10 Best Investment Options in India 2019
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10 Best Investment Options in India 2019

 

Best Investments options in India

Why do people invest? Maybe they are in need of financial security. What are the best investment options to attain financial security? It’s to save and invest money for a long period of time in order to have financial stability in the 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.

By making a smart investment you can not only achieve the financial objectives of life but can also create a financial cushion for future in order to live a secured life. This is the reason why investors are always on search of top investment plans where they can multiply their money with minimum risk involved. Nevertheless, on contrary to this, there is no such investment product which offers high returns with low risk. The risk and returns are directly proportionate to each other. It means, higher the risk, higher the returns and vice versa.  So, before zeroing in on an investment product, it important to match the risk associated with the product from your own risk profile. With the best investment options in India, you can your money work for you and can maximize your earning potential.

What are Investment Options?

Investment products can be categorized into two categories –financial and non-financial assets.  Financial assets includes fixed income products such as PPF, bank deposits and market linked products such as stocks, mutual fund, etc. Non-financial assets includes gold, real estate, etc.

Investment options are investment plans which offer the benefit of wealth accumulation along with advantage of market returns. Apart from pure Investment plans, there are some investment options such as ULIP plans which is the blend of investment and insurance plan. The investment options are decided on the basis of the risk appetite of the investor and his/her investment goals. The investment plans help the investors to accomplish their long-term as well as short-term investment goals and are an ideal option for investors who want to generate wealth and accomplish the goal of saving taxes.

Top 10 Investment Options With High Returns

Let’s take a look at the 10 best investment options with high returns.

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 Rs.500

Only applicable in case of close-ended and ELSS schemes

Bank Fixed Deposits

No Limit

As low as 1000/-

7 Months

Unit Linked Insurance Plans

No Limit

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

5 years

National Pension Scheme

No limit

Rs.500-Rs.1000

Variable; until the age of 60

Senior Citizens' Saving Scheme (SCSS)

Rs 15 lakhs

No limit

5 years

Direct Equity

No Limit

No Limit

Not Applicable in this case.

Real Estate Investment

No Limit

No Limit

Not Applicable in this case.

RBI Taxable Bonds

No Limit

Rs. 100

7 years

Gold ETF

No Limit

Variable

Not Applicable in this case.

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. The PPF account can be opened in bank or post office and the money gets locked for the tenure of 15 years. Moreover, in this investment option, 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 that you are only allowed to withdraw your investment at the end of 6th year. In case you need the money then you can take a loan on the balance of PPF account. Let’s take a look at the interest rates offered by PPF account from the year 2012-2019.

PPF Interest Rate From 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 the last 7 years.

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

Mutual Fund Investment Options

As one of the most lucrative investment option in India, Mutual Funds are best investment plans with higher returns on investment over a long period of time. These are market linked investment instruments in which the money is invested in various financial instruments such as equity, debt, stocks, money market fund, etc and the returns are generated as per the market performance of the fund. Even though the risk involved in mutual fund investments are higher, it offers a much better return compared to any other   best investment options in the market. The two major investment instruments offered by mutual funds are:

Equity Mutual Fund

Equity funds are market linked securities which provide high ROI by investing in shares of companies of different market capitalization. As compared to other investment options in India like debt or fixed deposits, equity mutual fund offered much better returns. However, the risk involved is more. In equity mutual fund scheme 65% of the asset is invested in equity and equity-related securities and rest 35% of the asset is invested debt and money market instruments. Let’s take a look at the top performing equity mutual fund scheme 2019.

Equity Funds

Returns

 

3rd Year

5th year

Mirae Asset Large Cap Fund

17.43%

17.99%

ICICI Prudential Bluechip Fund

13.36%

12.08%

Axis Bluechip Fund

14.47%

12.48%

SBI Magnum Multicap Fund

12.32%

16.07%

SBI Bluechip Fund

9.9%

13.59%

Debt Mutual Fund

Debt funds are considered as one of the best investment options for investors who want to gain a steady return on investment. In debt fund, the investment is made in fixed-interest securities such as government securities, corporate bonds, commercial paper, treasury bills, and other money market instruments. The major objective of investing in debt funds is to generate capital appreciation and earn interest income. Let’s take a look at the top performing debt mutual fund scheme 2019.

Debt Funds

Returns

 

3rd Year

5th year

Reliance Low Duration Fund

7.49%

7.95%

Aditya Birla Sun Life Savings Fund

7.89%

8.43%

UTI-ST Income Fund

7.16%

8.03%

DSP Credit Risk Fund

4.4%

6.7%

HDFC Short Term Debt Fund

7.47%

8.22%

Bank Fixed Deposits

Fixed Deposits are very popular fixed-income investment options, 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 of investment. 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.

As one of the safest and best Investment option in India, the 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.

Unit Linked Insurance Plan (ULIP)

Unit-linked insurance plans are considered as one of the best investment options in India. The ULIP plans offer the dual benefit of insurance cum investment. Moreover, the ULIP plan also offers the benefit of tax exemption to the policyholder. ULIP plan comes with a lock-in period of 3-5 years.  In ULIP investment option a part of the premium is kept to provide insurance coverage to the insured whereas the other half of premium is invested market-linked instruments such as shares, bonds, etc. Let’s take a look best performing ULIP plans for investment.

ULIP Plans

Entry Age

Minimum Premium

Premium Allocation Charge

Policy Admin Charge

No. of Free Switches in Year

Bajaj Allianz Future Gain

Minimum- 1year

Maximum- 60 years

Rs.25,000

0%-1.5%

Rs.33.33 per month

Unlimited

Aegon Life I Maximise Secure Plan

Minimum-7 years

Maximum- 55 years

Rs. 24,000- Rs.36,000

Nil

Rs.100 Per month

4

MaxLife Fast Track Growth  Fund

Minimum-18 years

Maximum-50 years

Rs.25,000-Rs.1,00,000

2%(Single Premium)- 4%(Annual Premium)

Rs.1,500 per year

12

SBI Life –e-Wealth insurance

Minimum-18 years

Maximum-50 years

Rs.1,000-No limit

No charge

N/A

NA

SBI Life Wealth Assure

Minimum-8 years

Maximum-65 years

Rs.50,000

3% of single premium

Rs.45 per month

2

National Pension Scheme (NPS)

As government-backed investment option, 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.

Senior Citizen Savings Scheme

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

SCSS schemes 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.

Direct Equity

Direct equity is considered as one of the most lucrative and best investment options for a long-term period. Even though most of the investors consider direct equity a high-risk investment options, the returns offered by direct equity funds are higher than any other investment options available in the market. However, while investing in direct equity investment plans it is very important to keep in mind certain aspects such as picking the right stock, time your entry and exit in the market. While investing in direct equity make sure you know how to analyze a share stock before going to buy direct equity or share. If the investment is for a long time, for example, more than 15 years, it is somewhat sure that there will be a higher return. Currently, the 1 year, 3 years and 5-years market returns are around 8 %, 13%, and 12.5% respectively.  In order to invest in a direct equity fund, the investors are required to open a demat account.

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 the property increases within 6 months. Real estate investment works as an asset which is considered as one of the best investment plan with high returns over a long term period.

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 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.

Gold

Gold is one of the oldest, evergreen and one of the best investment options, 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 Schemes with High Returns:

Mutual Fund Scheme

1 Month

3 Month

6 Month

1 Year

2 Year

3 Year

5 Year

Religare Invesco Gold ETF

8.64%

10.57%

8.95%

14.66%

24.41%

4.94%

15.68%

SBI - ETF Gold

8.62%

10.53%

8.89%

14.48%

24.01%

4.43%

16.33%

HDFC Gold ETF

13.5%

15.4%

14.3%

7%

0.9%

-1.9%

6.7%

UTI Gold ETF

13.6%

15.5%

14.7%

7.1%

1%

-1.9%

6.8%

Axis Gold ETF

13.4%

15.4%

14.6%

7.2%

1%

-1.9%

6.7%

Two ways by which money can work

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.

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 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 and best 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 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 the 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 investment option to stabilize your future.

What you should do?

Some of the above-mentioned investment options are fixed income while others are market linked investment option. While planning to accumulate wealth for the future, it is important to understand the role of both types of investment options. While market-linked investment options help to navigate the volatility of the market while generating high returns on investment, the fixed-income investment options preserve the accumulated wealth so that you can achieve the financial objectives of life. In order to achieve long-term goals, it is very important to make the best use of both the investment options. Keeping in mind the important aspects such as taxation, risk and investment horizon have a judicious mix of investment.

Investment Options -FAQs

Q. How is Risk and Return Related?

Risk and returns are directly related. Generally, in any investment the risk factor increases with the higher potential of returns on investment. However, even if the risk factor is high it does not guarantee higher returns.

Q. What is an Asset Allocation?

Asset allocation is an investment strategy which main objective is to balance the rewards Vs risk by distributing the assets of the investor as per the investment duration, risk appetite and financial goals. The three major asset classes are fixed income, equities and equivalents and cash. Different asset classes have different level of returns and risk over a period of time.

Q. What is Diversification?

Diversification is the method of distributing the fund in a way that it balances the risk and minimizes the exposure to any specific asset. Under the concept of diversification the investment is made in different assets in order to reduce the risk or volatility.

Q. What Types of Risks are Involved in Investing?

There are 9 types of risk involved in investment, these are:

  • Market related risk
  • Liquidity risk
  • Concentration risk
  • Credit risk
  • Reinvestment risk
  • Inflation risk
  • Longevity risk
  • Horizon risk
  • Foreign investment risk

Q. What are the Steps in the Investment Process?

There is 5 stages involved in any investment process. These steps are as follows-

  • Understanding the client
  • Decision of asset allocation
  • Strategic portfolio selection
  • Decision of asset selection
  • Evaluating the performance of the portfolio

Q. How can I Avoid the Most Frequent Money-Losing Mistakes?

One can avoid the most frequent money losing mistakes by keeping some important points in mind.

  • Don’t put all the eggs in one basket
  • Stop trying to time the market
  • Set long term financial goals
  • Start investing through SIP

Q. What Questions Should I ask Before Making any Investment?

The questions that should be asked before making any investment are:

  • What is the investment goal?
  • What is the investors risk appetite?
  • What is the time frame of investment?
  • Who are you investing with?
  • Are you making a diversified investment?

Q. What Investment Hazards Should I Look Out for?

The investment hazards that one should look out for are:

  • The investors should first evaluate the needs and then make investment accordingly.
  • Monitor your investment.
  • Set your long term financial goals.
  • Don’t rely on shot cuts in investments
  • Invest in funds in a disciplined manner to avail maximum returns.

Q. What Should I Invest my IRA in?

Like any other investment options, the investors should match the portfolio along with the desired returns, investment time period and risk tolerance. As, IRA (Individual Retirement Arrangement) is a long term investment the investors should focus on equity funds in order to gain maximum return on investment.

Q. What is Derivatives and Options?

Derivatives can be described as the investment options which value is created on underlying assets like binds, stocks, currencies, commodities market index and interest rates. Options on the other hand are the type of derivative and are a great investment instrument which enhance the investment portfolio of an individual and reduces the risk.

Q. When Should I Start Investing?

In order to gain maximum return on investment and to achieve the long term financial goals of life on can start investing as early as possible. The longer you stay invested in the market the more you can gain returns on investment and can create wealth in a long term.

Q. What is the Impact of Taxes on my Investment Returns?

The net profit made on the stock sales share of mutual funds are taxable as capital gain. Tax benefit is offered on mutual fund ELSS funds under section 80C of Income Tax Act.