Introduction 

Saving and investing instill a sense of financial discipline to ensure financial protection for your present and future. Investing is all about growing your money to achieve your different goals. You can achieve the goal of wealth accumulation utilizing different investments that offer the power of compounding.

You can get inflation-beating returns with specific investments and, at the same time, grow your wealth over investment tenure like mutual funds – for example, direct equities. To invest in the equity market, you need a Demat account, and know ‘how to create a Demat account‘. Demat account opening is a 100% digital process and helps to quicken investing.

Why is Investing Important? 

Have a  look at what you can achieve by developing investing habits.

• Build Your Wealth

People save and choose to invest for wealth creation over time. This process can be started by reinvesting the profits or income from investments. For example, you can invest in fundamentally strong companies using a demat and trading account and reinvest the dividends or interest earned. 

• Financial Security

Saving and investing instill a sense of financial discipline to ensure financial protection for your present and future. Every person wants to be financially secure. Therefore, they ensure to keep aside extra money in an investment vehicle and stay protected against sudden financial hardships.

• Financial Independence 

With an efficient investment, you can stay independent if there is any financial hardship or leave off your working boots and enter the retirement phase. Make sure you have enough funds as a retirement corpus to pay for your needs and desires for the rest of your life. 

• Attain your Financial Goals

Individuals set specific financial goals in their lives and invest to attain those goals. For example, purchasing a dream house or giving a modern look to the existing home, buying a new car, taking a world tour, or just meeting forthcoming financial obligations like children’s higher education abroad or their marriage and many others. 

Apart from this, investing minimizes your tax liability also. 

Where to Invest in India

There are numerous investments available for retail investors in India, but you must invest cautiously, considering risk-taking capability and goals you want to achieve. Among numerous investments in India, commonly utilised investments by retail investors are as follows:

1. Direct Equities or Stocks 

When you buy shares of a company, it is called stock investment. Here you indirectly acquire an ownership stake in that company. If you hold these stocks for the long term, it aids in capital appreciation. If you become an active trader, you use a margin trading facility and trade for more than available funds with you.

• Return Potential is high but at high risks.
• Free to buy or sell

Mutual funds 

A mutual fund is a flexible investment instrument investing the pooled money collected from a number of investors with common investment goals. A fund manager can invest in various instruments, including stocks, bonds, money market instruments. 

• Return potential is moderate at a lower risk as compared to stock investment. 
• Free to enter or exit.

Fixed Deposits

Fixed deposits are available for every type of investor irrespective of the horizon to achieve a goal and risk profile. You can invest in a bank FD, corporate FD, or post office FD. It starts with 7 days and goes up to 10 years with most banks/NBFCs.

• Returns are lower than stock investments. 
• Flexible for premature withdrawal 
• Very low risk

2. National Pension System (NPS)

NPS is generally used as a retirement pension scheme. Under this scheme, the Indian government provides monthly pensions to NPS beneficiaries after their retirement. NPS offers an option to invest in equities also.

• It allows partial withdrawals but after retirement. 
• The accumulated funds from NPS are tax-free.

You should save early and start to invest now. With each day you wait for investing, you lose the investment opportunity to build your wealth and achieve financial goals. 

Make sure you diversify your investment portfolio with different types of stocks as well as investments.

• Determine your risk profile before choosing your investments.