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In today’s day and age, saving money is not just about saving it in a bank account. Increasing inflation and economic uncertainty after the pandemic have changed the need for savings for all of us. It is about keeping inflation in check and not letting your money eaten up by inflation. The inflation rate is rising by 6 to 7 percent every year, if the growth of your saved money does not match the growth rate of inflation, you are losing the purchasing power of the money saved. That means the saved money cannot purchase the same amount of goods in the future as it can purchase today. To tackle this and restore the purchasing power of your savings, here are the top 7 investments in 2024 that can help you beat inflation and optimize your savings.

1.      Stocks

• Brief: -Stocks are one of the most popular and one of the most misunderstood investment choices by most of us. It is due to a lack of knowledge and past examples that frightens most of us. Equity stocks can be a great avenue for investors looking for long-term investments with handsome returns. This is a high-risk investment option but if you can dedicate a little time and effort to understand the working, you can make a good investment that can fetch you a lot of interesting stuff along with good returns.

• Tenure: – for equities, investments for the long term can fetch you great returns, though it is no guarantee that long-term investment will always fetch you good returns. Tenure can vary as per the objective and style of investors. Traders tend to go for short tenure whereas investors are here to stay for a while

 

• Risk & Returns: – Stocks work or high-risk, high-reward principle, it can eat up all your investment or it can give you multifold returns in a very short period. A better understanding of the stock market and learning market dynamics can help you make good decisions with lower risks and better returns.

 

• Verdict: – Stocks can be a good avenue for investors looking to get a decent return with a bit of margin for risk. One should invest in this after doing a fundamental analysis if going for long-term investments. With shorter periods, traders can rely on technical analysis for making investment decisions. Stocks can be one of the top 7 investments in 2024 that can help you beat inflation.

 

2.      Cryptocurrency

• Brief: – Cryptocurrency is one of the latest investment options. It is one of the most widely talked about instruments in finance but very few only know how it works. It comes in with various names like Bitcoins, Ethereum, Dogecoin, Litecoin, etc. It is a digital form of currency with no regulation. Cryptocurrency is one of the most volatile instruments for investing, so you need to be well-versed in the risk that comes with cryptocurrency. You need to have a cloud-based cryptocurrency wallet to buy cryptocurrency. The name of cryptocurrency is derived from encryption technology that is used in the dealing.

• Tenure: – Deciding on an investment tenure is very difficult for cryptocurrency. It is highly volatile and cannot be predicted. There are over one thousand cryptocurrencies, and due to their highly volatile nature, almost all of them should be traded for short tenure.

 

• Risk & Return: The risk for this is very high, as the crypto price is very sensitive. It works on a high-risk and high-reward structure. The price of cryptocurrency is determined by the demand and supply of cryptocurrency which is difficult to predict. This is a non-tangible investment that is stored in a wallet, for that you need to keep your wallet secured, any threat to its security can lead to loss of all the crypto in your wallet. Always have a backup in case of loss of access to the wallet or else you may lose all your investment. It is easy to buy cryptocurrency but it can be difficult to convert it into tangible assets. As there is no regulation for cryptocurrency, there is no legal protection system for its investors.

 

• Verdict: – It can be a very rewarding investment. At the same time, its volatility may cause huge losses. Be careful, understand how it works, have a contingency plan, and diversify your investment. Cryptocurrency can be one of the top investments in 2024 that can help you beat inflation.

 

3.      Mutual Fund

• Brief: – Mutual funds have emerged as one of the most popular investments in the country. Those who cannot understand the workings of the stock market, but wish to get good returns from the market, can go for mutual funds. In mutual funds, multiple investors invest in a fund, which in turn is invested by a fund manager in various stocks. A fund manager is an expert on the stock market. All the funds are invested in various stocks after exhaustive research. The returns from these investments are given to investors after deducting all the overheads of the fund house. Mutual funds are getting popular with the rise of the working population. A mutual fund is divided into two investment modes, lump sum, and systematic investment plans. Whenever someone invests in a mutual fund, units of the funds are allocated to the investor and those units have a NAV (Net Asset Value). NAV at which units of that fund are allocated, becomes cost price for the investors. Fluctuation in the price of NAV decides the returns on the investment.

• Tenure: – The duration for mutual funds depends on the invested class of funds, for equity mutual funds, medium to long tenure can give good returns. Equity funds, stay invested for at least 4 to 5 years, whereas in debt funds, some are for short duration and others come with fixed durations like capital protection schemes.

 

• Risk & Return: – Equity mutual funds are high on risk, not as high as stocks or crypto. It is spread across multiple scrips which helps to dilute the associated risks. It can give returns anywhere between 10% to 18% or beyond, respective to fund and market performance. Debt mutual funds are comparatively safer with lesser returns.

 

• Verdict: – Mutual funds are one of the very popular investment vehicles with good returns over the last few years. Systematic investment plan (SIP) has attracted the working class with its consistent performance in the last few years. Mutual funds can be one of the top 7 investments in 2024 that can help you beat inflation.

 

4.      Life Insurance

• Brief: – Insurance is one of the most popular investment options for investors. It offers a variety of products with a combination of good returns, tax rebates, and risk coverage. There are different products offered by an insurance company some of which can be helpful to beat inflation.

 

 

1. • Guaranteed investment plans: – Guaranteed investment plans offer guaranteed returns after the maturity of the policy. In these policies, the investor needs to invest for a predefined period of 5 to 25 years and get the maturity amount after 10 to 30 years. For certain policies, there are bonuses after a specified period. The returns on these policies can be 6 to 10 percent depending on the offering. These policies offer risk coverage that varies from policy to policy. These policies also give tax rebates under section 80c of the Income Tax Act and returns on these instruments are tax-free under section 10(10D) of the Income Tax Act (for premium amounts below 5 lacs annually). Investors should indulge in guaranteed plans only when they are planning to stay invested for a long term, at least for 10 years.
   •  ULIP (Unit Linked Investment Plans): – ULIP is a unique product that offers a combination of good returns, risk coverage, and tax benefits. Unlike guaranteed plans, it does not offer a guaranteed sum after maturity. The invested amount is bifurcated and a major part of it is invested into funds that give good returns on stock markets and a smaller chunk of investment goes for risk coverage of investors. This makes it a unique investment vehicle that offers good returns along with tax benefits and risk coverage. This investment can give you a good return of 10 to 15 percent, provided the investor is ready to invest for a long term, at least for 5 years. These policies also give tax rebates under section 80c of the Income Tax Act and returns on these instruments are tax-free under section 10(10D) of the Income Tax Act (for premium amounts below 5 lacs annually).

• Tenure: – The duration of investments in Life insurance policies depends on the plans. It can be for a duration of 5 years (ULIP, allowing premature withdrawal) to 30 years. it is a long-term investment option.

 

• Risk & Returns: – Investment in insurance products is relatively safe bate. In guaranteed plans, returns are low but guaranteed, and higher risk coverage. In the case of ULIP, risk can go higher as it is invested in various funds. As ULIPs stay invested for a long duration, they give decent returns. It provides lower-risk coverage than guaranteed plans. Life insurance can be one of the top 7 investments in 2024 that can help you beat inflation.

 

5.      Sovereign gold bonds (SGB)

• Brief: – Indian households have a major part of their savings invested in gold. Gold is one of the most imported items along with crude oil. To decrease this trade deficit due to the import of gold, the government has offered sovereign gold bonds for gold investors. The price of gold bonds is linked to the fluctuating prices of physical gold. The bond is issued by the RBI on behalf of GOI. An SGB is issued by GOI for in small window of 5 to 7 days, where investors can buy these bonds online or from the nearest bank branch. Gold sovereign bonds can be a great investment vehicle that can beat inflation. Historical data suggests the price of gold has been on the rise. It gives the perfect balance of regular interest income and capital appreciation. GSB is issued by the government and backed by gold.

• Tenure: – The tenure of SGB is 8 years but after 5 years these bonds can be enchased. If you hold SGB on a de-mat account, it can be traded.

• Risk & Return: – The maturity value of SGB is linked with the market value of physical gold. It can be considered as one of the safest investments with good returns as these are backed by the government. However, Investors can potentially lose money in SGB due to a dip in gold value. Apart from the appreciation of the SGB, investors receive 2.5 percent interest at regular intervals.

• Verdict Risk: – SGB is one of the must-have investments for those who want to diversify their portfolio. It is a long-term investment that is linked to the market price of gold. It will not give you the pleasure to possess physical gold, but it will compensate by giving you interest at regular intervals. Sovereign gold bonds can be one of the top 7 investments in 2024 that can help you beat inflation.

 

6.      National Savings Certificate (NSC)

• Brief: The national savings certificate, is an initiative of GOI to inculcate a habit of savings. The NSC provides a decent rate of interest with low risk as it is backed by the Government. You can visit your nearest post office to subscribe to the scheme. You can start investing in this instrument with Rs. 1000/- only. You will get a tax rebate of up to 1.5 lacs under section 80c of the Income Tax Act. Currently, the rate of interest in the national savings scheme is 7.7%.

• Tenure: – tenure for this scheme is 5 years where the investment is compounded annually.

• Risk & Return: – it is a low-risk investment, as it’s a government initiative. The rate of returns is declared every quarter by the government. The current interest rate is 7.7%, a little above the inflation rate.

 

• Verdict: A national savings Certificate is one of those investments that has low risk and gives decent returns. Tenure for this investment is moderate. The current rate of return is a bit more than the inflation rate. It can be one of the top 7 investments in 2024 that can help you beat inflation.

 

7.      Bank fixed deposits

• Brief: – Bank deposits are one of the oldest and time-tested mediums of saving. The best part about these is you get guaranteed returns on the deposits. You can put deposits for shorter periods like below 1 year but the returns for these would not be more than 5 percent. These are tried and tested investments that give safe and fixed returns to depositors. Bank deposits can be done as one-time fixed deposits or recurring deposits. Interest rates for these instruments are the same.

• Risk & Returns: – Risk for deposits depends on the health of the bank or financial institute. if the bank has a large book with a healthy balance sheet, fixed deposits are safe bate. Deposits with scheduled commercial banks are insured for up to 5 lacs, which gives a sense of security to investors. Returns depend on tenure and vary from bank to bank. for shorter tenure return hovers between 4-5 percent, whereas for long tenure it can go up to 7.5 to 8 percent. repo rate decided by RBI also becomes the benchmark for interest offered on deposits. The assured returns from a good commercial bank can be considered safe.
• Tenure: – Tenure for deposit depends on the financial needs of the holder. You can break the deposits prematurely in case of callable deposits. In such an instance, you will lose a portion of your interest as a penalty. To get decent returns you should plan to stay invested for at least over a year. Right now, as inflation is on the higher side, the Reserve Bank has raised the repo rate, so all the commercial banks are offering decent interest rates on fixed deposits that are going beyond 7 percent for longer investments.

Read here: – Old or New? Which Taxation regime is suitable for you? 

Frequently asked questions

1. What is the best investment option among all the options mentioned above?

Ans: – The main purpose of using these investment options is to beat inflation and optimize your savings. All these investment options come with pros and cons. Cryptocurrency works on the demand and supply principle, stocks derive their price based on multiple factors like demand and supply, market sentiments, financial performance of the company, etc. mutual funds derive their price from their portfolio. Whereas other options have limited growth potential. The best bet to invest is to diversify your investment into multiple investment options.

2. How inflation can hurt my savings?

Ans: –The inflation rate is a rise in the price of goods over a period. If today you are buying a good at a certain price, after a few years, you possibly need to pay more to buy the same good. This extra inflated price will take away extra money from your savings. If your saved money is not able to grow with the same or more velocity than the inflation rate, you will not be able to buy the goods with the saved money. This rising inflation rate which outgrows your savings will devaluate your savings.

3. How to manage the risks associated with all these investment options?

Ans: – there is always a certain degree of risk associated with all the investment options. Higher risks give the possibility of higher gains in any investments. There are multiple strategies one can use to mitigate these risks. Gaining a sound knowledge about the investment option can give the right sense of investment. It will help you to make a sound and confident decision on investment. Keeping patience can work effectively in some of the investment options. The must-have investment strategy for anyone is to diversify the savings among all the options. It gives a mix of all the outcomes that will manage growth and risk simultaneously.