Are you choosing the right financial products?

Mahesh Pai explains the importance of financial planning and different ways of investing one’s money

One reason why Indians survived the lockdown was their habit of saving as much as they can. People with a low income also manage to save some part of their earnings and invest the same in one way or the other; this made them tide over a difficult period. The most important thing that one should do in life is financial planning. Like the saying goes, “Do not put all your eggs in one basket”, in the same way one should not invest their money in one place only. Following are different instruments available for investment can be helpful for investing one’s money.
1. Money which one may require at any point of time should be invested in either fixed deposits or liquid mutual funds. Plus one should keep some funds in a Savings Bank Account which may fetch you a return between 3 to 7% p.a.
2. Money that one wants to invest for 1 to 5 years can be invested in Bank Fixed Deposits, Bond Funds, SIPs, Balanced Funds (Preferably for 3 years or more), etc. This may fetch returns between 5 to 10%.
3. For money which one wants to invest for more than 5 years, Equity Oriented Mutual Funds can be the best options subject to the risk appetite of the person. In this type of instrument, there is always a risk of erosion of capital also.
4. National Saving Certificates for 5 years can fetch an interest of 6.8%, Kisan Vikas Patra for 10 years and 4 months can fetch returns 6.90% of p.a. RBI’s Floating Rate Bonds is also good option which fetches returns of 0.35% over and above Interest rate of NSC prevailing at that point of time.
5. For an investment period of more than 10 years, Life Insurance Policies are also very good instruments for investments. It gives both, the benefits of Insurance as well as returns. People who want to secure their family can go for Term Plan in which there are no returns on investment. The other type of policies, the conventional policies, in which the insurance companies invest 80 to 90% of the money in Government Securities, Bonds and Company Debentures with fixed rate of interest and balance 10 to 20% is only invested in equities. These types of policies are most common in the Indian market as the money is safe and they give reasonable tax-free returns between 5% to 7% as well as insurance coverage. The third type of policy which is gaining popularity nowadays is Unit Linked Insurance Plans. This is a combination of Mutual Fund and Term Insurance. It delivers returns comparable with Mutual funds which is also tax free.
6. Another popular way of investing in India is gold. This is the most preferred type of investment for women. They enjoy wearing gold and feel this is a safe investment as it can be liquidated or mortgaged, as well.
7. Properties are one more way of investing which is quite popular. It is costly as well as risky as it depends upon a highly volatile market and has proved beneficial for people who have large appetite for investing
Above are some types of investments which a person should know and invest according to his or her requirement

The writer is an investment consultant and business coach. Email:

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