Investment Planning Guide for Middle-Income Groups


    The middle-income groups fall under the section of individuals that makes for a significant portion of our economy and works resiliently to secure a stable future. In India, most typical middle-class homes enjoy little comforts in life, like having a home or owning a car, and planning for various short-term and long-term needs. An extremely crucial element of life for them is to invest money to support various life goals. 

    Before we move forward to the Investment planning guide, let’s understand some basics – what is investment

    Investment is a way of building wealth by putting aside some capital over time to gain returns. When you invest your money in smart options, you can ensure steady growth. It is important that you understand what is investment and then explore different options to pick the best investment plan suiting your requirement.

    Financial preparation plays a vital role in everyone’s lives, especially so for the middle-income groups. Whether it is to fulfill short-term objectives such as purchasing a new vehicle or saving for retirement, selecting the right investment instruments is crucial. Although a middle-class household’s average income has gradually risen, the importance of investment remains the same.

    No matter what payscale you are on or how much you earn, you want to ensure that your existing obligations are met, and there is a safety net for your goals and that of your family. You can achieve this and more by making smart investments. 

    If you fall into the middle-income group, here is how you should plan to invest money:

    1. Assess Needs

    The selection of the best investment plan must be made after assessing your needs carefully. It can be stability, income, or growth. Do you need a secondary income source, want to plan for your retirement years, or for your child’s higher education?

    If you are young and plan to start a family, you really should consider what your real needs are before you follow an investment plan. It can be a home, education of a child, or health. You may create a time frame after assessing the requirements to define the point in time when you will need a specific amount.

    1. Control Expenses

    The next step is to manage your costs, which can be achieved by making a budget. It is a way of never running out of money, and it helps in supporting various needs in life the right way. When you have a clear idea of all the expenses – regular or miscellaneous, you can see how you can exercise control over the spending.

    Budget planning is yet another way to cut down on unnecessary expenses and utilise the saved amount for investment purposes. Based on the amount you can set aside, you can choose to invest in the best investment plan that fits your profile. 

    1. Design a Financial Plan

    When creating a financial plan, the most important thing to do is to set specific financial targets. If you want to purchase a car in five years or save for your children’s education, selecting the right target gives you an idea of the amount we need to set aside today. The next move is relatively simple once this is completed.

    Having a plan in mind also helps in selecting the best investment plans for life.

    1. Focus on Long Term Goals

    The next important thing is to keep your long-term financial goals in sight. For instance, if you want an investment opportunity with a life cover, ULIPs would be a good choice for you. The lock-in period of 5 years is a big positive for ULIPs, making them one of the best investment plans for middle-income groups. It is a habit many have lost to saving for a more extended period, and ULIPs allow you to continue with this conventional yet safe financial approach.

    Long-term investments also support you to produce higher and more secure returns. However, since the Long-Term Capital Gains Tax (LTCG Tax) implementation in the Union Budget 2018, which applies to MFs, SIPs, etc., many long-term investment options have moved out of the picture. However, ULIPs have been exempted from this tax as an insurance tool.

    1. Choose Saving Plans

    If taking risks is not your preference, choose savings plans instead of the best investment plans available. You want your hard-earned money to grow over time but with lesser risk, for which saving plans are well suited. Putting your money in a suitable savings plan is a smart way to increase your wealth and cater to financial goals. 

    To encourage investors to spend more and earn high returns, you can find some of the best savings plans offered by renowned life insurance companies. You must look at both the pros and cons of your investment options and prepare accordingly before investing. 

    With investment plans, middle-income groups can earn good returns and fulfil life ambitions and goals. Be careful when you make investment decisions for life.

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