The five biggest investment lessons of 2018

Last Updated: Thu, Apr 12, 2018 17:48 hrs
Savings - Investments (Image Courtesy: bajajfinserv)

Pitfalls are obvious when you start something new, but a pitfall in investment can hurt enough to remember. To make a successful investment, it is important to judge the right plan and the right time of investment.

Investors need to make the accurate judgment about the market and the on-going trends in the market. It is important to get aware of the facts and the offerings that are available in the market for the investors.

A true investor always learns from the small hiccups that come in the way of investments. Many investors have learned the right way to invest through their continuous and steady investment policy.

I, being one of those steady investors, would like to share my experience of various investment plans that I came across and will tell you about the lessons I learned.  

Top 4 investment lessons that I learned!

Fixed Deposit investment

As suggested by most of the experienced people of our life, I was also suggested to make some investment in a Fixed Deposit Scheme. A fixed deposit investment is known as one of the safest investment tools that give you assured returns. The interest rates offered on an FD are higher than a saving account interest.

The amount you invest in an FD gets locked for a fixed and pre-decided tenor, and you earn interest on the invested amount. You get the facility of flexible tenor that you may choose as per your need. Also, you can easily withdraw the amount invested when in need. A fixed deposit will give you assured returns and at a fixed interest rate. The interest rate of an FD does not fluctuate as per the market conditions, making your investment risk-free.

The lesson I learned:

I invested in an FD for 4 years and to my amaze I received the returns as expected. The only flaw that I found for investing in an FD is the penalty that has to be paid in case you withdraw the money before maturity.

Mutual Fund investment

Mutual fund investment offers you the bigger returns but at high risk. The interest rate of a mutual fund is subject to the market risk, and it fluctuates as per the market conditions. The returns that you will earn from a mutual fund investment may be higher, but the risk involved in this plan is also higher. A mutual fund investment can provide you rate of return ranging from 8% to 9%.

The lesson I learned:

Aware of the fact, that mutual fund investment is subject to market risks, I landed up in investment loss though of a small amount. I would suggest that those investors who are good at speculating the market conditions should invest in mutual funds. As the risk is high in the mutual fund investment, one should be very careful while investing in a mutual fund scheme.

Compare: Fixed deposits vs Mutual Funds

Public Provident Fund (PPF)

A public provident fund scheme is one of the favorable investment tools that can give you better returns at considerable rates. A PPF is a safe option as your money remains in the hands of government where you get the accumulated sum at the end of the tenor. The tenor of a PPF account may range up to 15 years. This investment tool is an ideal investment option for a salaried person who can invest a small sum of money from their income on a monthly basis.

The lesson I learned:

Undoubtedly, this is a safe investment option, but it does not offer you the liquidity option. Premature closure of a PPF account is also not allowed, apart from few exceptions. You cannot withdraw the invested amount from a PPF account before maturity as the lock-in period is 15 years.

Tax-Free Bonds

Another investment option that I choose was opting for a tax-free bond. These are the securities that are issued by the government bodies to get the finance for their projects. These investments are usually of long-term that ranges over 15 years. The interest earned from this scheme is tax-free that is added benefit for an investor.

The lesson I learned:
Tax-free bonds are safe investment plan, but they offer a lower rate of interest as compared to other long-term securities. Also, you don't enjoy the liquidity benefit as these bonds are issued for long-term and are sold in recognized stock exchange only.

The Bottom Line

Now, when you have the information about various investment plans, you can choose the best for yourself and learn from the lessons that are shared. So, invest your money wisely and make your future secure!
Also Check: Complete Guide to Investing

In Case of Any Query, feel free to Contact Bajaj Finance Customer Care.

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