The year of the pandemic essentially made us all hit a reset button on our lives. Apart from the changes in our daily routine, it has left a lasting impact on the economy and our finances. If you have resolutions this year to bring your financial health back on track, it is crucial to be well informed.
Most of us are aware of how an investment works – you allocate your money in a financial instrument of your choice to align with the expectations of benefits in the future. But, investors often face challenges when estimating the amount or the right vehicle to grow their money for different purposes. Here is where an investment calculator comes into the picture.
Achieve your financial goals in 2021(Image Source: Shutterstock)
It is an easily accessible tool that can determine the amount, frequency, investment tenure, depending on your expectations. You can also adjust the results based on your expected rate of return with the investment calculator online.
You can efficiently use the investment calculator once you are aware of the options available for investing your money. It will allow you to make a well-informed decision and create a strong financial shield for the future.
So, let’s look at some of the investment options that can work in your favour:
- NPS
One of the key objectives of investing your money is planning for retirement. Having a strong financial support system for your old age is crucial, and it is best to plan early for it. A majority of the Indian population is young presently but, the proportion of the 60+ population is likely to increase and reach 317 million by 2050. This means you need to begin planning now to lead a comfortable life post-retirement.
The National Pension System (NPS) is a scheme offered by India’s government to establish better standards of financial security for the retired population. It is an investment tool that deposits your money in bonds, equities, government securities and other such instruments per your preference.
You can receive a monthly pension with the NPS after retirement to support your expenses. It is a cost-effective and transparent investment that can be ideal for most people. Investing in the NPS also makes you eligible to receive tax benefits under the prevailing tax laws. Depending on the type of NPS account you have and the applicable tax slab, the tax benefits may vary.
- PPF
If you are looking for a long-term investment instrument that includes tax savings, Public Provident Fund (PPF) may be suitable for you. It is especially ideal for investors with a low-risk appetite. It is one of the well-known investment tools in India that aligns with the financial goals of a regular individual.
The fund is regulated by the government of India and comes with a lock-in period of 15 years. The lock-in period can be extended by five years once the original lock-in period is over. PPF is an affordable investment option since you can begin investing with a minimum amount of Rs. 500 per annum. If you have a PPF account, you can also take a loan against it once you are in the 3rd financial year of the investment.
Furthermore, PPF is categorized as exempt-exempt-exempt (EEE) under the tax policy. This means that the principal investment amount, maturity proceeds, and interest earned is exempt from taxation.
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- Mutual Funds
Mutual funds are one of the preferred investment options for new-age investors. It is a market-linked tool that invests money in various instruments such as equity, debt, stocks, etc. Using an investment calculator can enable you to narrow down your options bases on your financial profile, which is unique.
The returns generated by mutual funds depend on the market performance of the selected fund. One of the desirable benefits of a mutual fund is that it is flexible, allowing investors to switch, entry and exit the fund according to their choice. It also incorporates the varying risk appetites of the investors so that they can choose a suitable fund.
Most people believe that you need to have the intensive financial knowledge to invest in mutual funds. This is not the case since a fund manager is appointed to take care of your investment portfolio.
However, it is crucial to invest in mutual funds with realistic expectations to avoid disappointments in the future. An investment calculator can help you with projecting your requirements more accurately.
- Term Plans
Investing your money for wealth creation is crucial, but it is also essential to focus on financial security. Term plans are insurance instruments that can protect your family against unpredictable circumstances. It is one of the most popular insurance products available to create a support system at affordable rates.
Understanding what is investment goal for you will help you create a diverse portfolio that optimizes your income. As an investor in 2021, you can use several resources such as the investment calculator online to do so. It can assist your investment decisions and help organize your finances more competently.
