In one of my earlier posts, I had mentioned the best ways to invest money for teenagers and millennials. I have explained there what could one do to invest in small amounts in SIPs to get the most of the amount that is invested. However, we might sometimes get some big orders through. Or sometimes we may be getting our yearly bonus. Or any joining bonus in case anyone joins a new organization. In such cases, we would get a huge amount of money. And since this would be a huge amount I always would suggest investing such amounts in areas which could fetch you the most returns. That is why I am writing this article today to explain you. I want to tell you according to me what is the best way to invest extra money.
Best way to invest extra money by saving tax
When we invest any money or get any money we will have to pay tax. But when you have a substantial amount you need to make the decision properly. If you want to save tax and also do the investment, then I suggest going with ULIP. ULIP is Unit Linked Insurance Plan. When we want to invest our money and at the same time save taxes, there is nothing better than this. In ULIPs also, I would not recommend going all in and investing the whole amount at once. For example, let us assume that you have 10000000 Rupees with you which you want to invest in. My recommendation would be to go with a ULIP of 3000 monthly until the total amount is consumed. If you would like to opt for a longer period then you could do that as well.
The interesting fact about ULIP and why I recommend this as the best way to invest extra money is, the investment return and everything is tax-free. That said it is not that you can invest any amount and it would be tax-free. But as long as you invest 10% of your basic or your total income you are good. Another advantage is that ULIPs come with Life Risk coverage. So essentially if anything happens to you, during the period then your family or whoever you keep as your nominee will get the complete amount and it would be tax-free for them too.
Best way to invest extra money by doing SIP
The next best thing I would say is that when you have a surplus amount always do SIP. This is the fact whether you have a surplus amount or not, it needs to remain as is. Even though you would want to invest the complete amount, that would not be wise. Instead, do a SIP where you invest the same amount but over a period of certain months. That way you will be able to bank on the volatility of the market. And it will work to your advantage.
These are the two ways I would say are the best way to invest extra money. If you feel there is any other way that could give more returns. Then please do let me know in the comments below.
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I am a 31-year-old dude from a lower-middle-class family hailing from a small village Narasinghpur in Cuttack, Odisha, INDIA. I have a post-graduate degree in M.Tech from BITS Pilani. I started blogging back in June 2014. You can check out my journey and all that I have learnt all these years on my website.