Investment Options - 15 Best Investment Options in India

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Investment Options

Why do people invest? Maybe they are in need of financial security. What is the best way to attain financial security? It’s to save and invest money for a long period of time to have a financial stability in future. According to the typical thinking of most of the people, if you need more money you need to work more. But is that bunch of money going to be pleasurable if you don’t have the time to enjoy it? You can’t have a clone of yours to work every time for you so the expansion of money leads to an extension of your working hours. Investment is to make your money work for you, maximizing your earning potential to know more about the best investment options in India.

Investment options

Investment plans offers investment component along with insurance component. Being a perfect blend of investment and insurance plan, it offers best of both the words. A pre-stipulated part of the premium attracted by an investment plan is used to provide life cover. As for investment, he balance amount is invested the preferred financial plan. The financial plan is decided on the basis of the risk appetite of the investor and his/her investment goals. The plans help an investor to accomplish his/her long as well as short-term investment goals. An investment plan is an ideal option for the investors who want to generate wealth and accomplish the goal of saving taxes.

Life insurance is considered as the best investment option. As a primary benefit, it offers financial protection to the policyholder and his/her nominee or family. In a covered event, they get pre-decided insurance benefit. As a secondary benefit, it offers funding instrument that the policyholder can in order to accomplish his/her short-term as well as long-term investment goals.

There are 2 types of investment options in the market. The first one is ULIPs i.e. Unit Linked Insurance Plans which offers returns on the basis of overall market performance. The second one is traditional endowment plans which offer a one time or annuity payout as the maturity benefit. Both the plans are best investment options in India. The selection of the plan depends on the insurance goals, investment money, investment horizon and risk-appetite of the policyholder. Best investment options in India fulfill the investment goals of an investor in a stipulated period of time.

Best Investment Options in India

Investment Options

Maximum Amount

Minimum Amount

Minimum Investment Period

Public Provident Fund

1,50,000/ - (One FY)

500/- (One FY)

15 Years

Mutual Fund (SIP)

No Limit

As low as 500

Only applicable in case of close-ended and ELSS schemes

Equity Shares

No Limit

No Limit

Not Applicable in this case.

Real Estate Investment

No Limit

No Limit

Not Applicable in this case.

Gold ETF

No Limit

Variable

Not Applicable in this case.

Post office monthly income account schemes (single)

4,50,000/-

1,500/-

5 Years

Company Fixed Deposits

No Limit

As low as 2000/-

12 Months

Initial Public Offerings

No Limit

No Limit

Not Applicable in this case.

Unit Linked Insurance Plans

No Limit

1,00,000/-  for plans 45 years and below

45 Years or below

Bank fixed deposit (FD)

No Limit

Rs. 1000

7 days

Senior Citizens' Saving Scheme (SCSS)

Rs 15 lakhs

No limit

5 years

RBI Taxable Bonds

No Limit

Rs. 100

7 years

National Pension System (NPS)

No Limit

No limit

Variable; until the age of 60

Sukanya Samriddhi Yojana

Rs.1 lakh 50 thousand (per financial year)

Rs. 1000

21 years

Recurring deposits

No Limit

No limit

6 months

Here we come up with the top 15 best investment options

1.   Public Provident Fund

It is the safest and secure long-term investment product amongst the best investment options in India. It is totally tax-free. Under the PPF account opened in bank or post office the money get locked for the time of 15 years and you can earn compound interest from this account. You can also extend the time frame for the next five years. The only drawback of this PPF account is you are only allowed to withdraw your investment at the end of 6th year. In case you need it, you can take a loan on the balance of PPF account.

PPF Interest Rate 2012 to 2019

Financial Year

Interest Rate

2012-2013

8.80%

2013-2014

8.70%

2014-2015

8.70%

2015-2016

8.70%

2016-2017

8.10%

2017-2018

7.60%

2018-2019

7.60%

**PPF rates represented above are for last 7 years.

**All interests earned on PPFs are tax-free.

2.   Investing a Mutual Fund

People who want to invest in equities and bond with a balance of risk and return generally choose to invest in mutual funds. Nowadays investing in stock markets through a mutual fund is a market trend. One of the best investment options is a mutual fund for a long time by systematic investment plan. This investment plan will definitely give a much better return compared to any other investment option in the market.

Here are top mutual funds to invest in 2018

Mutual Funds Name

Mutual Funds Types

Date of Launched

 NAV as on 13 June, 2018

Mirae Asset Emerging Bluechip Fund

Regular (Growth) Jul 09, 2010 49.3340

Motilal Oswal Multicap 35 Fund                      

Regular (Growth)

Apr 28, 2014

26.650

HDFC Mid-Cap Opportunities Fund

Regular (Growth)

Regular (Growth)

57.124

ICICI Prudential Technology Fund

Growth

Growth

54.920

SBI Banking and Financial Services Fund

Growth

Feb 26, 2015

16.235

L&T Infrastructure Fund

Growth

Sep 27, 2007

16.870

Franklin India Smaller Companies Fund 

Growth  

Jan 01, 2006

59.349

SBI Bluechip Fund

Regular (Growth)

Feb 14, 2006

38.599

Franklin India Focused Equity Fund

Growth

Jul 26, 2007

38.585

Aditya Birla Sun Life Frontline Equity Fund

Growth

Aug 30, 2002

218.330

3.   Direct Equity or Share purchase

Make sure you know how to analyze a share stock before going to buy direct equity or share. It is the best amongst the list of top 15 best investment options for the long period of time. If the investment is for a long time, for example, more than 15 years, it is somewhat sure that there will be higher return.

4.   Real Estate Investment

One of the fastest growing sectors in India is real estate, holding the huge prospects in major sectors like housing, commercial, hospitality, manufacturing, retail and more. Buying a flat or plot is the best decision amongst the investment options available in India. The risk is very low because the rate of property increases within 6 months.

5.   Investing in Gold in Various Ways

Gold is one of the oldest and evergreen investment products, as the value of gold increases quickly.

If you are looking for a gold investment option you can simply opt for any gold investment format like gold deposit scheme, gold ETF, Gold Bar, Gold mutual fund etc. gold investment can benefit in the short period of time.

Top 5 Indian Gold ETF investment options, with their return rates

Mutual Fund Scheme

1 Month

3 Month

6 Month

1 Year

2 Year

3 Year

5 Year

Religare Invesco Gold ETF

-1.5

13.2

8.1

10.7

0.9

2.4

5.6

SBI - ETF Gold

-1.5

13.2

8.2

10.7

1.6

2.5

5.7

ICICI Pru Gold ETF

-1.4

13.3

8.3

10.5

1.5

2.5

5.6

Quantum Gold Fund

-1.6

13.1

8

10.5

1.5

2.4

5.6

HDFC Gold Exchange Traded Fund

-1.5

13.2

8.1

10.3

1.4

2.3

5.5

**above returns have been calculated based on NAVs as on 16.04.2016

 6.   Post Office Saving Schemes

This is the best in top 15 best investment options in India that ensures the highest return, there is a monthly income plan of Post Office Saving Schemes is very suitable for retired people with regular income requirements. This government saving scheme does not have any risk-related factor but the interest is quite low.

Requirements and Benefits

Interest rate wef- 1.4.2018 is 7.6% payable monthly per annum (multiples of 1500/-)

Maximum investment limit-

Single account Rs 4.5lacs

Joint account Rs 9lacs

Minimum eligibility age 10 and above (can be opened in the name of minor or by minor)

Single account can be converted to joint and vice versa.

7.   Company Fixed Deposits

Company FDs are very beneficial in comparison to the bank FDs as it gives higher rate interest. Make sure you select the investment period very carefully as it is not allowed to withdraw money before maturity. The corporate fixed deposit schemes are not under any insurance benefits and neither it is under the control of the Reserve Bank of India. Company Fixed Deposits is one of the top 15 financial investment options in India. So investors who are willing to invest for long term and can bear some amount of risk can opt for company FDs.

8.   Initial Public Offerings

IPOs is once in a lifetime opportunity as it happens only once in every company. It is very attractive if launched by the good and reputed company. There are some unique risks associated with them. The lack of information links some uncertainties with IPOs. It’s a long term investment option with low risk.

9.   Unit Linked Insurance Plans

It is also known as ULIPs, which falls under the list of top 15 best investment options in India. It invests in debt and equities markets. The fluctuation is counted by the net asset value (NAV). It is not very known but, plays an important role investment market.

Period

Absolute Returns (in%)

Annualised Returns (in%)

Performance Ranks(within fund class)

1 Week

1.3

**

32

1 Month

2.7

**

23

3 Months

3.2

**

14

6 Months

1.3

**

6

1 Year

2

2

7

2 Years

26.1

12.3

22

3 Years

37.6

11.2

25

5 Years

55.7

9.3

7

**annualized return illustrated only for 1year and above.

**ranking amongst total 35 Equity Oriented Hybrid Speciality Funds

10.   Invest in Bonds

If you feel uncomfortable in investing in mutual funds and direct equity market investments, then you can try investing in bonds. Investing in bonds can be one of the best investment options since there are many good bonds which actually provide a high rate of return on investments. There are bonds that are under the regulation of government, for example, a bond for 10 years which is currently giving a rate of interest of 7.70%.

11.   Bank fixed deposit (FD)

Fixed Deposits are a very popular fixed-income-providing investment vehicle, as they offer fixed returns over the investment tenure. The returns are payable monthly, quarterly or annually, as per the bank guidelines.

Depending on the bank, FDs offer cumulative and non-cumulative options. In a non-cumulative option, the interest is paid as per underwriting, whereas in the cumulative option, the interest is reinvested within the FD and is then payable at maturity.

Investments in Fixed Deposits can be made online or by visiting any branch of the bank of your choice. The interest rates are attractive, as they range from about 6.50% for regular account holders to over 7% for senior citizens, for an FD of 1 year.

FDs offer a range of tenures (minimum - 7 days, maximum - 10 years) and the investors can choose what suits their needs best.

12.  Senior Citizens' Saving Scheme (SCSS)

Senior Citizens' Saving Scheme (SCSS) is risk-free, tax saving investment for senior citizens above 60 years and offers them a regular income. They offer a whopping 8.6% interest per annum, which makes them highly attractive investment option.

These are available across India through post offices and certified banks. The maximum amount one can invest in this scheme is Rs. 15 lakhs.

While the tenure of the scheme is 5 years, it can also be extended for another 3 years.


13.  RBI Taxable Bonds

RBI Taxable Bonds have tenure of 7 years and offer an interest rate of 7.75% per annum.

These bonds are issued in Demat mode only and are credited to the Bond Ledger Account (BLA) of the investor.

The bonds are issued at a price of Rs. 100, and as a proof of the investment, the investors get a Certificate of Holding.

The interest can be availed as regular income in the non-cumulative option, whereas the cumulative option includes the interest reinvested.

13.  National Pension System (NPS)

The National Pension System is a government initiative and aims to provide pension solutions. The fund invests in equity, bonds, government securities, and investment alternatives as per the will of the investor.

It offers two choices: Auto and Active. Under the former, the funds get automatically invested in various assets, whereas the latter allows the investor to make this choice.

The lock-in period for any investor depends on their age, as the scheme only matures when the investor turns 60.

The accumulated interest is tax-free in this scheme. If one avails the lump-sum payment upon maturity, 40% of it is tax-exempt; if one chooses to receive a pension after maturity, the amount is taxable as regular income is.

14.  Sukanya Samriddhi Yojana

The Sukanya Samriddhi Yojana was introduced to mainly promote the welfare of the girl child, which is why the account can only be opened by a legal guardian of the girl child.

The account has tenure of 21 years and can be opened with as low as Rs. 1000. The rate of interest offered by the scheme is 8.6%, and this interest is compounded annually or paid monthly, as per the option availed.

The scheme also offers Triple Exempt Tax benefits, as the amount invested, interest received and the amount withdrawn are all exempt from the payment of tax, as per the Income Tax Act, 1961.

15.  Recurring Deposits

A Recurring Deposit can be opened at any Bank or Post Office and is a great way to safely deposit money at recurring intervals.

The terms of Recurring Deposits vary, as banks offer them for 5 years, whereas banks can offer them for even 12 months.

Monthly, quarterly, half-yearly, yearly or cumulative interest options are available for investors to choose from

 

Two ways by which your money can work for you are:

1.    Money earns Money: You can give money to someone to use it for a pre-defined period of time. That money will come back with an interest. Or you can also invest in stocks.

2.    Buying something that could increase in value: You are an owner of something for which you hope that its value will increase with time. At the time of need, you can sell it and get the money along with the profit.

There are a various short term investment and long term investments options available in the market in India like mutual funds, bank fixed deposits, equity shares, stocks and much more. One can opt for the most appropriate investment option as per his needs, budget and future plans.

Risks and Returns are the two terms that click in your mind instantly whenever you hear about Investment options. All the three terms- Investment, Risks and Returns are interlinked and interdependent. High investment leads to more risk which further leads to higher returns.

Some people think that ‘Investing is Gambling’. But these two terms are quite different. One should not get confused with both. Gambling is putting money at risk by betting on an outcome which is uncertain. It works just on a hope that you might win the money. But investing doesn’t work on this principle. Yes, there is a risk but there is also a security of getting a certain amount of money after a defined time interval.

Timeframe, Tolerance, Diversification, and Knowledge, these are the four strategies which can reduce your exposure to investment risk. You should stay invested for longer in that product with which you feel comfortable. Don't get stuck to any one type of investment option and put efforts to understand the financial world to become a good investor. 

So, think, research, understand and decide the best saving investment option to stabilize your future.