How to Grow Your Wealth At Higher Than FD Rates?

The concept of investing is a popular one that is constantly pursued by people who wish to generate more wealth and increase their financial reserves. With the right strategy and financial vehicles, investing can be a successful and lucrative way to maximize your existing funds.

But time and again, I have seen people using bank fixed deposits or FDs to park a large part of their investments. But no matter how safe bank fixed deposits are, the fact is that these will never beat inflation and the FD taxation is also not investor friendly.

Here are a few investment options that can help grow your wealth at higher returns:

Stock Market (Direct Stocks) Investments

Stock markets are one of the best options to generate long-term wealth. But you regularly hear stories where people lose money. But the fact is, for those who know how to invest properly and don’t become too greedy, the stock market can be a reliable investment option for wealth seekers.

By purchasing shares in public companies, you can generate returns from gains in share prices as well as dividend payments. As compared to real estate, investing in the stock market also offers greater liquidity, created by the ability to buy, and sell shares quickly. But while the potential for gains from stocks is immense, it is not for everyone. Buying a few stocks here and there is one thing while investing your life’s savings is another. So what are the other options to invest in stock markets?

There are two of them – Equity mutual funds and ULIPs.

Equity Mutual Funds

Investing in mutual funds is an ideal option for investors looking to create a diversified and well-balanced portfolio. By pooling money from many investors, mutual funds are able to invest in a variety of stocks, bonds, and other securities at one time. As opposed to individual investing, this allows the fund manager to lower overall costs as well as to set appropriate limits on risk according to their clients’ goals.

Additionally, investors can benefit from the efficient and expert management of sophisticated capital resources available solely through mutual funds. With diverse strategic approaches addressing a wide range of economic and market conditions, these investments leverage professional knowledge with heavy-weight research and analytics, bringing added value previously unavailable with individual stock trading.

Systematic Investment Plan or SIP, is the most popular approach to investing in mutual funds in India, where the investor invests a fixed amount at period intervals (mostly monthly) without any regard for market ups and downs.

Unit-Linked Insurance Plan

A unit linked insurance plan (ULIP) are hybrid products that offer the dual feature of providing life cover as well as work as an investment option, which if managed well, has the potential to increase your wealth based on market-linked returns. While everyone should be investing in funds based on their risk appetites, the fund-switching option in ULIP plans does offer a lot of flexibility that allows you to change your portfolio allocation within the overall ULIP structure.

As the assets chosen by the policyholder increase in value, so too does the value of their ULIP policy. While it can provide good returns, it also offers life cover to the policyholder. Moreover, these policies are flexible with respect to premium payment frequency as well as maturity privileges such as partial/full withdrawals or surrender benefits.

Related Reading – Why ULIPs are better than Endowment Plans?

Real Estate

One of the most basic and common types of investment made by us Indians is in real estate. Investing in real estate has a variety of advantages. It can generate consistent rental income and provide a potential for appreciation in the long run.

Additionally, real estate may provide tax advantages, such as home loan tax deductions for interest expense and depreciation. Therefore, by leveraging the power of real estate, you can build your wealth in multiple ways.

But the biggest issue with real estate is the large ticket size and the risks involved that come with it like delay in delivery, unexpectedly slow growth in property prices in any areas due to local reasons, etc.

Overall, when you create a properly diversified and the right combination of investments, it can help you grow your wealth over the long run. Real estate, stock market investments, and alternative investments can create multiple streams of income and build your wealth over time. With the right strategy and a long-term outlook, these three investment options can be the key to your financial success.

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