Family and friend gatherings often revolve around investment strategies, starting with questions on how to make investments or concluding with deliberations on where to invest.
In the past, the lack of investment opportunities due to financial constraints was a significant hurdle. However, now, the abundance of choices presents a new challenge, i.e., finding the right investment options.
The key to achieving financial freedom is creating a balanced mix that accommodates regular expenses, allows room for future savings, and includes high-return investment options.
In this investment series, we will explore two types of investments: those that maintain stable savings with returns of 5-8% and those that outperform inflation, providing returns of 8-10%.
Additionally, we will consider fixed monthly income instruments to further diversify our investment portfolio and ensure a steady path to financial freedom.
So, let’s embark on this exploration together and uncover these eight investment options, and learn how to make the most of them
How to Make Investments to Earn 5-8% Monthly Returns
Investors actively seek out how to make investments in monthly income plans from banks, NBFCs, and the post office, as they offer a reliable and regular source of income during retirement.
However, schemes like PPF may not provide annuity benefits, and the Pradhan Mantri Yojana can only be accessed once you turn 60.
Suppose you’re in your early 30s and wondering how to make investments that offer stable returns over both the short-term (5 to 10 years) and the long-term (until retirement). In that case, we have compiled a list of schemes that allow you to effectively leverage the power of compounding and achieve your financial goals.
- Monthly Income Plan
- Post Office Monthly Income Scheme
- MIS from Banks
- Annuity Plans from Insurance
There are primarily three schemes in which you can invest now. The returns, tenure, and lock in periods are given in the below table.
How to Make Investments : Comparing Saving Schemes
|Instrument||Rate of Interest||Lock in Period||Maximum Investment Limit||Tenure|
|Post office monthly income scheme||7.70%||5 years||15 Lakh (Joint)||5 Years|
|Monthly Income Plan (Banks)||6.25%||Withdrawal Allowed||No upper limit||10 Years|
|NPS||Floating Rate||10 Years||No upper limit||Until age 60|
- Post Office Monthly Income Scheme (POMIS) – Large Savings for smaller goals
Post Office Monthly Income Scheme is the best way to invest money if you have short-term financial goals with a timeline of around 5 years.
For example, if you invest ₹9,00,000 in a joint account under the Post Office Monthly Income Scheme, you can earn a monthly return of ₹5,775.
- Bank MIS and FD – Boosting Savings With Regular income
National banks like SBI, Bank of Baroda, and Union Bank also offer monthly income plans. If we compare them, the highest interest rate offered is 6.25%.
In India, some banks also offer to pay principal and interest monthly. Say you have Invested 10,00,000 Rs in MIS, at 7.50%. Not only do you enjoy the interest payment of 6250, but you also earn part of your principal 5620 Rs. extra, making it 11870, Rather than getting the principal amount during maturity.
This can provide financial stability and reduce the need to dip into savings or rely on other sources of income.
- NPS- Effortless Tax-Saving Financial Planning
Choosing NPS during the 30s for retirement planning is the apt way to navigate how to make investment decisions for these reasons.
- Since you can take on higher risk, NPS allows you to take on aggressive risk since it is market-linked and invests across various asset classes. This aggressive risk can potentially lead to higher returns over the long term.
- Choosing Auto Mode in NPS diversifies the investment based on your age in auto mode. You may change your fund manager if you are unsatisfied with the performance.
- You get double tax deductions combining 80c and 80CCD, worth Rs. 200,000 combined.
- Deffered Annuity Plans – Stable Returns As Long As You Live
Having a guaranteed deposit at a future date feels like giving a salary to yourself. An annuity does the same thing once you invest a lump sum or systematic investment for a pre-decided period while earning.
So you can enjoy the monthly payment after a specific date. Insurance companies and NBFCs in India offer annuity plans.
For 30 years, the old market has had many deferred annuity plans to provide, which become beneficiaries when you are still earning. Make a one-time investment with a lump sum amount, and the payout is delayed until you retire.
How To Make Investments To Earn 8- 10% Monthly Returns
While discussing how to make investment decisions. Low-risk investments can provide stable returns; they may not beat inflation. To address this, diversify your investment portfolio and consider high-risk options. These high-risk investments, listed below, have the potential to outperform inflation.
However, please note that they may require a higher capital investment.
- Real Estate – A traditional Investment Instrument with Bumper Returns
I learned an important lesson on how to make investments by observing my father’s ventures in real estate. It allows you to double or triple your profits, provided you possess the right expertise, connections, and capital.
Exceptionally, investing in commercial shops or land can be highly advantageous. While the initial rental returns may range from 2-3%, the rental income can grow substantially over time. Additionally, the principal amount you invested can experience exponential growth.
However, it’s important to note that investing in tier-2 and 3 Indian cities requires significant capital ranging from 50 lakhs to crore.
- Investing in Startup – To Maximize Returns
Investing early in a startup has multiple benefits. Firstly, for less capital, you can get a large share, and secondly, when it gets successful, you can assume your returns are booming and will become between 25-40% in three to five years.
Being a seed investor- investing early in friends’ or family’s startup- or an angel investor or venture capitalist gives you skyrocketing returns.
Venture capitalists and angel investors are the richest people in the world because they know how to invest money strategically. You may not earn a monthly return. In specific terms, angel investors also make monthly payment once startups earn profits.
- Mutual Funds – Systematic Withdrwal Plan
“Mutual Fund Sahi Hai” investors have realized this infamous quote to be true as they contemplate how to make investment decisions through mutual funds.
For instance, Nippon India Small Cap Fund Direct-Growth has earned 47.14% over the previous three years. It was one there many that comes in 20-40% returns bracket.
By investing a lump sum amount earlier and receiving monthly returns, similar process are but in reverse to SIP pattern.
SWPs have shown returns ranging from 14% to 40% over three-year and five-year periods. Explore the available SWP options and choose the plan that aligns with your financial goals and risk tolerance.
- Renewable Energy – The Future of Energy and Investment
We understand that the future of renewable energy is remarkable. But how is it connected to high returns? There’s a goal to replace fossil fuels in India by 2070;
By 2023, the share of renewable energy in the energy mix has already experienced a substantial increase of 25%.
This surge in renewable energy has attracted the attention of various financial institutions, foreign direct investors (FDIs), venture capitalists, and other investors. They recognize the immense potential of solar and wind energy, which are considered valuable assets.
For instance, companies like SustVest have emerged, focusing on solving multiple problems while offering attractive returns of up to 15% and a consistent monthly income. The popularity of such projects can be gauged by their rapid subscription rates, with many projects filling up within hours.
Investments can range from as low as INR 15,000 to as high as INR 25,00,000, allowing individuals to calculate their potential returns based on their desired investment amount.
India is one of retail and institutional investors’ most promising investment avenues. Unlike Japan, where interest rates on savings and fixed deposits can go negative, India offers more favorable conditions for investors.
Before the term “financial planning” gained popularity, the generations were well versed on how to make investment from traditional instruments like Real Estate, Gold, and Saving Schemes.
However, as the world accelerated at a rapid pace, alternative investments like mutual funds and renewable energy gained prominence.
With this rapidly changing landscape, it’s easy to get overwhelmed and confused, leading to either investing in everything or focusing on just one instrument. The choice paralysis on how to make investment is real when it comes to investing.
However, it’s essential to stay focused on your goals. While stable returns can be achieved through low-interest investments, beating inflation requires experimenting with real estate or renewable energy investment platforms.Check out SustVest today and take a look at how renewable energy investment works.
Founder of Sustvest
Hardik completed his B.Tech from BITS Pilani. Keeping the current global scenario, the growth of renewable energy in mind, and people looking for investment opportunities in mind he founded SustVest ( formerly, Solar Grid X ) in 2018. This venture led him to achieve the ‘Emerging Fintech Talent of the Year in MENA region ‘ in October 2019.