Driving Naari Programme launched in Chandigarh
Investments have become an important aspect in our financial lives. Therefore, it is necessary to pick and choose the right financial product to keep your money safe and earn side by side.
As a lot of financial products are available in the market, it is slightly difficult to choose the right one. One should consider various key factors carefully before selecting any of these products.
Things to keep in mind while selecting the right financial product –
Returns
This is the foremost key factor to take into consideration, while choosing a financial product for investment. Certain products, such as Fixed Deposits (FDs), provide a consistent and predetermined rate of return, whereas others, like equity investments, yield returns linked to the market.
It’s important that the investment objective aligns with the type of return the product offers. For example, if your goal is to save for your child’s higher education, you may consider investing in diversified equity funds. Additionally, it’s advisable to check whether the investment product offers returns that are adjusted for inflation or not.
Risk
Usually, the greater the potential return an investment promises, the greater the associated level of risk. Therefore, it’s essential to assess your risk tolerance, consider your overall financial circumstances, and take into account your current life stage before making any decisions.
Cost of the product and charges
These factors can impact the overall investment return. Prior to making an investment, it’s advisable to review the investment management fees, administrative expenses, or any other charges associated with the investment product.
Liquidity
Certain investments come with a predetermined holding period, like the 15-year lock-in period for PPF, and early withdrawal could incur penalties. In contrast, alternatives like liquid mutual funds allow for same-day withdrawals upon request.
Taxes
Certain products provide tax advantages, like a deduction of Rs. 1.5 lakh under section 80C for investments in PPF. Conversely, with some other investments, the income generated (dividends or interest) may be subject to taxation when you redeem or withdraw them.
