A financial windfall can be a life-changing event. It can help you achieve your life goals and create generational wealth for your family. The good people at Lottoland India have met their share of people who instantly became very wealthy. One of the first questions they usually ask is regarding investing their money so it will make them even more prosperous.
Regardless of the size of the windfall, a good strategy is essential. A trusted financial professional can assist you in making the best choices. Below, we will share with you some tips we have gathered from investment experts and financial advisors worldwide. You, too, can make your financial windfall work for you.
The real estate market is one of India’s most popular investment avenues. It offers high returns and is relatively low risk compared to equity markets. The Indian real estate sector has grown rapidly due to urbanization, increasing disposable incomes, and favorable government policies.
Investors are attracted to the property market because it provides an opportunity for passive rental income and long-term capital appreciation. Moreover, home loan interest rates are currently at 15-year lows. This makes purchasing residential properties a good option for investors.
Windfall gains can also be used to pay off debt or increase life and health insurance coverage. However, it is essential to resist the temptation to spend a significant portion of your windfall on luxuries. While these expenses may make you feel good for a while, they could hurt your financial security in the long run. Instead, try to save a portion of your windfall and invest it wisely.
Sovereign Gold Bonds
If you have come into a windfall, buying gold bonds is one of the best ways to invest it. These bonds are highly safe and offer a guaranteed return on your investment. These bonds are also tradable and can be used as collateral against loans.
They are issued by the Reserve Bank of India and are denominated in grams of gold. They are an excellent alternative to physical gold and have low transaction costs. The interest on these bonds is tax-free. However, the capital gains will be taxed in line with your individual tax slab.
Investors can buy these bonds through public issues announced by the government. They can also trade them on the stock exchange, though liquidity is low, and they usually trade at a discount. Investors can also earn indexation benefits if they transfer the bonds before maturity and a sovereign guarantee on their principal and accumulated interest. The bond’s tenure is eight years.
Investing in fixed deposits is one of the safest ways to grow your windfall. This is a conservative investment option that several banks, post offices, and non-banking financial companies offer. It is also an attractive tax-saver as investments up to Rs 1.5 lakh are eligible for deduction under Section 80C.
FDs are an essential part of your portfolio because they provide balance to your market-linked investments. During periods of market lows, the interest income from FDs can compensate for losses in your other assets.
Choosing a bank that offers competitive rates on your FD is important. Small finance banks and NBFCs typically offer higher FD interest rates than large public sector banks. However, you should avoid complex, exotic products that promise high returns. These products are often not suitable for all investors. They may also carry high risks. Instead, invest in simple, diversified equity mutual funds to help you achieve your financial goals.
Investors must consider their financial goals, risk appetite, and time horizon when choosing an investment avenue. Market-linked investments such as stocks and mutual funds offer higher inflation-adjusted returns than fixed-income products like bank fixed deposits.
The Indian stock market has seen a rise in interest from global investors thanks to the strong fundamentals. However, investors should understand the nuances of equity investing before making any significant investments.
BFSI and fintech sectors experienced a resurgence in 2022, with deals accounting for 18% of India’s PE-VC investments. The sectors benefit from a solid domestic consumption base, low credit penetration, and increasing openness to finance.
A new-age brokerage app makes it easy for retail investors to participate in the equity market. But direct equity investments should be considered only by investors with a high-risk appetite and an understanding of the functioning of the stock markets. Investing in a diversified equity mutual fund can be a safer option for small investors.
A financial windfall is rarely expected, but they happen all the time. If you find yourself with a substantial amount of money, do not go it alone. Hire a financial advisor or other professional to help you invest your money. No investment is foolproof, but there are low-risk investments that can help you ensure your money will continue to grow. Don’t risk your financial future. Invest and save now for a better tomorrow.