Where should I invest my excess money?

Once you have an emergency fund in place (enough money to last you 6 months without any income), you can start to invest your money. There are numerous ways in which to invest money, and the right decision depends on your personal goals and risk appetite. 

The first step is to remember the golden rule of investing – the higher the potential returns of an investment, the higher the risk that the investor has to bear. You need to find your place in the risk-reward spectrum. 

For example, if you need to invest money for your retirement, then it may be a good option to invest your money in a vehicle that provides fixed or relatively stable returns. However, if your goal is to fund your child’s higher education, you can consider investing in vehicles that provide long term wealth creation potential like equity mutual funds.