Before you start investing, you need to decide what your investment purpose is. Do you want to meet financial needs in retirement? Or are you looking to fund the education of your children? Once you know your investment purpose, you can start choosing the right investment tool. Determine your time frame, the quantum of your investment, and the type of financial product you want to use. Below are some tips to help you select a tool. Read on to find out more about the advantages and disadvantages of each investment tool.
Bonds – These types of securities are a safe and low-risk investment tool. Because they are not risky, they offer low-risk investment opportunities and lower returns than stocks. Bonds are issued by governments and corporations, and investors purchase them at face value, plus interest, and then pay them back over a certain period of time. Bonds are safer than stocks and are an excellent way to protect your family’s finances should the worst happen.
M1 Finance – This online brokerage service lets you invest without a personal financial advisor, but it does take a few hours to open an account. M1 Finance has an intuitive interface, and you can manage your account from anywhere. There is an annual subscription fee of $125, but the service offers free trials for up to 10 holdings. Investing in M1 Finance is a good idea for long-term investors, and it is also easy to use.
Recurring Deposits – Another popular investment tool is a recurring deposit. Like fixed deposit, it requires you to make regular deposits. You will receive higher returns than you would with a savings account. The recurring deposit is an excellent way to start saving without a monthly minimum. Many banks offer this option, as it promotes the habit of perpetual savings. However, it may not be for everyone. Therefore, you should choose an investment tool based on your own needs and financial goals.
Mutual funds – You should invest in mutual funds that meet your needs. These funds are a good way to build long-term wealth because they use the knowledge of fund managers who have a proven track record. They also leverage their own expertise and know-how. By monitoring the expense ratio, you can cut costs and invest in the right mutual fund for your needs. This tool is highly affordable and helps you achieve your financial goals without incurring high costs.
SIP – A SIP allows you to invest a fixed amount each week, month, quarter, or half-year. Depending on your income and financial goals, SIPs are an excellent option for beginners. With a fixed amount each week, you can invest in a diverse range of securities. SoFi also offers education tools and automatic investing opportunities, so you don’t have to worry about putting your money at risk.