Money which is lying idle and is not invested anywhere, and you are not earning any interest or investment income on it is referred to as ‘Idle Money’. If you have idle money lying in your saving account, then investing that money elsewhere is a better option.
Investing money in a different venture involves risk. Higher is your risk involved, higher are the returns and vice-versa. There’s a famous saying that, ‘You should never put all your eggs in one basket’.
Hence, you should invest your idle money in different ventures in order to diversify your risk. Let’s discuss different options for investing your idle money:
You can invest your idle money in gold. It has been seen that long-term investment in gold helps in earning income in the form of increased gold price.
It is important to decide the type of gold you are investing your idle money in like you are purchasing gold jewelry or gold coins and bars. Investing in gold jewelry is less beneficial as the price of gold jewelry includes high making charges.
On the other hand, the price of gold coins and bars includes nil or minimum making charges. So, if in case you decide to sell out your gold, you’ll get more cash in case of gold coins and bars in comparison to gold jewelry.
If you have idle money then you can invest it in real estate like you can buy a plot or house. Long-term investment in property is considered a good option.
First, it has been observed that over the period of time price of property increases implying capital appreciation and second, you can earn additional income by renting it out. If you don’t have enough money to buy property then you can take a home loan or mortgage loan to fund the extra cash requirement.
Taking a home loan and loan against property helps you in saving on tax payments also. So, taking a loan has three advantages such as you can utilize your spare cash, you get tax benefits and you are getting a new property in your name.
You can invest your spare funds in fixed deposits. Investing in fixed deposits is better than keeping your cash in a savings account, as the rate of interest on it is higher. If you are looking for a safe investment option then you can invest in fixed deposits, as there are no chances of depreciation of value.
Though returns on it in the form of interest-earning is less in comparison to other investment options. But if you are a risk-averse person then you can invest in it, instead of keeping your cash idle.
Besides the above-mentioned options, there are various choices to invest idle money like mutual funds, equity, Public Provident Fund(PPF), Senior Citizen’s Saving Scheme(SCSS) etc.
A detailed planning is required to manage your finances and investing money has long-term implications. Before investing your idle cash, you can check for different prospects online or you can seek an advice of financial adviser as well.