It is necessary to invest our money in the correct place. To understand what will happen to your money we should first know the 5 Best Ways to Grow Money in 2021 For Beginners.

Let’s analyze each investment option based on these three parameters :


Assume you have an emergency and require money right away. How quickly can you get your money back from that investment is called liquidity.


It is the chance that you’ll lose your money. So this is termed as risk.


How much your money grow? The money you will get additionally on your principal amount is known as Return.

Let’s now analyze the following investment options.

Savings Account    

A saving account is an account where we can deposit and withdraw money. The procedure of the saving account is very simple one can easily withdraw and deposit money. Because of that, we frequently get tempted to spend. So long-term investments become challenging with a savings account.  Under savings account- Liquidity is high because you can withdraw your money any time you want. But every bank has a limit for the number of financial transactions you can do per day. Risk is zero; it means your money is safe with the bank if you pick a trusted bank. Returns are low. SBI provides an interest rate of 3.25% to 3.5% on Savings Account.

Click here – To Open Savings Account Online

Fixed Deposit / Recurring deposit

A Fixed Deposit is when you give a definite amount to a bank for a fixed period. For example, FD interest rates range between 4.5% to 6%, based on how long are you giving your money. Higher the term higher will be the interest. Now Talking about the parameters. Liquidity is medium. If you withdraw your money earlier than your maturity ends then you have to pay a penalty fee. Risk is zero. Once the maturity period is over bank will return all your money with the interest. Returns are low. It is between 4.5% to 7% depending on the bank and how long are you giving your money for.

The issue with FDs is that if you withdraw your money before maturity or if you miss your monthly installments then you have to pay a penalty. A recurring deposit is a deposit product that allows you to save a small sum of money every month or quarter and gives you an attractive and short return. The minimum amount for investing in Recurring is Rs.100 each month at an interest rate ranging from 2.50% to 8.50%. If you skipped paying the monthly installments then you will need to pay a penalty fee.

Health Insurance

If God forbid you met with an accident or are recovering from an ailment then the hospital bills are going to be crazy. In such a scenario, life insurance will help you cover all your medical bills.

The risk is null and the returns are large because it can protect your life or it can save you from debt. All you have to do is pay 4k to 8k every year and in return, insured a sum of Rs.2-5 Lakh to pay your medical bills depending on the policy you take.

How to invest?

There are various websites like Policy Bazaar, Coverfox, etc. that will assist you to compare health insurance so that you pick the best health insurance according to you. All you have to do is request the executive and they’ll come to your office or your house to get the registration done.

Stock Market

A stock market is a market where you can buy and sell shares of publicly held companies. It will be your responsibility to analyze which company might perform well in the future and then set your bet by buying the shares of that company.

The risk connected with the stock market is high because if your analysis is wrong and the company does poorly then you can lose your capital.

Liquidity is medium since it needs almost 2-3 business days to get your money back.

But the returns can also be high.

Open your Demat Account with Zerodha: Click Here – Zerodha

Mutual Funds

Mutual Fund is teamwork because a Mutual Fund collects money from people like us and creates a money pool. A fund manager then uses this pool to place in stocks, bonds, and other assets. The fund manager takes care of all of it for a commission of 0.05% to 2%. There are so many mutual funds available in the market.

Both short-term investments and long-term investments are safe and good. We should decide which suits best for us. The liquidity varies from medium to high because in general, it will need 1-3 business days for you to get your money back but if you invest in Liquid Mutual Funds then you will get your money back instantly. There is a little piece of risk linked with Mutual Funds but as long as you do your research, you should be fine. Returns are medium. The past returns have been in average between 8% to 14%. These are the 5 Best Ways to Grow Money in 2021 For Beginners.

How to pick up the best investment option?

The best investment for you depends on what your requirements are. We just reviewed 5 investment options. How shortly do you need your money back will help you decide which of these 5 investment options is best for you. One should not keep all of your eggs in one basket which is why you can distribute your investments like this.

Firstly in your Savings Account, you can keep around 20K – 50K INR for your monthly expenses and keep some ready cash handy.

Secondly, maintain an emergency fund which is 2-3 months of your salary. For your emergency fund, chose a low-risk medium-return investment choice. So you can choose an FD.

After all, if you still have money to invest then chose a Mutual Fund that grants high returns at high risk or invests in the Stock Market. In this 3rd category, if you don’t need the immediate money then you can invest for a longer-term through stocks.

Also Read: How to get your first freelancing project?


Ultimately, you will only decide what you want to do with your money. Ensure that you review and adjust your savings once a year to meet your goals. Therefore these are the 5 Best Ways to Grow Money in 2021 For Beginners.


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