Smart Ways to Make Your Money Grow

Did you know that India is the only country to exceed the score of 7.3 on the Aegon Retirement Readiness Index (ARRI)? This is way higher than the global average of 5.9. Indians are in the habit of saving and always on the lookout for savings tips. However, saving money will not make it grow. What we need to focus instead on are investment tips, especially those that help yield higher returns.

Security and Returns

Putting your money into a fixed deposit provides security and earnings. Fixed deposits give you an assured return, while offering a higher interest rate than a regular savings account. For this reason, they are a preferred investment option in India. Fixed deposits form the foundation on which all savings or investment tips are based. 

Making the Most of Volatility

The second rule of smart investing deals with expecting volatility in times of market stress but ensuring that you profit from it. For example, by adopting an approach of rupee cost averaging, or buying equal rupee amounts of investments at regular intervals, Systematic Investment Plans or SIPs in mutual funds, allow you to purchase more shares or units when prices are low and less when prices are high, mitigating the effects of short-term market volatility on your investments. 

Mutual funds offer the potential of higher returns than fixed deposits. Moreover, they offer a simple, professionally managed, and affordable opportunity to increase the value of your investments. The many types of funds – stock, bond or fixed-income funds, balanced funds, money market funds – differ from each other in their focus on a particular asset class or classes.  The money from many investors is pooled to buy stocks, bonds or other assets, giving investors a way to diversify their holdings. 

Don’t Put All Eggs in One Basket

Here’s one of the most important investment tips. Put away money in different investment options to aid its growth. For instance, you can set aside some in a savings account, some in a fixed deposit and some in mutual funds. 

Mutual funds in themselves offer portfolio diversification by distributing your investments between stocks and bonds. Whilestocks provide the potential of higher returns, bonds preserve and grow your capitalespecially during market downturns.


Know Thyself

Whatever your investment style – enterprising and active, defensive and passive, conservative and smart, a player or a speculator, the best savings or investment tips are only effective if you start early. The younger you are, the more the risks you can afford to take – minor setbacks in the stock market can be accommodated by adopting a long-term horizon – and the more regular and disciplined your investments in mutual funds are, little by little, a small amount can become a substantial sum over time due to the effect of compounding. 

What’s most important is to set long-term financial goals, based on how much money you would require for a future expense (like maybe your child’s higher education) or for retirement. Without a clear understanding of your future financial needs, it’s impossible to make sound decisions regarding how much to invest and where to park funds for growth.

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