(Published on 12-Sep-2020)
The recent stock market crash of 2020 had initially put investors in jeopardy and projected an economy where making Money would become severely challenging. However, since April 2020, SENSEX had started to move north, indicating a turn. Currently, the market is somewhat at a volatile stage, and investors need to be cautious while investing.
Several individuals are, thus, on a quest to know how to make money this year and minimize losses. There are several Investment avenues that new investors can tap into and expand their savings, irrespective of what their goals are.
Here Are Few Tips That can Aid in the Process –
Tip 1: Consider Objectives and Goals
Before investing, individuals need to assess their objectives and goals. Some prefer to simply grow their wealth while others invest to meet expenses in the future, like children’s education or wedding, buying a car, down payment for a home, etc.
Having a set objective and goal enables investors to plan accordingly – they can opt for low-risk schemes for growing their savings, or those with high returns to meet future expenses.
Tip 2: A Certain Degree of Risk is Necessary
Investment options, like deposit plans bearing zero risks, have recently considerably lowered their interest rates. For instance, bank fixed deposits are averaging a rate of interest of 5%.
As such, for making money this year, individuals need to undertake a certain degree of risk.
Investing in regular or direct mutual funds can be an ideal option in this case. These enable an individual to invest in two ways –
In this regard, investing in mutual funds bearing moderate to moderately-high risk levels may prove to be lucrative. Large-cap and Bluechip funds can also be the options to go for since these invest in large Indian companies that are financially stable and have not been drastically affected by the recent downturn.
- Lump-sum – This involves a one-time investment of a sizable amount.
- Systematic Investment Plan (SIP) – A particular amount is deposited every month.
Investors who want to invest in equities directly, can also look for fundamentally strong stocks. However, in order to invest in stocks investors need a trading and Demat account, which can be created through new age investment platforms like Groww.
Tip 3: Avoid High-Risk Investments
High-risk investments may offer high returns. However, it is advisable to avoid such schemes in uncertain times like these.
Such investments must only be considered when investors have built a substantial quantum through low or moderate risk products and possess optimal knowledge of the market.
Tip 4: Opt for Short-Term Fixed-Income Schemes
Fixed-income schemes like bank FDs are currently offering some of the lowest rates. As such opting for such plans is surely not one of the brightest ideas to make money under the current scenario.
However, individuals can easily invest in such schemes for short-term as an alternative to a savings account, which currently offers an average interest rate of 3%.
For those looking to know how to make money investing in fixed-income schemes can opt for corporate FDs. These are offered by financial institutions (other than banks) and companies. One of the drawbacks of corporate FDs is that the minimum investment is usually high.
Few corporate FDs that are offering the highest rates (as of August 2020) now are listed below –
| Product | Minimum deposit amount | Annual rate of interest |
| Bajaj Finserv FD | Rs.25,000 | 6.90% |
| PNB Housing Finance FD | Rs.10,000 | 6.65% |
| LIC Housing Finance FD | Rs.20,000 | 6.00% |
The above is the minimum rate of interest for cumulative fixed deposits. Non-cumulative FD rates may be lower for monthly, quarterly, and half-yearly pay-outs.
Tip 5: Review your Investments Frequently
It is essential to keep reviewing the performance of an investment, provided it is market-linked.
Doing so is particularly necessary in case of stock trading. Stocks may be one of the simple ways to make money online, but investors have to remain cautious at all times. Individuals will have to remain abreast of the company’s recent developments. Any major changes can affect its stock prices.
Hence, when learning how to make money, it is quintessential to keep reviewing and planning ahead to avoid losses.
Hence, when learning how to make money, it is quintessential to keep reviewing and planning ahead to avoid losses.
Tip 6: Diversification is Essential
Diversifying investments essentially means to invest in several avenues. Doing so is necessary to maintain a balance between risk and return.
One of the ideal ways to diversify is to invest in – - FDs for short-term.
- Mutual funds and stocks for medium-term.
- Other fixed-income plans (like PFF) for long-term.
Tip 7: Check the Charges before Investing
This tip may not directly be linked to making money, but it is essential to follow. When buying stocks or investing in mutual funds, investors may need to utilize the service of a stock brokerage company. Such companies usually charge a fee, which may be based on transactions. There might also be other charges involved. Hence, it is necessary to check all the charges of a brokerage company before going forward with it. Keeping all these tips in mind will help those looking to know - how to make money. It is recommended that beginners start small, especially in the case of investments that involve some risk.
