Leading a happy and healthy life means ensuring several things as we grow up, start working, settle down, and strive to achieve multiple goals. We should invest time in our own health and wellbeing, along with looking to safeguard the future aspirations of our loved ones (in case something happens to us), make plans to accomplish major objectives, and of course, put efforts towards leading a comfortable life after retirement.
Now, many of these things call for a sound investment plan on your part. Let’s begin with a time frame as an example. Say you want to go ahead with the best investment plan for 5 years. How do you chalk it out? Find the answers below.
Best Investment Plan for 5 Years- Key Components
Talking about the best investment plan for 5 years, it is important that you put a few components in place. Also, it is vital to mention at the outset that there should be a few focus points while creating your investment portfolio. Firstly, it should be aligned with your five-year goals. Secondly, you should invest as per your risk appetite and financial circumstances. The portfolio should spread out risks and diversify by balancing low-risk and high-risk (and higher return) investment options.
Now, let us look at a few strategies that you can use to build your portfolio in this regard.
- ULIPs- These are viable choices in terms of choosing the best investment plan for 5 years. They offer much-needed life insurance coverage for your family, and you also get to choose the funds you wish to invest in. Mix it up with debt, equity, or hybrid funds as per your current life situation. But you will need to stay invested for the lock-in period of 5 years. However, they are often more effective as long-term investments due to charges like premium allocation and fund management fees.
- SIPs (Systematic Investment Plans)- You can start off with smaller amounts and invest more as your income goes up. For this duration, you have various options. Debt funds or balanced funds are good for investors with low to moderate risk tolerance. You can pick equity funds for higher potential returns. But they come with higher risks.
- FDs and RDs- Recurring deposits can be employed to invest for 5 years, with a fixed amount each month. This investment has zero risks and guaranteed returns while offering handsome benefits due to compounding. If you already have a lump sum amount, consider putting some of it into an FD (fixed deposit) to earn zero-risk and guaranteed returns within this period.
- Post-Office Savings Schemes- You will also find multiple savings schemes from the post office, which have varying lock-in periods. These are safer investments and come with decent returns as well.
Some other choices include the National Savings Certificate (NSC), treasury securities, and more. Make sure you consult an advisor before going ahead with your portfolio.