Last Updated on March 7, 2023 by hassan abbas
In today’s fast-moving world and highly unpredictable economy, individuals constantly juggle between income and expenses. Instead of working for extra income and taking a toll on your personal life, you can put your money to work for you. For greater growth of your funds, you can make strategic investments. With numerous available options for investments, if you are confused, here are five lucrative investments that can give you an extra income.
- Mutual Funds
Mutual funds involve pooling funds from a large number of investors and investing in various assets ranging from debt instruments to equities. You can invest in funds with moderate to high-risk instrument schemes. You can diversify your investments across equities, bonds, and large-cap or mid-cap companies to meet your financial goals. The investing period can be several years. Mutual fund investments have historically generated higher returns. With technological advancements, you need not hold mutual funds in physical form. You can hold your fund units in your demat account. Demat account meaning, in simple terms, is online storage with a stock that holds all your stock market assets.
- Annuity Plans
Insurance companies offer annuity plans. You can invest a lump sum in annuity plans for your retirement strategy. The returns on these plans vary by your chosen options. You need to invest in an immediate annuity for instant regular income, and a deferred annuity provides income at fixed intervals.
- Dividend Paying Stocks
Stocks are a great option to diversify your financial portfolio. Capitalizing on a rise in the stock price is not the only option in the stock market. For extra and regular income, you can consider stocks of well-established companies. Dividends are a share of a company’s profit in a financial year available for its shareholders. You can analyze a company’s financial situation to know if it can maintain strong fundamentals and offer good regular returns. You can open demat account online to invest in stocks conveniently.
- Fixed Deposits
You can invest a lump sum amount in a fixed deposit (FD) with non-banking financial companies (NBFCs). NBFC FDs are known for higher interest rates than banks or post office FDs. These FDs offer interest on a quarterly or half-yearly basis. You can earn an additional interest rate if you make an online FD. If you are an elderly individual aged over 60 years, you can invest in senior citizen FDs, offering an additional interest rate of 0.25%. You need to ensure that you invest in an FD with the highest safety ratings by the credit bureaus. You can choose to reinvest the interest amount via a cumulative FD to increase your extra income.
- Post Office Monthly Income Scheme
India Post offers several investment options. One of their investments is a Post Office Monthly Income Scheme (POMIS). It can open an account with a tenure of 5 years. The investment scheme allows you to earn monthly payouts during the maturity period.
- Senior Citizen Savings Scheme
Post office investments include another unique investment scheme for individuals aged 60+. A senior citizen savings scheme can offer you significant returns for extra income without risk on your capital.
- Long-term bonds
A long-term bond issued by the government can pay you interest once or twice a year. It is also a low-risk option to earn extra income. These are tradable instruments. If you want to sell them in the secondary market, you are free to do so. However, most individuals invest in government bonds for a considerably long tenure, say 15-20 years.
Thus, you can choose from these investment options for extra income based on your investment horizon, risk appetite, and capital available to invest. If you want greater control over your returns, you can consider NBFC fixed deposits, as they are not market-linked instruments. You can consider equities for high and inflation-adjusted returns, provided your risk profile allows you to take a higher risk on your capital. If you want to start small and gradually add to your investment, you can invest in Mutual Funds with a Systematic Investment Plan (SIP).
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