Valentine’s Day is around the corner. There is no better time than this to revisit your couple goals – as an unmarried one looking to get hitched in near future or a newly married one with plans for the future or a married couple looking to enhance family’s wealth. Life goals are closely intertwined with the financial ones. Thus, it is imperative that you create a financial plan that will help you achieve your goals in due time and with high returns.
Most couples these days have double income with both partners earnings. The room for experimentation with investments is wider. For instance, amongst both the partners, the one who is earning a higher income can invest more in equity while the other one can focus on debt-focussed instruments.
As a thumb rule, you should invest “100 minus your age” percentage in equities. Similarly, if your spouse is claiming HRA exemption on house rent, you can invest in a good mediclaim policy for your parents and avail tax exemption under Section 80D. The idea is to minimize risks and maximize returns collectively.
We discuss a few significant investments that you can look at as a couple –
- Equities – These are volatile investments that you can make in either equity or derivatives. Successful investing in this market requires you to do a thorough study of the market and be aware of the technical and fundamental analysis to a certain extent. You must be sure about the right time to enter and exit from any stock to avoid any major losses.
- Mutual Funds – These are collective investment vehicles offering a wide range of schemes like equity funds, debt funds, hybrid funds, sectoral funds, and many more. Each fund will earn different returns depending upon its composition. You can invest by choosing funds per your risk appetite and time horizon.
As a couple investing for long-term family goals like a child’s marriage or education, investing in various mutual funds is highly profitable. However, your returns are highly dependent on market movements.
Equity Linked Savings Schemes – which have a lock-in of 3 years and Debt Mutual Funds can be used for tax saving purposes. These can be useful to cover the Rs 1.5 lakh ceiling under Section 80 C while planning your taxes.
- Bank and Company Fixed Deposits – Fixed deposits are offered by banks and NBFCs. These are the first go-to investment options for any life stage. Safe, stable and fixed income are the key attractive reasons for going for fixed deposits. Fixed Deposit rate on bank fixed deposits are lower than company fixed deposits.
The company fixed deposits like Bajaj Finance FDs offer a tenor of 12 to 60 months to help you plan a sizeable investment with high-interest rates of up to 8.75%.
- Real Estate – As a couple, your first real estate investment will be for a house for your family. Real estate as a growing sector has a huge potential and can earn high returns. However, you need to do thorough research of the area to be invested. Also, it might not be easy for you to go through the process of buying and selling properties.
You can jointly take a home loan and also receive tax deductions on the interest amount up to Rs 2 lakhs.
- Small-Savings Schemes – Post office savings, National Savings Certificate (NSC), Sukanya Samriddhi account for the girl child, Employee Provident Funds (EPF) and Public Provident Funds (PPF) are some of the other saving options. You can pick these investments if you have a fixed nature of income.
The government of India tweaks the interest rates on each of these options each year and investment in these can be a steady cushion for the volatile portion of your investment portfolio. Most of these options offer tax deductions under Section 80 C again with an additional Rs. 50,000 for New Pension Scheme (NPS) investment.
Why fixed deposits are the best investment option for couples?
Young couples can invest for longer durations while those who are further along in their lives might have liabilities to be paid off like home loan installments or education expenses for children. Fixed deposits can help plan for all time horizons.
1. Meeting short term and long term goals: Given the wide range of tenors, couples can either park their money in an FD for the short term or use them for achieving their financial goals set for the medium or long term. If you are looking to have money in the near future for a down payment, invest in an FD for 12 months. But if you are looking for a foreign holiday after 4 years, go for a 3-year horizon which will pay higher interest rates.
2. Beating inflation for family expenses:
As the family grows and the expenses increase, you can go for FDs with shorter tenors to beat inflation and meet your household expenses comfortably.
Also, since the FD interest rate offered on medium to long term FDs is almost double than the interest rates offered by a savings account, it makes sense to use these instruments to make your money work and generate superior returns.
3. Growth for future or meeting periodic expenses:
If you want to accumulate wealth for your future, you can choose fixed deposit from Bajaj Finance, wherein the interest earned during the tenor of the FD will be added to the principal amount. Hence, your principal will grow by the amount of interest you will earn during a specific period. This means that your total invested amount will increase and will fetch you higher returns. This reinvestment of interest is called compounding, and it causes a kind of snowball effect on your returns.
Conversely, you can go for periodic payouts, wherein you can receive periodic interest payments that can be utilized to meet monthly expenses or make further investments.
Allocating a portion of your portfolio to fixed deposits will help you balance the risks of other market-linked investments. Look for high-rated FDs like Bajaj Finance Fixed Deposits, which are rated MAAA (stable) by ICRA and FAAA/Stable by CRISIL. With such high credibility ratings, you can be at ease and see your money multiply over time.