Investment can be for parking funds, to earn regular returns and for growth. Use savings accounts, ‘flexi’ accounts, liquid, short-term and short-term floating rate mutual funds, for short duration parking of funds.
Use Post Office Monthly Income Scheme, 8% Taxable Government of India Savings Bonds, 9% Senior Citizens’ Savings Scheme (for persons of 60 years and above only), bank fixed deposits, short and long-term floating rate mutual funds, fixed maturity plans of mutual funds, and structured withdrawals from PPF accounts, to earn regular returns.
One should invest in a very well diversified equity portfolio of blue chip stocks and/or use systematic investment and systematic transfer plans into mainline diversified equity mutual funds, for wealth enhancing (growth) investments. The real estate market is also a good, long-term and wealth-enhancing avenue of investment.
However, real estate suffers from some drawbacks such as poor liquidity, difficulties in verification of title, requirement of large amounts of capital for a single purchase, high registration costs, menace of black money in real estate transactions, problems arising out of absentee landlordism, etc.
Real estate mutual funds should be available in India before long, at which time systematic investment and systematic transfer plans into these funds can certainly be considered.