Other Ways of Saving Money

Saving and investment opportunities can be through Real Estate, Gold, Stocks and Shares, Insurance Schemes and Mutual Funds as well. Several of these offer multi-dimensional avenues. Each has to be considered in terms of Risk, Returns and Liquidity, and any financial decision has to be taken with these golden principles in mind.

Investment in stocks and shares is a risky business at any time, though returns may be high. It also needs an in-depth understanding of the investments, other than in initial public offerings (IPO), cannot be done directly. Transactions have to be carried out through brokers on the floor of the stock exchange.

Gold and real estate are sound investment avenues, but they need large outlays of money, particularly real estate. Returns are unpredictable. Liquidity, while high in the case of bullion, is very low as far as real estate is concerned.

Insurance schemes offer good investment opportunities. LIC has schemes to meet various needs and the payment is staggered in ways to suit individual pockets and earning patterns. Choose the one that best meets your requirement in terms of lock-in period, returns, and tax benefits. Insurance schemes have an added advantage in that most allow the investors to avail of loans for various purposes. With the imminent opening up of the insurance sector, more attractive schemes are sure to come into the market.

Government schemes like Public Provident Fund are also attractive to investors, as they offer tax benefits as well as loan facilities. Savings can be spread out or a chunk deposit can be made each year. The Risk factor is very low, though returns as well as liquidity can be classified as only average.

Mutual Funds are all the rage at present as investment instruments. The main plus points are the facts that liquidity is very high, and, even with a small sum, affordable by working women and men, and with no particular knowledge of the stock market, one can invest in blue-chip shares. The investment decisions are left in the hands of a professional. Risk can range from low to high, depending on the company and scheme chosen. Care has to be taken to research the background of the company floating the funds, the philosophy of the fund manager and the fees charged by the company, which can affect returns.

Unit Trust of India ( UTI) offers a wide variety of schemes, and they combine with tax benefits and insurance cover to form attactive packages. Risk here is low, returns high to medium and liquidity is the same.

Study the schemes and select one that meets your requirements in terms of returns and maturity. With such a wide range of choices, the investor would do well to keep the golden principles of Risk, Returns and Liquidity in mind, and decision.