Thinking Long Term? Speak to Your Financial Guru!

When it comes to investments who could be a better financial guru than your dad?

Sahil, a 27-year-old young professional did the same. While every year he took a resolution, this year his resolution was planning his finances in a better way.

He and his retired dad were having dinner on a Friday evening. That’s when he spoke to his dad, “Dad. I want to live my retired life like you. Just so calm, cool and financially independent without any worries. It’s been 3 years since I have been working but I haven’t managed to save much. I’m really worried about my future financial goals.”

His dad smiled and replied, “It’s ok beta. It’s the right time you have realized this and don’t worry it’s not too late to make any investments. You just need to be a smart investor and everything will be alright.”

Sahil smiled and asked, “So, Dad… will you be my financial guru?

His dad laughed,”Of course son!”

“Now before we get into the nitty-gritty of any investment, let me first explain what a long-term investment really means?

A long-term investment is a kind of financial investment you make for over a long period of time. In most cases, your money multiplies, thus providing you with a financial corpus for future needs. An investment that spans for more than five years is generally considered to be a long-term investment. Some investments may also span up to ten, fifteen or even more years. In fact, the longer the investment, the better it is.

Now let’s look at what type of long-term investment should you choose?

While a long-term investment is a great idea, selecting the best investment plan that will help your money grow is crucial. If you’re wondering which are the right ones? Here are some long-term investment options:

• Public Provident Fund

A Public Provident Fund (PPF) is one of the most common saving plans. It is a risk-free investment option where all you need to do is deposit a certain amount regularly and you will yield the returns of it over the long term. This is also a great retirement investment option.

• Unit Linked Investment Plans (ULIPs)

These are high-risk investment options where your money is invested in stocks, bonds, and equity funds. ULIPs act as great long-term saving plans that are ideal for funding marriage expenses, making down payments towards home and even retirement. They provide a triple benefit of good returns, tax savings, and protection. The best thing about ULIP is that even the returns you earn are tax-free. There are new age ULIP which provide additional allocations where the company also invests with you in your funds. This is indeed a must-have investment instrument in your financial portfolio.

• Real estate

Real estate features among the most common investment plans in the market. But before you invest in real estate, you need to study the market well in order to make an informed decision. Although real estate will not ensure immediate liquidity, there are chances for the returns to be exponentially high, especially if your investment has been around for a rather long time.

• Endowment plans

Endowment or savings plan provides guaranteed returns and hence they are perfect for your mid-term investment goals. They are risk- free tax saving instruments. Liquidity level of endowment plans is also higher as compared to others.

Sahil then thanked his dad for his financial advice.

His dad replied, “No problem son. Just like you, there are multiple other youngsters who will need this financial guidance to make the best out of their earnings.’