Salaried individuals have fixed monthly income unlike a self-employed or businessman, which means that they have to manage investment and expenses within a stipulated income. They cannot change the lifestyle due to income constraints. Therefore, salaried people need to consider time, risk, income growth and return expectation while determining the best investment option for them.
Below is the list of 5 best investment options for salaried individuals who have just begun their career:
Systematic Investment In Equity Oriented Product
A young earner has less responsibilities in the beginning of a career and his/her potential to take risk is high. Therefore, they can consider investing in equity-oriented product. Within equity class, the investment should be done in a systematic way, i.e. instead of putting the money once in a year or so, it should be invested in instalments every month. You can invest in the Mutual Fund SIP if you are not comfortable with direct investment in the stock market. Within equity mutual fund scheme, you should diversify investment as per risk and return expectation and in sync with your financial goal. For example, for medium term investment you can select a large cap equity fund for getting high return at moderate to high risk and similarly for the long term you can invest in mid-cap fund for high risk and high return option. Equity investment through SIP mode reduces the risk in the long term and if you have diversified the investment, then it further curtails the volatility risk.
Invest In Recurring Or Fixed Deposit
A Fixed Deposit is considered as the safest form of investment as the return is guaranteed after the tenure is over. It not only cultivates a habit of saving, but fixed deposits offer higher interest rates than normal savings account. Another advantage of a fixed deposit is that it can come to your rescue when you are facing a huge cash crunch. Salaried individuals should also use the Recurring Deposit option to create the contingency fund and ensure sufficient liquidity for distressed situation.
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