To make their future financially secure and better, it is necessary for every individual not only to save continuously but also to invest that savings in the right way. Inflation) helps to meet the increased needs and become a new source of income.
It depends on the investment option you have chosen. The biggest question is, in which type of investment plan should you invest your money and which should not? It totally depends on –
- What are your long term and short term goals?
- How much risk can you take?
- For how many years are you going to invest?
Where and how to invest money ?
Here we are giving information about 11 best investment options, keeping in mind all investment objectives and investment returns. Before this, you can also know how to earn more interest (up to 9%) on your Savings Bank Account, for this you can go to this post –
Maximum Return Investment Plans
1. Investing in Equity
Investing in Equity Shares is the best option. As per the analysis, the return on equity is the highest as compared to other investment schemes, there is no upper limit on the return on equity. There are many such investors who get manifold returns from their investment on equity shares.
But with high returns comes high risk and the same applies to equity. The probability of its rise in the stock market is always equal to the probability of its fall and if you make a wise decision to invest in equity, then it can reduce the risk to a great extent.
Things to keep in mind while investing in Equity –
- If you are in the initial stage, then first of all research it how it works and what are its main points. Which will help you in further decisions and avoid risk.
- If you want to invest in Equity, then you should always invest considering the long term. If you invest for a tenor of 10-15 years then it will give the highest return on your investment.
- Do not invest your entire savings in the stock market. Rather, 50%-70% of the total savings is considered a good option to invest in the stock market, this will help your portfolio.
- Make a list of your favorite stocks, get in-depth research and insights on past year performance of these stocks and company’s future plans.
- Never invest in those random shares on which you have never researched.
Keeping all these things in mind, make your investment.
Advice – Brokerage companies recommend investing for free. Never go by his advice as he wants to get maximum investment so that he can get brokerage. Go ahead with your own research and go through these guides before investing in the stock market:
What is Share Market? (10 Basic Points of Share Market)
13 Golden Tips for the Stock Market
How to become a Smart Investor?
2. Mutual Fund –
- Investment in Mutual Fund Salaried Person i.e. those who get salary every month, it is considered as the best investment option for them – Best Investment Option for Salaried Person
- Mutual Funds are the best option to invest in Equities and Bonds with a balance of risk and returns.
- A large portfolio B can be made by investing a small savings every month through SIP.
- Through Mutual Funds, you can invest in the equity of companies in various sectors like finance, energy, health care, technology. This will reduce your overall risk. For example, if at some point one company does not give good returns, but other companies will reduce your losses by giving good returns and your portfolio will be in profit.
For more information related to investing in Mutual Funds, see our guides –
3. Investing in Real Estate –
Real estate is one of the fastest growing investment sectors in India. Few years back, people used to buy house, land or commercial space for their use but due to change in trend of investment and returns, they are selling these and start investing in real estate to earn high profit in future.
- As you know, there is no minimum or maximum investment limit in real estate. If you do not have much money, then you can also invest in shares of real estate companies.
- Sometimes their value increases more than the actual price of the shares in the market, which keeps on moving on its own. This should be kept in mind while investing in such a situation.
- The profit on the sale of real estate is fully taxable. However, you can save tax by re-investing the sale money.
Investing in real estate only depends on how wisely you invest. For example, suppose you are buying some land at some remote place outside the city then you can get a big profit if there is a possibility of development there in future.
Best Long-Term & Safe Investment Schemes
4. Public Provident Fund Investment
Public Provident Fund is the safest and long term tax saving investment scheme in India. The reason for this is that PPF investment is being conducted by the Indian government. PPF account can be opened in any nationalized, authorized bank and some specific private banks and post offices.
PPF Important Points –
- There is no tax on the return or interest received on PPF and you can also save tax under section 80C of Income Tax by investing up to Rs 1.5 lakh per year. Good Tax-Saving Investment.
- It is for long term investment which is for 15 years, it can be extended for 5 years.
- The minimum amount to invest in PPF is INR 500.
- If you are considering income tax deduction under section 80C then the maximum amount is INR 1,50,000.
- The current rate of interest on PPF savings is 8%, which is higher than Fixed Deposit.
- You can earn compound interest on your investments and the interest amount is tax-free.
- You are allowed to withdraw your investment from your account only after the end of the 6th year.
- For complete information related to PPF, see this guide – PPF Guide
Best Investment Options for 5 Years
5. National Savings Certificate for 5 years
National Saving Certificate (NSC) is a type of government savings bond which is a risk free investment option. It is a part of the Indian Postal Service.
NSC: Important Points
- The duration of NSC VIII is fixed for 5 years.
- The interest rate is 7.9% compounded annually.
- 1,00,000/- per annum is tax exempt under section 80C of the Income Tax Act.
- There is no maximum limit for investment and the minimum limit is Rs. is 100.
- Interest received from NSC is taxable and is not tax free.
Best Investment Plan for 3 Years
6. Equity Linked Savings Schemes
Equity Linked Savings Schemes is a type of Mutual Fund scheme, in which you can take tax benefit under Section 80C of Income Tax by investing. ELSS is the best investment plan for up to 3 years. ELSS is basically a diversified equity mutual fund, which gives you the benefit of tax deduction under section 80C of the Income Tax Act. It is also called ‘Tax Saving Mutual Fund’, most of the Indians are not aware of this investment option. This is the best investment option to save some tax under 80C along with the benefits of equity.
Best Short-Term Investment Plans in India
7. Short term Fixed Deposit
Short Term Fixed Deposit (Short Term Fixed Deposit) is the most popular short term investment option. Amount is deposited in a deposit for a fixed period. At that fixed tenure you get the principal along with the interest and you can also invest the money in fixed deposits for a longer period of time as well. But in the long term, other investment schemes give better returns than fixed deposits, so FDs are a good way to go for the short term.
Following are the options to invest in FD –
- Fixed Deposit with the Post Office
- Fixed Deposit with Banks
- And Fixed deposit with companies
8. Recurring Deposit (RD Account)
Recurring Deposit is the best option for those who are not able to invest a lump sum amount and are looking for monthly or quarterly investment in a security plan. An RD is usually opened for a fixed time period and deposits can be monthly, quarterly at pre-decided or stipulated intervals as per the terms and conditions of the scheme.
Following are the options for investing in Recurring Deposits:-
- Bank Recurring Deposit
- Postal Recurring Deposit
Best LIC Investment Plan
Life insurance investment has become another better option as it serves two types of purpose and it also provides life insurance along with investment. Life insurance companies also pay a fixed rate of bonus at the time of maturity along with a final additional bonus.
9. LIC Jeevan Labh
Key Points of LIC Jeevan Labh –
- The policy term will be 16 years, 21 years or 25 years.
- The premium paying term will be 10 years (for 16 years), 15 years (for 21 years) and 16 years (for 25 years).
- The minimum sum assured is Rs 2,00,000 and the eligible age for admission should be 18 years.
- The maximum age at entry is 59 years (for policy term of 16 years), 54 years (for policy term of 21 years) and 50 years (for policy term of 25 years).
- Maturation amount is tax free under section 10D.
- The premium paid on this policy is exempt from income tax under section 80C.
Best Investment Plan for Child
10. Sukanya Samriddhi Yojana (SSA)
Sukanya Samriddhi Yojana is an investment scheme launched by the Government of India for the benefit of the girl child only. SSA is a good investment scheme for girl child’s higher education and marriage.
- Sukanya Samriddhi account of the girl child can be opened till the age of ten years.
- It is necessary to deposit at least 1000 rupees per year in this scheme.
- The maximum limit is Rs 1.5 lakh per annum.
- The average interest in this scheme ranges from 8% to 9.5%.
- The maximum tenure of this scheme is 21 years from the date of account opening.
- Up to 50% of the amount can be withdrawn after the girl child attains the age of 18 years.
- When the girl gets married, the account is automatically closed and the entire amount is paid.
Best Investment Plan for Senior Citizen
NPS is established by the Government of India for the purpose of providing pension benefits to all citizens. Due to the involvement of the government, it is a safe investment scheme for pension purpose.
There are two types of options available to build your portfolio in NPS –
Tier 1 Account – Under this account, the customer cannot withdraw the funds before retirement. It is mandatory for all government employees to invest 10% of their salary in this account.
Tier 2 Account – Under this account, customers are free to invest funds as well as withdraw funds as per their convenience. However, a customer should have a Tier-I account to open a Tier-II account.
Equity and Mutual Funds are a good option if you want to invest in a high return plan for long term, but they also carry high risk. Invest in PPF, NSC or FD for low risk schemes. If you are in youth level then you should invest more in high return investment scheme like 70%-80% of your investment portfolio. After that, as you move forward, you can reduce your investment risk-wise and switch to safer investment plans.