If you are a business owner, your priority would be to invest in growing your business. However, when you are in a better position in the future, it is advisable to invest your hard-earned money in investment options to build a strong financial portfolio. As there are numerous financial products available in the market, many people are confused about where to invest money. So, before talking about any specific investment, let us understand the fundamentals first.
Here are some of the types of investment plans for non-salaried people:
ULIP is a one-of-its-kind insurance plan that helps you insure your life as well as earn attractive returns through investments in the capital market. Part of the premium that you payis invested in equity, debt, or a mixture of both.
Additionally, ULIP offers tax benefits. Under Section 80C of the Income Tax Act 1961, the premium paid towards the policy is deductible up to INR 1.5 lakh. The amount received on maturity or the death benefit received by the nominees is also tax-free as per Section 10(10D) of the Act. It is advisable to stay invested in ULIP for a minimum of 10-15 years to reap the benefits of compounding and to grow your wealth exponentially. ULIP facilitates goal-based savings and can help you to meet your financial aspirations like buying a house, sponsoring your children’s education and their wedding, and building a large retirement corpus. With the help of the Internet, you can easily buy an online investment plan and choose a ULIP as per your risk-taking ability.
The Government of India launched the National Pension Scheme in 2004. It is a pension-scheme where you can regularly invest until you stop working. You can partially withdraw a lump sum on your retirement and utilize the balance amount to invest in an annuity fund, which will ensure a fixed income after you retire. If you are planning to invest in NPS, your age should be between 18 to 60, and most importantly, you must be an Indian Citizen. NPS offers two distinct investment options, which are Tier-I and Tier-II. The Tier-I account is the compulsory pension account that accumulates your retirement corpus. The Tier-II account is a type of voluntary savings account that you can open as per your will.
In a Tier-1 account, once you reach the retirement age of 60, you can withdraw 60% of your retirement corpus, whereas the remaining 40% of the corpus will be invested in annuities that provide regular pension to you. When compared to the Tier-1 account, a Tier-II account is more flexible in terms of deposits and withdrawals. There is no limitation on withdrawing your corpus. You can operate this account just like your bank’s saving account.
The Government of India regulates the PPF, which is a tax-free investment instrument. It is considered to be one of the safest investment alternatives. PPF has a lock-in period of 15 years, and the income accumulated eventually is exempted from tax. The Government of India controls the interest rate of PPF, which is paid every quarter.
One of the advantages associated with PPF is that you can withdraw your funds partially on the completion of five years. Moreover, PPF offers guaranteed returns. Therefore, it is one of the most popular investment avenues in the market today.
These three financial products offer tax benefits and can help you accumulate a significant corpus to meet your future financial goals. These offerings make them ideal investment instruments for self-employed individuals like you. Invest your hard-earned money in the product that suits your requirements.