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What is Investment? Related Articles

Knowledge Centre Team February 21, 2023 459 Views How to Invest Money - Learn the Best
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The meaning of investment is putting your money into an asset that can grow in value
ULIP
or produce income or both. For example, you can buy equity stock of a listed company
in the hopes of receiving regular dividends and capital appreciation in the form of the Tax Saving
share price.
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Your savings become investments when they are put into assets that carry investment
risk or a degree of illiquidity. Such investments help you create wealth that can be used Child Insurance
as an emergency fund, a retirement corpus, for buying a house, or funding a child's
education, etc. Retirement

Objectives of Investment Saving Plan

The need for investment will grow as you move ahead in life. Growing responsibilities Tax University
will demand an increase in investment. The primary objectives of investment are listed
below:

Safeguard your Money

Investing keeps your money safe from immediate and unnecessary expenditures. It
also helps you keep your money safe from inflation effects. Inflation erodes the
value of your money unless it is invested in an interest-earning asset. Thus,
investing will help you automatically keep up with inflation.

Grow your Savings

Investment is the only way to start growing your invested money. It allows your
money to earn interest and if you keep the interest invested it will also start to earn
interest.

Build Funds for Emergencies

 Life is usually a series of ups and downs. Few times you are earning decent and
saving money while
Lifeother times you
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Plans a large sum for an emergency.
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investment pools help you on such rainy days.

Secures your Retired Life

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Retired life is where you don’t have a source of income to sustain your life. Once TRY OUR

you have built a retirement corpus, you can experience the freedom that comes CALCULATORS
with it.
Calculate Fund Value

Save Tax Calculate Premium

Investment in tax-saving instruments like life insurance plans, ULIPs, PPF, NPS, etc
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allows you to claim deductions on your taxable income. Thus, investing in specific Financial Immunity Calculator

assets can help you reduce your tax liability. Many of these investments also help Compounding Calculator
you reduce your future tax with tax-free maturity values.
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Fund Bigger Life Goals

Your monthly income will not be enough to purchase your next car or build a house
for your family. However, if you invest a small sum in a few years both could be
possible. Get a Call Back
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Depending on the type of asset you invest in you can expect a certain degree of risk
and return ratio. You can divide all investments into the following categories:

Owner's Equity Name

These are some of the high-risk investments as you are directly holding the
ownership stake. Owners only earn after paying all the expenses and liabilities. Email
Ownership stake makes you a party to the profits and losses of the company.

Lending Mobile

Lending is considered safer than equity ownership as you secure an obligation

from the borrower to pay interest. Thus, you hold the first right to the money over Annual Income (In Lacs)

the owners. However, the rate of return will also be lower.

<3 3-5
Money Market Participation
5-7 07-10
Money market investments are short-term debt obligations, which can last up to
10-15 > 15
365 days or less. Examples include T-bills, Commercial Papers, etc. Even though
these investments will earn less, they are safe.
I agree that even if my contact
number is registered with NDNC /
Types of Investments NCPR, I would still want the
Company to contact me on the
You will find many investment options and you should shortlist the best ones as per given number and email id for
the clarifications/product
your needs. At a broader level, investment can be divided into two categories - Equity information sought by me and
agree that I have read and
and Debt. Equity primarily invests in shares of companies in different ways. Debt is
understood the Privacy Policy and
where your money is invested in money market instruments. agree to abide by the same.

The below table lists different types of investment options in India: C O N TA C T M E

Investment Description Risk Reward

Type

Stocks Stocks represent your ownership share in High High

the company. Stocks will provide a return
on investment through changes in the
share price, or dividends. It can be highly
volatile and is considered one of the riskiest
investments.
 Bonds Bonds are an instrument of borrowing. Low Low
Bondholders have Plans
Life Insurance the first right to the
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assets of the company. Thus, these are
considered safer than equity stocks. Also, a
bondholder’s return on investment will be
more stable
Aboutthan
Us a stockholder's as bonds
can have fixed coupon rates.

Mutual Mutual funds are pooled assets that are Medium Medium
Funds professionally managed. It can pool money
from thousands of small investors and
create a portfolio of up to 30 securities to
generate a return on the pooled money.
Mutual funds allow investors to invest a
small amount regularly and choose their
asset portfolio as per their risk profile.

Unit Linked ULIPs are life insurance plans that allow you As per High
Insurance to invest in diversified funds as per your risk your
Plans profile. You will get market-linked returns portfolio
and tax-saving benefits on your
investments. Life cover will be available
regardless of the performance of the
invested sum.

Gold Investing in physical gold could be Medium Low

expensive, risky, and fraught with storage
issues. Thus, you can use an electronic form
of gold investment. Gold ETFs and Gold
Bonds are some of the popular ways of
investing in gold and keeping up with its
price.

Public It is a scheme that offers a good rate of Low Low

Provident return and a sovereign guarantee. With PPF
Fund (PPF) you can beat inflation, and build handsome
wealth, that too completely tax-free. PPF
also allows adequate liquidity. Thus, this
investment helps you build a safety fund for
your family. The account is extendable after
15 years of maturity. So, you can use it to
save for your retirement and draw a tax-
free pension after 60.

Why is your Choice of Investment Asset Important?

Selecting an investment option needs a balance between the following three factors:

Liquidity

Risk or Volatility-Return

Investment Tenure

Usually, risk-return and liquidity are inversely proportional to each other. The higher the
risk the lower the liquidity and the higher investment tenure you will need.

For example, if you are only saving money, the liquidity is high, the investment risk is
zero, and there is no investment tenure.

All the assets and investment options offer a different trade-off between these factors:

Investment Option Liquidity Risk-Return Ideal Investment

Term
 Savings Account Equal to Cash Almost Nil Nil
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Fixed Deposit Lower than Higher than 7 days to 10 years
Savings Savings

Gold HighUs
About Medium 5 to 15 years

Equity Stocks High Very High 3 to 30 years

Equity Mutual Funds Medium to High 5 to 10 years

High

ULIPs Low Medium to 5 to 81 years

High

Public Provident Fund Low Low (but tax- 15 years+

(PPF) free)

Real Estate Very Low Medium 10 years+

While investing you should always optimize the investment horizon. Your chances of
receiving better returns will be higher if you stay invested for a long time with high-risk
investments. However, you also need less risky and more liquid investments to fulfill
your short and medium-term needs.

Before investing in an asset, you must understand the risk-reward equation and
liquidity.

Factors to Consider Before Investing

Now that you understand investment basics, you must also learn to choose the best
investment option as per your financial goals. Listed below are a few steps to help you
find the best investment option as per your life goals:

Define your Investment Goals

Every financial journey is different, and hence everyone's investment goals are
different. The first thing you can do is define your investment goals. This will help
you with the following:

How much money do you need in the future?

How much you can invest now?

How long do you need to invest?

Choose Investment Options as per Goals

Once your goals are defined, select the investment option. Your choice will depend
mostly on the time available for a particular milestone or event in life. For example:

If your goal is to buy a car after 3 years, you can invest your savings in a debt
mutual fund and achieve your goal.

Buying a house after 10 years means you can invest in equity funds and stocks.

Ensure Higher Tax Savings

Long-term investment options can also help you save on tax:

Investments like PPF and ULIPs help you reduce your taxable income when you
 invest in them.
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Equity mutual funds, gold ETFs, and debt mutual funds enjoy indexation
benefits on capital gains if you hold them long enough.

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Insure Important Family Goals
Certain family goals like a child’s higher education and marriage cannot be left to
chance. So, you should choose investment options that offer good growth as well
as protection for the goal.

Investment options like ULIPs have a life insurance cover with diversified
investment options.

Guaranteed Return Plans are safe long-term investments that offer guaranteed
returns on the investment that you make.
Investment is essential to grow your money and create wealth. It will help you achieve
your life goals. There are many investment options available in India, and you must
understand the purpose, the risk, and the reward associated with them.

You should pick an option according to your investment goals and needs.

FAQs Related to Investment

What is investing?

How does investment work?

When should you start investing?

Why invest when you can save money with zero risk?

Disclaimer: This article is issued in the general public interest and meant for general
information purposes only. Readers are advised to exercise their caution and not to rely
on the contents of the article as conclusive in nature. Readers should research further
or consult an expert in this regard.

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www.lifeinscouncil.org | IRDAI Registration no: 136. www.irdai.gov.in WEBNJV3CHODEC17 ENG | CIN: U66010DL2007PLC248825
Trade Logo of Canara HSBC Life Insurance Company Limited (formerly known as Canara HSBC Oriental Bank of Commerce Life Insurance
Company Ltd) hereinafter referred to as "Insurer" is used under license with Canara Bank and HSBC Group Management Services Limited.
1. The monthly survival benefit mentioned is an example of Life Assured opting for Sum Assured as 1Cr under Life Secure with Income plan
option. Under this plan option, a Monthly Survival Income shall be payable at the beginning of each month, starting from the Policy Anniversary
coinciding with or following the Life Assured attaining age 60 years (last birthday) which shall continue till the end of the Policy Term or the death
of the Life Assured whichever is earlier. In case of death of the Life Assured during the Policy Term, Sum Assured on Death basis the Coverage
option opted, less cumulative monthly income(s) already paid shall be payable. The Policy will terminate after payment of this benefit.
2. Benefits are guaranteed provided the policy is in force and all premiums are paid as and when due.
3.The maturity benefit calculated for a 25 years old healthy male who has opted for Canara HSBC Life Insurance Guaranteed Savings Plan with
Guaranteed Savings Option through insurer’s website, annual premium Rs. 2,10,000, (excluding taxes) premium payment term 10 years and policy
term 20 years. The maturity benefit is Rs. 51,84,468 which includes Guaranteed Sum Assured on Maturity, accrued Guaranteed Yearly Additions
and Guaranteed Loyalty Addition. T&C apply.
4.Tax benefit of Rs. 46,800/- is calculated at the highest tax slab of 31.2%(including 4% cess) for an individual assessee on life insurance premium
of Rs. 1.5 lacs under Income Tax Act, 1961 and tax benefit may vary from assessee to assessee. Tax benefits/savings are subject to provisions
under section 80 C, 80 CCC, 80 D, 10(10A), 10(10D) and other sections of the Income Tax Act, 1961. The provisions of Income Tax Act, 1961 are
subject to amendments made by the government from time to time. Goods & Services Tax will be charged on the premium amount. Please consult
your independent tax advisor for details.
5. The maturity benefit is calculated for a 25 years old healthy male life who has opted for Canara HSBC Life Insurance iSelect Guaranteed Future
Plus with Endowment Option, monthly premium Rs. 10,000 (excluding taxes), premium payment term 10 years and policy term 20 years through
online sales channel. The maturity benefit in form of a lumpsum benefit equal to Rs.34,24,444 is paid at the end of the 20th year, provided the
policy is in-force and all due premiums have been paid. T&C Apply.
6. The premium of ₹939 mentioned is exclusive of goods and service tax and is an example for a healthy 25-year-old male, non-smoker, covered
for ₹2 crore under plan option ‘Life Secure’ with monthly mode of payment and coverage option as ‘level’. The policy term and premium payment
term considered is 10 years. Actual premium rates may vary and will depend on the plan/coverage opted and company's assessment of risk on
insured's health, lifestyle, occupation etc. Refer Sales Brochure for further details

Please know the associated risks and the applicable charges, from your insurance agent or the intermediary or policy document
issued by the insurance company.

The Unit linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be
able to surrender/withdraw the monies invested in Unit linked Insurance Products completely or partially till the end of the fifth year.

The investment risk in investment portfolio is borne by the policyholder.

Canara HSBC Life Insurance Company Limited is only the name of the insurance company and Canara HSBC Life Insurance Invest 4G
is only the name of the unit linked insurance contract and does not in any way indicate the quality of the contract, its future prospects
or returns.

Unit linked Insurance products are different from the traditional insurance products and are subject to the risk factors.
 The premium paid in Unit linked Insurance policies are subject to investment risks associated with capital markets and the NAVs of
the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is
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responsible for his/her decisions.

The premium shall be adjusted on the due date even if it has been received in advance.

About
The various funds offered Us this contract are the names of the funds and do not in any way indicate the quality of these funds,
under
their future prospects and returns.

Past performance of the investment funds do not indicate the future performance of the same. Investors in the Scheme are not being
offered any guaranteed / assured returns.

The premiums & funds are subject to certain charges related to the fund or to the premium paid.

Collection of advance premium shall be allowed within the same financial year for the premium due in that financial year However,
where the premium due in a financial year is being collected in previous financial year, the premium may be collected for a maximum
period of three months in advance of the due date of the premium. The premium so collected in advance shall only be adjusted on
the due date of the premium. Such advance premium, if any, paid by the Policyholder shall not carry any interest.

7. The above scenario has been calculated for a 52 year old individual who has opted for Canara HSBC Life Insurance Guaranteed Assured INcome
- Long Term Income plan option and has chosen Premium Payment Term - 12 years, Deferment Period - 5 years, Income payout period - 30 years,
income will commence at the end of 18th year till the end of 47th year and Policy Term - 47 years, Income Payout Frequency - Annual and an
Annualized premium of Rs. 5 lacs. Guaranteed Income displayed above is the sum of Assured Income installment + Loyalty Income installment.
The above benefits will be applicable, provided the policy is in-force till the end of the Policy Term. For details on benefits and terms and conditions
applicable under the product, please refer the sales literature.
^Individual death claims settled and reported in public disclosures for FY 2022-23.

For more details on risk factors, terms and conditions please read the Sales Brochure carefully before concluding a sale.

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IRDAI is not involved in activities like selling insurance policies, announcing bonus or investment of premiums. Public receiving such phone calls are
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