Where to Invest Your money in 2024?

As we start a fresh year, it’s time to plan on various investment options that will help you achieve your goals in 2024. We all know India is the fastest-growing economy and we all have witnessed this in the past year i.e, 2023. Despite the economic and geographical tensions like rising inflation and interest rate hikes, both bulls and bears had their chances.

Now the question arises, where and how to invest your money in the year 2024? And what will be the market outlook for 2024? These are some of the questions that will be addressed in this article. We will also cover different ways to save money for the future to achieve your financial objectives in time.

Best Options for Where to Invest Money in 2024-

1.   Stocks

Direct stocks are one of the best options for investing looking for long-term wealth creation. In this, you invest in listed equity shares of various companies and earn capital appreciation and dividends. As inflation is surging, an equity option is the best one because it provides inflation-beating returns to investors. Stocks are suitable for those who can take high risks and are looking to invest for a longer period. The longer you stay invested, the higher returns you can expect. However, as it is a risky instrument, you need to do proper research and planning before investing in any stock to save yourself from any heavy losses.

You will need a demat and trading account to do buying and selling of shares and these accounts should be linked to your bank account for easy money transactions.

2.   Mutual funds

If you are looking to invest your money but don’t have much time and expertise in stock markets, then mutual funds are for you. Mutual funds are an instrument that is managed by a professional known as a fund manager. So, you do not need to worry about continuously tracking the markets. In mutual funds, you have three categories to choose from- equity, debt, and hybrid.

Equity mutual funds are for aggressive investors who are looking for capital appreciation. Debt funds are less riskier than equity funds and suitable for those who are looking to invest in safer instruments like government securities, bonds, etc. And the last option is to invest in hybrid funds, which is a mix of both equity and debt. Nowadays, hybrid funds are the most preferred option among investors, as they get the benefit of both equity and debt.

3.  Public Provident Fund (PPF)

It is considered to be a safe investment option for investors looking for fixed returns. PPF is a 15-year plan with a current interest rate of 7.1%. However, partial withdrawals after five years are allowed in some situations like marriage medical emergencies, etc. It is backed by the Government of India, so the risk is minimal. PPF is the best option for your long-term goals like retirement, child education, etc. You can open a PPF account in both banks and post offices.

The most important feature by which most investors get attracted is their tax benefit. You are allowed to claim a deduction of Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961, and also, the maturity amount after 15 years is tax-free.

4.   Sovereign Gold Bonds (SGBs)

These are another investment option that is safe and helps you diversify your portfolio by investing in Gold. SGBs are safe because it issued by the Reserve Bank of India (RBI) on behalf of the Government of India. It has an 8-year lock-in period. But if you are in need of funds, you can exit after five years of the date of issue. To get tax benefits, it is suggested to hold till maturity. It also provides you with a fixed interest of 2.5% per annum. In the case of individuals, the minimum investment should be 1 gram of gold and the maximum will be 4 Kg.

The capital gain on SGBs on maturity is tax-exempt which makes it more attractive to investors.

5.   National Pension System (NPS)

It is a long-term investment plan for retirement savings. The main objective of NPS is to make people invest regularly during their employment so that they can create a sufficient retirement corpus. During the time of retirement after the age of 60, a minimum of 40% of your corpus is kept aside to procure a regular pension, and the remaining corpus i.e., 60% will be paid as a lump sum.

There are two types of NPS accounts:

  • NPS Tier-I Account (Default one)
  • NPS Tier-II Account (Voluntary)

You also get a tax exemption of up to Rs 2 lakhs under Section 80C and Section 80CCD. The returns will depend on what portfolio mix you choose between different asset classes- equity, corporate bonds, Government bonds, and Alternate assets.

6. Real Estate

It is one of the fastest-growing investment options among various types of investments. But, to invest in real estate we need high funds and capital, right? The good news is, Not Anymore! If you want to invest in real estate but do not have much capital, then you can invest through Real Estate Investment Trusts (REITs).

Money is collected from investors and invested in commercial properties that generate revenue. The profits from the properties are then divided among the investors. As an investor, this is a fantastic opportunity, as it allows them to make profits from real estate investments without actually owning them. With rental yields and even capital appreciation, you can earn income without the responsibilities of ownership.

Factors to consider before investing-

While making any investment decision, there are certain factors that need to be considered. Here are some of them:

  1. Investment Objectives: Before investing your hard-earned money in any instrument, first be clear about your objectives/goals. You can decide where to invest depending on your long-term and short-term
  2. Risk Tolerance: Now this is something you need to decide on how considerable risk you can take to get significant returns, or maybe you are a conservative investor and looking to create a safe portfolio with stable returns. Risk tolerance is personal and according to your levels, your investment options will be determined. If you are conservative, then debt funds/bonds are good for you and if you are an aggressive investor then you can invest in stocks and equity mutual funds.
  3. Time Horizon: It simply means how much time will you be investing. If you have a shorter time frame, the funds must be free and available in the account at a specific time. You, therefore, need to make a safer investment which is not much You might be able to take more risks if you invest for the long term. For a longer time horizon, you can choose equity and equity-related instruments to invest for a period of five to seven years.

Indian Stock Market Outlook for 2024

Equity markets remained volatile in the year 2023 due to various macro concerns. And it is quite tough to predict the 2024 market situation. Many experts predict that the markets will still be choppy in 2024 due to COVID-19 rising tensions and other macro existing factors like the Russia-Ukrain war, global economic slowdown, etc.

But there are some positive things that India’s young and large populations have higher disposable incomes and huge growth opportunities. Post-covid, the situation of participation of retail investors has improved drastically. Currently, the demat accounts stand at 10.4 crore. Now, imagine the growth and development, if these numbers reach 20-30 crore in the coming time.

In light of China’s stringent COVID laws and challenges, FPIs have chosen to alter their path, and the road to foreign investments appears to be heading more toward India. Furthermore, as a result of the country’s progress, foreign investors have been enticed and convinced to relocate to India.

Also, the rate hikes are predicted to continue for at least through the first half of 2024. Investors’ investment strategies for the debt and equity markets will undoubtedly be influenced by their profile, investment horizon, investment objective, and risk tolerance. It is recommended to keep a balance of equity and debt portfolio mix till the picture is cleared.

Final words

We all know the stock market is risky and it is critical to remember that you may lose all your money if not invested with proper research and planning. To take a calculated risk with your investment, you must first research and comprehend the financial instrument in which you are investing. Stick to your asset allocation plan, be disciplined, and let compounding work for you.

by Instockbroker Team | January 5, 2024

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