When it comes to investing your hard earned money, every investor wants to invest in the best investment option that provides maximum return with no risk in a short period. Most people invest money either for securing their money or to reach their investment goals. Whatever the reason behind investing, your choice will depend on the investment horizon, financial goals, etc. Everyone wants to multiply their return with low risk, but to invest one has to know various investor options that are available in India.
But in reality, returns and risks come hand in hand, the higher the returns the higher the risks. In our country, investment options are of two categories, financial and non-financial assets, these are further classified. For further details on the investment categories, check the below picture.
For the investors, while choosing the investment options, there are some investment plans which give potentially high profitable returns but include high risk. On the other hand with low-risk investment options provides low returns. By investing in India, you will not only gain profit but also create financial stability for your future therefore, one could live a secure life. This is the main reason that investors search for the top investment plans as per their risk appetite, so they could multiply their money with the risk they can handle with. Also, we will provide you the detailed investment options in India, that could help the investor to reach their financial goals.
|Investment Option||Returns offered||Tax Rebate||Risks||Min. investment period||Who should Invest|
|Mutual Funds||Market- Linked||ELSS are Tax Free under Section 80C||Low to High||Schemes like ELSS has a lock-in of 3 years||Investors with moderate to high risk appetite|
|Public Provident Fund (PPF)||7.9%||Comes under EEE Category (Exempt-Exempt-Exempt)||No Risk||15 years||Indian Citizens with long term investment goals|
|Bank Fixed Deposits||Fixed returns (varies from Bank to Bank)||Tax- saving FDs allow deductions up to Rs.1.5 lakh||No Risk||7 Days||Individuals unwilling to take risks or exposure to equity|
|National Pension Scheme (NPS)||8% to 10% (Market Linked)||Allows deductions under Section 80C||Low to High||60 years||Investors looking for retirement investment plans|
|Unit Linked Insurance Plans (ULIPs)||Varies depending upon investor’s portfolio||Eligible for deductions under Section 80C||High risk||Less than or equal to 45 Years||Investors looking for life cover and wealth creation|
|Gold ETF||Market- Linked||Treated as Debt Funds and taxed accordingly||Low to Moderate||Not Applicable||Any Individual|
|Senior Citizens Saving Schemes (SCSS)||8.7%||Eligible for deductions under Section 80C||No Risk||5 years||Senior Citizens|
|Recurring Deposits||7%||No tax rebate||No Risk||6 Months||Any Individual|
|Real Estate||10% to 15%||20% Tax Deduction on taxable income||Moderate Risk||Not Applicable||Any Individual|
|Post Office Monthly Income Scheme (POMIS)||7.7%||No Tax Rebate||No to Low Risk||5 Years||Resident of India|
Take a look to understand each of the best investment options in India for 2020.
Unit Linked Insurance Plan (ULIP)
- ULIP is considered as one of the best investment options in India.
- ULIP offers dual benefits of "Insurance and Investment".
- ULIP also offers Tax exemption
- ULIP plan comes with a lock in a period of 3 to 5 years.
- ULIP premium saves as insurance coverage and the remaining as market-linked assets.
- It offers you to pay for the pre-defined time and provides you benefits for the complete period of the policy.
- Investors pay the premium either monthly or annually.
- It is a long-term investment horizon (15 years).
Public Provident Fund (PPF)
- PPF is one of the longterm investment options in India
- PPF is also a secured option for investments.
- PPF account can be opened either in the bank or post office.
- The invested money is locked for a tenure of 15 years or more.
- PPF provides compound interest on your saved money.
- There is also an option to extend the saving time tenure for the next 5 years.
- But, investors can withdraw the money only at the end of the 6th year.
- PPF is a government-backed scheme, so the amount saved in the account is completely safe.
- Minimum Rs 500 to maximum Rs 1.5 lakh has to be invested on annual basis.
- PPF also offers loan against the invested amount.
PPF Interest Rates from 2012 to 2020
- 2012 to 2013 - 8.80
- 2013 to 2014 - 8.70
- 2014 to 2015 - 8.70
- 2015 to 2016 - 8.70
- 2016 to 2017 - 8.10
- 2017 to 2018 - 7.60
- 2018 to 2020 - 7.60
Note: The above PPF rates are for the last 7 years.
- Mutual funds are a long-term investment plan with higher returns.
- It is a market-linked investment asset that includes - Equity, Debt, Stock, Money Market Fund, etc.
- The return will be achieved based on the market performance of the fund.
- Mutual funds have higher risk and offer higher returns when compared with other investment options.
- It offers exemption from wealth tax.
Bank Fixed Deposits
- It is one of the best ways of investment options in India.
- The amount is saved in banks, which is secured.
- The saving time tenure varies from person to person.
- In this category of investment, an investor has the option of making either a cumulative deposit or a non-cumulative deposit.
- In cumulative option, the interest gets reinvested to the principal amount and payable at the time of maturity.
- In the ono-cumulative option, interest is paid to the investor as per the underwriting.
National Pension System (NPS)
- NPS is a government-backed scheme, allows you to market-linked instruments like equities and debts.
- The final pension amount depends on the return investments.
- NPS gives 75% to 50% equity exposure and protects the investor from risk.
- NPS regulated by Pension Fund Regulatory and Development Authority of India, its open to all individuals between the ages of 18 to 60.
- Individuals can withdraw up to 25% from NPS after 3 years of account opening.
- NPS gives tax benefits up to Rs 50,000 under Section 80CCD(1B).
Recurring Deposits (RD)
- A recurring deposit is a monthly investing asset.
- Recurring Deposits are offered by Indian Banks, investors are allowed to do regular deposits.
- In this policy, an investor can choose their suitable tenure of time.
- Usually, RD tenure ranges from 1 year to 10 years.
- An investor will receive the interest along with the invested amount at the end of the tenure.
Senior Citizens Saving Scheme (SCSS)
- This is a 5-year scheme for senior citizens (60 years).
- The present interest of this scheme is 8.6%
- The tenure of this scheme can be extended up to 3 years.
- Tax- deduction applicable under Section 80C, of the income Tax Act, 1961 up to Rs 1.5 lakh per annum.
- This also a government-backed scheme.
- Gold ETFs or Gold Exchange Traded Funds are the gold investments.
- Gold ETFs trade on National Stock Exchange (NSE)
- These policies offer higher amounts with returns.
- But the investor should get the best information from the market to gain a profit.
- This type of investment policy is with low-risk appetite.
- This is one of the investments with high returns in India.
- It holds the sectors like hospitality, commercial, housing, manufacturing, and retail, etc.
- Though it is the high return policy, selling of property is difficult, in case of urgent requirements.
- Investors have to invest in commercial or resident properties or in Real Estate Mutual Fund to profit high return.
Post-Office Monthly Income Scheme (POMIS)
- POMIS is the monthly investing scheme regulated by the Post Office.
- It is a government-backed policy that allows the investor to save a specific amount monthly.
- The maturity period of this scheme is 5 years from the date of the account opening.
- To access this scheme Post-Office MIS account has to be opened by the investor with a minimum of Rs 1,500/-, but
- This is only for Indian residents not for the NRIs.
- An investor can open accounts either individually or by a joint account.
Factors to be considered before choosing an Investment Scheme
- It is a basic factor
- Depending upon their need, like for a child's higher education or retirement, based on their need to choose your option of investment policy.
- Many investment policies offer varied options, which policies suits you better go for it.
- Go for the investment policy for which you can go for, and how much you can handle to invest.
- Investment horizons like Log-term, short and medium-term investment plans, choose your term policy.
- For a long-term horizon - go for Mutual funds or PPF
- For Short-term go for Recurring Deposits or Debut Funds.
- The majority of investors seek saving of money 6 tax saving.
- To profit from this factor analyses the tax-saving investments and select the one which suits you.
- Investment risk is market-linked, example a government salaried person cannot tackle market risks but a businessman can tackle it.
- Always keep in mind the investment risk then go for it, because many investors look on to higher returns, but forget the risk behind that.
- The investor has to analyze the risk tolerance before going investment in any scheme.