Investment: Tips - Where to Invest Your Surplus Money

Investment: Tips - Where to Invest Your Surplus Money

In easy language Surplus Money is Your Total Income Less the expenses incurred by you. The less you spend the money, the more you can save.  You can invest your Money at the following places:

      -          When you have little fund: Deposit the part of your savings in bank and try to accumulate it as much as you can.

      -          When you have some Fund: Invest in Securities having nominal charges and very low purchase requirement with maximum return and reinvestment plans so that you can increase the amount of your investment.

      -          When you have some more Fund: You can go for investing in mutual funds.

      -          When you have more Fund: You can go for purchasing precious metal like gold, silver, etc. You can also go for down payment for purchasing some capital asset.

If we consider the time factor you can invest in the following manner:

      -          Short Term Investment: In case of short term investment shares from open market are the best options.

      -          Medium Term Investment: When you are planning for a medium term borrowing, you can choose options like mutual funds, Down payment for purchasing Capital Assets, Purchasing precious metals and buying some bonds with medium lock-in period.

      -          Long Term Investment: There is a huge deal in planning for long term investments. There are many options when you consider the long term investments. They are:

o   Purchasing Immovable Property

o   Purchasing Government Bonds

o   You can opt for depositing your money in a Fixed Deposit Account with the bank. This is the safest mode ever.

o   You can go for paying a onetime premium for future policies.

o   You can also opt for starting a new business by investing your surplus money.

v  Points to be kept in mind while planning for investment:

      -          Availability of surplus: When you decide to invest in any security, property, etc you must be firm about the source of surplus i.e. from where are you going to get the surplus amount for investment.

      -          Form a strategy about how the investment of your surplus can help you earn most profit.

      -          Liquidity: The most important point is you must take into consideration the liquidity factor. The cash required for day to day activities and other emergencies must be kept aside before making any investment.

      -           Have the necessary amount of fund to repay the borrowed amount if you have borrowed the fund.

      -          When you are willing to go for short term investment, choose the investments which are more liquid in nature.

      -          Risk Management: When you go for any type of investment, first scan the market so that you can learn about the risk associated with your investment. This will help you to choose investment bearing least / negligible risk. After investing also keep watch on market fluctuations so that if your investment are becoming risky, you can switch over to less risky ones.

      -          Diversification: Don’t invest all your money in one investment option. Go for diversification. Diversify them by investing a part of saving in short term, medium term and long term investments. This will help in maintaining liquidity and earn handsome return on the investment.

      -          Also consider the Tax that will be attracted on your investment income while you invest. This will help you save your tax.