Investment in 2024: How to choose the right financial product in New Year

This is one of the primary considerations. Some products like FDs offer a fixed rate of return while others like equity offer a market-linked rate of return. The investment goal and the return that the product offers should match. Say, if the goal is a child’s higher education, you can invest in diversified equity funds. Also, check if the investment product offers inflation-indexed returns or not.

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Typically, the higher the return that the investment offers, the higher the risk it carries. So, evaluate your risk appetite, overall financial situation, and life stage before making a decision.

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These can affect the overall return on investment. Before investing, you should check the investment management fee, administrative costs, or any other charges that are levied on that investment product.

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Some investments have a lock-in period, like 15 years for PPF, and there may be a penalty for early withdrawal. Other options, such as liquid plans of mutual funds, provide withdrawal of investment on the same day of the request.

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Some products offer tax benefits, such as Rs.1.5 lakh deduction under section 80C for investments in PPF. In the case of others, the income earned from the investment (dividend or interest) may be taxed at the time of redemption/withdrawal.

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1) Invest in products that you can understand.
2) Investment decisions should align with the overall financial plan, goals, and life stage of the individual.

(Disclaimer: The opinions expressed in this column are those of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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