Long-term investment is about wealth creation, whereas short-term investment is about capital preservation. It involves building an investment portfolio that will generate income for you over the long term, whether for retirement or achieving any other long-term financial objective. It’s crucial to build wealth to maintain the level of income you’d need in the future if you want to live comfortably afterward.
Long-term investments do, however, come with a certain amount of risk in order to reap the benefits. It typically includes ULIPs, equity investments, etc. Riskier investment options, on the other hand, give you a chance to recover from market risks as long as you stay invested for a longer period of time. In three or five years, it might decline by 20%, but in ten or twenty years, it might offer returns in the double digits. Assets also carry less risk, but the returns are either fixed or slow.
In order to achieve your long-term objectives and reap the desired benefits, you must give yourself the opportunity to overcome any short-term setbacks.
Long-Term Investment Plans to Invest in 2023
The following long-term investment plans can help you start planning your long-term investments and will eventually help you increase your wealth:
- Public Provident Fund (PPF Account)
- Mutual Funds
- Fixed Deposits
- ULIPS
1. Public Provident Fund (PPF)
PPF, or Public Provident Fund, is one of the conventional long-term investment strategies. Most of your family’s elders would have made PPF investments. It is regarded as one of the most secure and tax-effective investment plans in India. On maturity, you receive fixed returns with no risk.
Given that a PPF Account has a 15-year lock-in period, you may continue to invest during this time. After 15 years, you can withdraw your funds. In the fifth year, you may, however, partially withdraw (subject to terms and conditions).
Additionally, you are permitted to deduct up to Rs. 1.5 lakh of your PPF contributions from your taxable income each financial year under Section 80C of the Income Tax Act of 1961.
2. Mutual Funds
One of the best options for creating long-term wealth is investing in mutual funds. The investments are secure because SEBI regulates all mutual funds.
Mutual funds primarily fall into the following three categories: equity funds, debt funds, and hybrid funds. Debt funds put your money to work buying government and corporate bonds. If you prefer low risk and are content with reasonable returns, you might want to think about investing in debt funds.
On the other hand, equity mutual funds invest your money in stocks and provide capital growth. The risk involved is high, and the returns generated are dependent on changes in the stock market. According to the current trend, it is a wise long-term investment choice for more than five years. A great investment strategy if you enjoy taking on significant risk. You can invest in ELSS funds with only a 3-year minimum lock-in period that provide tax savings.
The least risky investments are hybrid funds, which are the ideal combination of fixed income securities and equity funds. Hybrid mutual funds are an excellent place to start if you’re new to investing.
3. Fixed Deposits
Bank Fixed Deposits are yet another conventional investment strategy. Choose tax-saving bank fixed deposits to reduce your annual investment costs by up to Rs. 1.5 lakh. Any lock-in period is an option, and once it’s over, you can withdraw your money. Because there is no risk, the money invested is secure.
Even senior citizens can invest in bank FDs because the returns are higher for those over 60 than for those under 60. For those who don’t want any equity exposure and are looking for safe and slow investment growth, FDs are the ideal investment.
4. ULIPs
Unit Linked Investment Plans is the official name of ULIPs. Due to their ability to provide both life insurance coverage and wealth creation, ULIPs are a fantastic investment strategy. You also receive tax advantages under Section 80C. Since five years is the minimum lock-in period for ULIP plans, it is appropriate if you want to remain invested for a longer period of time. However, compared to equity-linked saving plans, the overall risk is higher.
Simply put
For long-term wealth creation, you can invest in any of the aforementioned investment plans or schemes. It’s crucial to get guidance from a financial professional before you begin investing so they can help you keep track of your financial portfolio. To come to a decision, you can always conduct a search online, review market statistics, examine historical returns, and read about other investors’ experiences. By doing so, you will be able to make well-informed investments and receive returns that will enable you to achieve your stated objectives.
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