In today’s day and age, it is imperative to make smart investment planning as it can help you to generate income by putting your money to work. As important as it is to save your hard-earned money, making the right investment choice is equally important, so that money can multiply over a long-term period.Read more
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The BIG Question, Where to invest?
Whether you should invest in a bank fixed deposit or choose a mutual fund? Well, questions like these are common when it comes of where to invest the hard-earned money. When you start with investing, look for investment options that are growth-oriented.
The table below comprises the list of investment options, which is the answer to your question of where to invest in 2020.
|Investment Options||Who Can Invest||Investment Tenure||Risk Involved||Tax Rebate|
|Unit Linked Insurance Plan||Any individual who is looking forward to wealth creation and life cover||It could be less or equal to 45 years||High||Deductions within Section 80C|
|Public Provident Fund||An Indian citizen long-term objectives of investment||15 years||No risk||Falls within an exempt-exempt-exempt category|
|Post Office Monthly Income Scheme||Indian resident||5 years||Low||None|
|Senior Citizen Savings Scheme||Any senior citizen||5 years||No risk||Deductions within Section 80C|
|Mutual Funds||Any individual who has a moderate to the high appetite for risk||If ELSS then 3-years of the lock-in period||Low to high||The ELSS remains tax-exempt within Section 80C|
|Fixed Deposits||Any individual who doesn't wish to undertake any risk||7 days||Risk-free||The tax-saving fixed deposits permit deductions till Rs 1.5 lakh|
|Recurring Deposits||Any individual||6 months||No risk||None|
|Gold ETF||Any individual||Not applicable||Low to moderate||As it is treated as a debt fund so taxed in accordance|
|Real Estate||Any individual||Not applicable||Moderate||20 per cent deduction of tax on the taxable income|
|National Pension Scheme||Any individual who is looking forward to a retirement plan of investment||60 years||Low- high||Deductions within Section 80C|
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
In personal financial planning, savings and investments play different roles. While both have their importance, they have a different objective. In savings, you generally keep a specific amount of money aside for emergencies. On the other hand investing is when you invest your money intending to gain returns on investment and to multiply your funds.
Savings and investments differ in the way wealth is accumulated. Although, savings are considered as a passive way of accumulating wealth, making smart investment planning can help you to accumulate more wealth. Further, in this article, we will give some insight on where to invest money to maximize wealth.
Before making any investment, it is very important to understand the different types of investment. For most of the investors, the investment differs in terms of high risk, low risk and medium risk.
Let us take a look at the best investment options to maximize your wealth and where to invest the money:
ULIPs are considered as one of the most lucrative investment options in India. ULIP plans not only offer the benefit of investment return, but it also provides insurance coverage to the family of the insured. Moreover, the plan also offers the benefit of tax exemption. ULIP plans come with a lock-in period of 3-5 years and are the best suitable for investors who want to gain investment returns along with the benefit of insurance coverage. In a ULIP plan, a part of the premium is kept aside to be used for insurance coverage, whereas the remaining amount is invested in the various market-linked instruments such as debt, equity, bonds, etc. with an objective to gain investment return.
Any individual who is looking forward to investing in a monthly income scheme should consider investing in the POMIS, which is regulated by the post office in India. The key aspect of the post office monthly income scheme is that an individual needs to contribute a certain amount every month and is backed by the government. The maturity term for this scheme is five years right from the date of account opening. Any Indian resident can invest in this scheme with a minimum sum of Rs 1500. An investor can open the POMIS account jointly or individually, however, this scheme does not offer any sort of tax rebate either upon the maturity sum or the investment.
An individual who is above the age of 60 years can invest in this sort of saving scheme. The scheme caters to the senior citizens wherein the deposit could be made for 5-years right from the account opening date and likewise earns interest upon the sum. Moreover, the tenure for the same can get an extension of up to 3 years if needed. When compared to any other investment option in India the senior citizens' savings scheme offers the highest interest rate when compared to any other scheme of savings. It is also one scheme that helps to save tax as the investment made within this is tax-deductible under Section 80C up to Rs1.5 lakh each year.
Mutual funds are considered as one of the best investment options to multiply your hard-earned money. It is a market-linked investment option, wherein the money is invested in various market-linked investment instruments such as equity, debt, stocks and balanced funds to generate profitable investment returns in the long run. The returns are generated based on the market performance of the fund. Even though mutual funds investors have a high-risk exposure, it offers higher returns as compared to the other best investment options available in the market. The major investment fund options offered by mutual funds are:
Equity funds are market-linked securities with the main objective to provide high ROI by investing in large-cap companies. As compared to the other investment options such as debt or FD, equity mutual funds offer many profitable returns over a long-term. This investment option is best suitable for investors who have a high-risk appetite and who want to gain a higher return on their investment.
Debt funds are a great investment option for investors who want to gain a steady return on investment. In debt fund, the money is majorly invested in the fixed interest securities such as corporate bonds, government securities, treasury bills, commercial paper, etc. The main objective of investing in debt fund is to gain capital appreciation along with the benefit of regular interest income.
When it comes to where to invest, the bank fixed deposits remain the preferred choice of the individuals in India. The key aspect of the bank fixed deposits is that it gives you guaranteed fixed returns over a specified period. As per the principles of the bank, the time frame for the fixed deposits is selected by the investor, which could easily differ from 7 days to even 10 years or so. Besides, the investor could also choose from the accessible tax saver bank fixed deposits for a period from 5 years to 10 years. The investors also have the alternative to either choose a non-cumulative or a cumulative deposit. The difference between these two deposits is that with a non-cumulative option as per the underwriting the investor is paid on the hand with a cumulative option it is payable at the maturity period wherein the interest is reinvested into the amount of principal.
The recurring deposits are the term deposits that are offered by the different banks in India wherein the investor the depositor needs to deposit amount at regular interval and likewise earn good returns. This avenue provides the flexibility of investment as it permits the investor to choose the tenure as per the convenience. The recurring deposits tenure is generally from a year to ten years. If you wish to invest open an RD account, you can contact your preferred bank and proceed ahead with depositing fixed sum each month. At the time of the maturity, the earned interest will be paid including the amount invested.
When the gold and stock investment functions as a mixed entity this is what is called gold exchange-traded funds. Just like other company stock, such funds are traded upon the National Stock exchange and it is easy to buy as well. As it is on the premise of the gold cost, therefore is considered to be passive instruments and it is because of this it remains transparent when it comes to the pricing. Even when the market-linked tools are more volatile in regards to perils, it still offers a higher sum of returns. Therefore, before you decide where to invest the money, you must be well-aware of the investment product and the performance of the market
Undoubtedly, real estate is the fastest-growing segment in the nation. When we talk about real estate it is highly prospective as it includes commercial, hospitality, retail, manufacturing, and so much more. Moreover, if you are in dilemma of the safest avenue of where to invest the money then consider investing in the real estate as it is one safe investment avenue with high returns. Besides, the risk involved is also on the lower side and the cost of the property will rise in the coming times. Although, if you wish to sell the property on an immediate basis that could be because of any financial emergency becomes slightly difficult. The assets of real estate can also be liquified by the owner or the investor of any property. The investors can also invest in any residential or commercial properties and get high returns. Moreover, it will also help you to have a diversified asset investment portfolio.
A good retirement planning is of utmost importance and should not be overlooked at any cost. If you are also looking of where to invest the money for a relaxing golden period of your life invest in the National Pension Scheme. It is a scheme, which is government-backed, which permits the investors to invest in different market-linked tools, for instance, debt and equities. The final pension sum is upon the premise of the returns from such investments. The National Pension Scheme is regulated by the PFRDA. Any individual who is between 18 years of age to 60 years can avail the scheme; however, it can easily be extended up to 70 years of age. Up to 25 per cent of partial withdrawals can be done from the NPS, however, three years of the account opening.
When it comes to making a smart investment, you must know the various investment options accessible in the market. For any investor, to choose a suitable scheme depends upon the financial goals, time-frame, level of risk and so forth. Some of the other investment options are as follows:
Direct equity is another such investment option where you can consider investing for a long-term period. Even though for most of the investors' direct equity is a high-risk investment option, the returns offered by it is much higher as compared to other market-linked investments available in the market. However, while investing in the direct equity plan it is very important to consider certain aspects like selecting the right stocks, time of your entry and exit in the market. Before investing in direct equity, make sure that you know how to analyze a share stock. Currently, the market returns offered by direct equity for 1 year, 3 years and 5 years are around 8%, 13% and 12.5% respectively. It is also important to note that to invest in direct equity; you should have a DEMAT account.
Equity-linked savings schemes are tax saving investment option, which offers the benefit of the market return. ELSS fund comes with a lock-in period of 3 years and can be converted into the open-ended scheme after the completion of 3 years. Under this fund option, around 60% of the investment is made in equity and equity-related securities. Along with the benefit of higher investment returns, the investment made in the ELSS up to the maximum limit of Rs.1.5 Lakh is applicable for tax exemption U/S 80Cof Income Tax Act.
The Public Provident fund is a scheme that is backed by the government and it essentially enables to enjoy risk-free investment for a longer time. Every quarter the government revises the rate of interest upon the PPF account. Within a PPF account, the maturity term is of 15 years. The money within this type of account can be withdrawn partially after six years. If required, an individual may take up a loan upon the balance of the account of PPF. The key highlight of a PPF is that both the earned interest and the principal amount is secured as it is regulated by the government and falls into the category of EEE and therefore is tax-exempted. Any individual who contributes up to Rs 1.5 lakh each year to the PPF account is eligible within Section 80C for the tax deductions.
The most common question, which is often asked by investors along with where to invest, is how to invest. The answer to both these questions depends on your spending and earning. Before start making any investment, don’t forget to analyse your financial goals. Based on your long-term and short-term financial objectives you can choose to invest in these investment options to maximize your wealth.
The decision of where to invest the money should be completely assessed and the decision should not be taken in a hurry. Doing this will help you select the best investment options in India. Remember, investment does not mean that you have to save taxes rather the investment should grow into an amount considerably.
Start your investment journey, accumulate wealth and grow.
You may also like to read: 10 Best Short Term Investment Plans in India
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer. Tax benefit is subject to changes in tax laws. *Standard T&C Apply
Past 10 Year annualised returns as on 01-12-2023
^Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
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