision for you? It’s because investment puts a lot at stake. Most importantly, your position to take risks. You must always factor in your risk appetite to choose the best investment plan.

Let’s take an example-

You decide to invest a sizeable sum in equity and buy shares of a company based on your friend’s suggestion. Now, as market-linked instruments are highly volatile, your investment doesn’t go as planned. Instead of earning profits, you end up in losses.

Now your friend might be able to manage these losses, but can you? If you invest without considering your risk appetite, you can end up in significant financial crunches. So, you have to play safe. Invest only, keeping your risk appetite in consideration.

If you consider yourself a risk-conservative investor, consider investing in debt funds or government securities that offer fixed returns or don’t invest in market-linked instruments.

2. Be Familiar with your Investment Goals:

Make it a thumb rule to ask yourself, “Why am I here?” “What do I want from this Investment?”  while you’re selecting the best investment plan.

The best investment plan that you choose must align with your investment goals. Remember, investor goals differ from person to person.

An investor might want to invest for 15-20 years, while the other would want to invest for 3-5 years. At the same time, one investor might be investing to secure their child’s education in the future, while the other might be investing to buy a car or improve their financial security in the future.

Your investment choices of the best investment plan would depend on these goals. Accordingly, you can decide if you want to invest in mutual funds, equity, debt funds, ULIPs, or any other investment plan in the market.

3. Withdrawal Rules:

What’s the point of investing when you cannot withdraw the money the moment you need it the most? The best investment plan should offer you the flexibility to withdraw your funds when the time comes.

It is pivotal to note that not all the investment plans in the market have uniform withdrawal rules. While one investment plan can make it easier for you to withdraw your funds, the other might be a hassle and can also impose withdrawal penalties, decreasing your returns.

One such example is fixed deposits. While fixed deposits are great for a secure and long-term investment, it can be a hassle to withdraw your money without any charges and penalties before maturity. The same goes for PPF, which comes with an investment tenure of 15 years, with pre-mature facilities beginning from the 6th financial year.

Thus, go through the withdrawal rules while deciding the best investment plan according to your financial preferences.

Withdrawal Rules

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4. Death Benefit:

No one is promised a long life. The bitter truth about life is that it is uncertain. If not you, then your family should be able to utilize your investment funds in the case of your unfortunate demise. Ergo, the best investment plan should be the one that provides the family with a death benefit or a fund value if the investor dies an unfortunate death.

The Bottom Line

With all these tips, we hope you got all the clarity you needed to select the best investment plan for yourself. So, keeping all these factors in consideration, what would you be opting for? Just so you know, you can even use a savings calculator and investment calculator to make the decision easy for you. The savings calculator would help you calculate the returns or maturity amount payable by the best investment plan you have opted for.

So, what are you waiting for? Put on your thinking hats and decide the best investment plan for yourself.