20 Best Investment Options in India in 2023

20 Best Investment Options in India in 2023

Here is a list of the best investment plans in India 2023 that you can consider adding to your financial portfolio:

Features of Best Investment Options 2023 in Detail

The key features and benefits of the best investment options with high returns in India in 2023 are as follows:

1. Unit Linked Insurance Plan (ULIP)

   ULIP stands for Unit Linked Insurance Plans. These are a safe investment option with high returns that offer you the dual benefits of investment and life insurance.

   Features of a Unit Linked Insurance Plan (ULIP):

   • Premium Distribution: Part of the premium goes to life insurance coverage, and the remaining premium is invested in market-linked investment funds of your choice for high returns.

   • Multiple Fund Choices: Flexibility to choose from various investment funds, like-

   • Equity funds

   • Debt funds

   • Hybrid funds

   • Index funds

   • New Fund Offerings (NFOs)

   • Lock-in Period: Long-term investment options for a minimum of 5 years

   • Investment amount: Minimum investment amount is as low as Rs. 1000 per month or Rs. 1.2 lakhs p.a.

   • Free Fund Switching: You can change funds without additional cost based on your strategy

   • Partial Withdrawal Facility: ULIP plans offer an option to withdraw funds after the 5-year lock-in period

   • Flexible Premium Payment Options: Pay your premium amount in a lump sum or in regular frequencies as per the following:

   • Annually

   • Half-yearly

   • Quarterly

   • Monthly 

   • Tax Benefits of ULIP: You get deductions up to Rs. 1.5 lakhs u/ Section 80C of the IT Act, 1961. The payouts received at the end of the policy term are also tax-free u/ Section 10(10D).

2. Capital Guarantee Plans

   Capital Guarantee Plans are a type of best investment option that offers a guarantee that your initial investment will be returned to you, regardless of market performance. 

   Features of a Capital Guarantee Plan:

   • A portion of the premium is invested in low-risk funds which guarantees fixed returns at the end of policy term end.

   • Remaining premium is invested in market-linked funds for higher potential returns.

   • Offers dual benefits of capital protection and potential market-linked returns.

   • Small part of the premium ensures life coverage for the financial security of your family.

   • You can choose market-linked funds based on risk appetite and investment goals.

   • Best for individuals who seek a balance between safety and potential returns.

   • Capital guarantee plans eligible for tax benefits under Income Tax Act, 1961 (Section 80C and Section 10(10D)).

3. Pension Plans

   Pension plans are a type of insurance plan that combines the benefits of investment for retirement planning as well as life insurance protection. These are the best investment options to provide you with a regular income after retirement when you are no longer working. 

   Features of a Pension Plan:

   • Provide a guaranteed income after retirement, either immediately or deferred.

   • Helps to maintain your standard of living in retirement.

   • Allows regular contributions for a lump sum or annuity payouts.

   • Investment period of 5 – 30 years.

   • Flexible vesting age between 55 – 65 years.

   • Provides deductions of up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act, 1961.

   • Additional tax benefits under Section 10(10D) of the IT Act, 1961.

4. Child Plans

   Child Plans are also one of the best investment options that provides the benefits of both life insurance and investment. They offer a lump sum payout on maturity, which can be used to meet your child’s financial needs, such as education, marriage, or starting a business. Your child also gets a death benefit in case of your premature death.

   Features of a Child Plan:

   • Helps to build a corpus for long-term financial goals like education or marriage for your child, and insurance coverage provides financial security to your family.

   • You can choose the premium amount, fund options, and policy term as per your financial planning.

   • These are long-term best investment options with a 5-year lock-in period to promote disciplined savings.

   • The investment portion of your premium is invested in equity, debt, hybrid, or index funds for potential higher returns.

   • Child plans allow partial withdrawals in financial emergencies.

   • These investment options provide tax deductions under Section 80C and tax-free maturity proceeds under Section 10(10D) of the IT Act, 1961.

5. Senior Citizen Savings Scheme (SCSS)

   Senior Citizens’ Saving Scheme (SCSS) is a risk-free tax-saving investment option for senior citizens (>60 years of age) available in India. It is one of the best investment options in India to make savings for old age people as it offers a regular income.

   Features of Senior Citizen Savings Scheme:

   • SCSS is a government-backed scheme, making it a safe investment option for senior citizens

   • The minimum investment amount is Rs. 1,000, and the maximum is Rs. 30 lakhs. 

   • Offers a high-interest rate of 8.2% p.a. as of November 2023.

   • A 5-year maturity period, which is extendable by 3 more years.

   • Allows premature withdrawal with a penalty fee.

   • SCSS scheme is accessible through post offices and banks across India.

   • Tax deductions of up to Rs. 1.5 lakhs u/ Section 80C of the Income Tax Act, 1961.

6. National Pension Scheme (NPS)

   NPS is one of the government-backed best investment options that offer guaranteed pension benefits. The NPS fund invests in bonds, government securities, equity, and other market-linked assets as your preference.

   Features of the National Pension Scheme (NPS):

   • NPS is a voluntary retirement savings scheme that provides financial independence on  retirement.

   • NPS has two types of accounts:

   • Tier I Account: Mandatory long-term savings account without premature withdrawals

   • Tier II Account: Optional account with more flexibility for withdrawals

   • National Pension Scheme (NPS) offers two fund options:

   • Auto Choice Funds: Automatic asset allocation based on your age

   • Active Choice Funds: Customize asset allocation in equity, debt, and government securities

   • Offers various investment options, including equity, corporate bonds, government securities, and alternative assets.

   • You can claim tax deductions on your contributions under Section 80CCD(1) and Section 80CCD(1B) of the Income Tax Act, 1961.

7. Post Office Monthly Income Scheme (POMIS)

   The Post Office Monthly Income Scheme is another of the government-sponsored best investment options that offer you a guaranteed monthly income. It is a popular scheme among retirees and other investors who are looking for a steady stream of income.

   Features of Post Office Monthly Income Scheme (PO-MIS):

   • POMIS is a fixed-income investment option offered by the Post Office.

   • Allows Minors (>10 years of age), Individuals and Joint Life Account with 2 or 3 persons

   • Allows a fixed tenure of 5 years, which is extendable by 5 years at a time up to 15 years

   • Provides monthly income at 7.4% p.a. interest

   • You can start with Rs. 1,000 to up to Rs. 15 lakhs for Single, and Rs. 30 lakhs for Joint Accounts.

   • Interest is taxable, but you can claim up to Rs. 1.5 lakhs deduction under Section 80C.

8. Public Provident Fund (PPF)

   The Public Provident Fund (PPF) is the long-term best investment option in India. PPF offers guaranteed returns, which are declared by the Government of India on a quarterly basis.

   Features of Public Provident Fund (PPF):

   • PPF is a government-sponsored scheme that offers a secure and reliable investment option

   • The current PPF interest rate is 7.1% p.a.

   • Minimum PPF account tenure is 15 years, extendable indefinitely in 5-year blocks

   • You can invest a minimum of Rs. 500 per year, up to Rs. 1.5 lakhs annually.

   • Investments can be made in lump sum or instalments

   • Partial withdrawal of funds is allowed from the 6th policy year

   • Contributions, interest, and withdrawals are tax-free, ensuring tax efficiency

9. RBI Savings Bonds

   RBI bonds are safe investment options with high returns in India that are available to all citizens except Non-Resident Indians (NRIs). The returns are accredited to the investor in Demat mode in their Bond Ledger Account (BLA).

   Features of RBI taxable Bonds:

   • The RBI bonds are issued at a face value of Rs. 1000 and in multiples thereof, with no upper limit

   • These investment options are non-transferable, non-tradeable, and not usable as loan collateral

   • Interest is paid semi-annually on 1 Jan and 1 Jul at 8% p.a.

   • Premature withdrawal is allowed for senior citizens above the age of 75 and for certain specified cases.

   • Interest earned is taxable u/ IT Act, 1961

   • Returns on Bonds are exempted from wealth tax under the Wealth Tax Act of 1957

10. Bank Fixed Deposits (FDs)

    Bank Fixed Deposits offer fixed returns over a specific investment tenure. These are the best investment options that offer guaranteed returns for a fixed tenure. Bank FDs are one of the safe investments with high returns in India in 2023.

    Features of Bank Fixed Deposits (FDs):

    • Bank Fixed Deposits offer stability with fixed FD interest rates and predetermined maturity period

    • FDs available for tenures from 7 days to 10 years 

    • Loan and overdraft facility is available against FD if needed

    • You can choose interest payout at maturity or regular intervals (annually, half-yearly, quarterly, or monthly)

    • Senior citizens enjoy special additional rates of 0.25-0.75% p.a.

    • FDs are insured by DICGC up to Rs. 5 lakhs per depositor per bank

    • Tax-Saver FDs allow deductions under Section 80C, up to Rs. 1.5 lakhs per financial year.

11. Initial Public Offerings (IPO)

    An Initial Public Offering (IPO) is the first sale of company shares to the public when a company transitions from private to public ownership. Companies use IPOs to raise capital for growth, expansion, or debt reduction. 

    Features of an Initial Public Offering (IPO):

    • IPOs are the best investment options that enable companies to raise capital by selling shares to the public. 

    • The raised capital can be used for growth, debt repayment, or acquisitions

    • Companies going public list their shares on stock exchanges for public trading

    • IPOs offer potential for high returns, especially with successful companies

    • IPO shares provide liquidity through trading on stock exchanges

    • Investing in IPOs carries risk and volatility, as success post-public listing is uncertain 

    • IPOs allow founders, angel investors, and venture capitalists to invest in new companies from early on. 

12. Stock Market Trading

    Stock Market Trading is selling or purchasing the market-linked units of publicly traded companies or commodities. Public companies are businesses that are listed on the secondary markets/ stock exchanges like NSE, BSE, and NASDAQ. You can then sell the shares of these investment options at any time on stock markets, and the price of the shares will be determined by supply and demand.

    Features of Stock Market Trading:

    • Buying a share means owning a small unit of a company

    • Stock market is highly liquid, making buying and selling of stocks easy

    • Stock market investments are volatile, influenced by economic news, corporate earnings, and investor sentiment

    • Trading in the stock market can be rewarding with significant profits from rising stock prices

    • You need a Demat account to start trading on a stock exchange

    • Stock market trading is risky, as stock prices aren't guaranteed to rise

13. Mutual Funds

    Mutual Funds are the best investment options with high returns that allow multiple investors to pool money and invest in a diversified portfolio of market-linked instruments such as equity, debt, and money market funds. They are managed by professional fund managers who make investment decisions on your behalf.

    Features of Mutual Funds:

    • Mutual funds invest in a diversified basket of securities with the potential for high returns over the long term and reduce risk

    • They offer a variety of investment options in India, including equity, debt, and hybrid funds 

    • Mutual Funds are relatively affordable, with low minimum investment amounts due to pooling of funds.

    • These are highly liquid investment options, as you can redeem your fund units at any time.

    • Professional fund managers look after each mutual fund portfolio.

    • Equity Linked Savings Scheme (ELSS) mutual funds offer tax benefits u/ Section 80C of the IT Act, 1961

14. Gold 

    Gold has a long and rich cultural significance in India, and it is often seen as a symbol of wealth, prosperity, and good luck. This cultural significance makes gold and gold-assets a popular investment for many Indians. 

    Features of Gold:

    • The best investment options in gold in India include:

    • Physical gold

    • Gold ETFs

    • Gold funds

    • Gold bonds

    • Gold and gold-assets can be easily pledged for instant loans, making it a best investment option

    • Offers high asset liquidity, as it can be easily bought and sold in markets and stock exchanges

    • Gold prices can be volatile, influenced by international factors and market sentiment.

    • It is a hedge against inflation, as its price rises when the value of currency falls.  

    • Tax implications on gold vary, with long-term and short-term capital gains tax applicable.

15. Real Estate

    Real estate is a physical and tangible investment, including properties like land, homes, and commercial buildings. Over time, real estate can appreciate in value, offering potential capital gains. This makes it one of the investment options with high returns in India.

    Features of Real Estate:

    • Real estate prices in India have historically appreciated, making them the best investment options for long-term capital gains.

    • It can provide a steady rental income for passive income

    • Real estate is tangible that is usable for personal or commercial purposes.

    • It requires a long-term investment horizon for optimal returns.

    • These are less liquid investment options than alternatives like gold mutual funds 

    • It is considered a safe asset with high returns in 2023 in the long term

    • The Indian government offers tax benefits to real estate investors under Income Tax Act of 1961, such as:

    • Section 24(b): Deduction of interest paid on home loans 

    • Section 80C: Deductions on principal repayment of the home loan

    • Section 54: Tax exemptions on capital gains tax on sale of residential property 

16. Real Estate Investment Trusts (REITs)

    Real Estate Investment Trusts, or REITs, are among one of the best investment options with high returns in India. Under it, you can indirectly invest in a diversified portfolio of real estate assets. REITs are traded on stock exchanges, making them a liquid investment.

    Features of Real Estate Investment Trusts (REITs):

    • REITs let both small and big investors to invest in real estate without the hassle of property management

    • These are managed by professional teams, reducing the need for hands-on property management

    • You can start investing in REITs with a minimum of Rs. 10,000

    • REITs are required to distribute at least 90% of taxable income to shareholders in the form of dividends

    • A Real Estate Investment Trusts are subject to strict regulations which require them to disclose financial information on a regular basis

    • No tax exemption benefits are available as it is a market-linked high-value investment

17. Cryptocurrencies

    Cryptocurrency is a digital or virtual currency that is stored on an online ledger or blockchain. It is widely traded across the globe today. Cryptocurrencies are the best investment options in the modern world as they are decentralized, meaning that the transaction can not be controlled by any government, financial institution, or external entity. Crypto-trading is not illegal, but the regulatory framework is still uncertain in India.  

    Features of Cryptocurrency Investments:

    • From 1 Apr 2022, the income from the transfer of cryptocurrencies and Virtual Digital Assets (VDAs) are taxed at 30% p.a.

    • Cryptocurrencies are the investment options that can be traded globally, 24/7.

    • These are transparent assets, as all transactions are recorded on a blockchain

    • Cryptocurrencies are volatile assets, meaning that their prices can fluctuate wildly.

    • Safeguarding cryptocurrency holdings is crucial, as they are vulnerable to theft and hacking.

    • Investing in cryptocurrencies is a high-risk investment, as there is no guarantee of returns.

    • The cryptocurrency space is constantly evolving, with new coins and tokens entering the market, requiring research and due diligence.

18. Corporate Bonds

    Corporate bonds are debt securities issued by corporations to raise capital. In India, corporate bonds are the best investment options that provide you with an opportunity to lend money to companies in exchange for regular interest payments. The principal amount is returned at the end of the maturity of the bond. 

    Features of Corporate Bonds: 

    • Corporate bonds are the best investment options that provide a fixed income through interest payments

    • These bonds have a maturity date on which the issuer must return the principal amount

    • The investment period of these investment options typically ranges between 1-10 years

    • Corporate bonds are available in a variety of maturities and credit ratings, offering flexibility

    • These bonds have potential for higher returns than other fixed-income investments, such as government bonds.

    • Corporate bonds are subject to credit risk, with a chance of issuer default on debt obligations

19. Government Bonds

    Government bonds, also known as sovereign bonds, are debt securities issued by the Indian government to finance public spending and manage fiscal deficits. They are typically seen as safe and best investment options  with high returns in India as they offer stability along with periodic income. 

    Features of Government Bonds:

    • Government bonds are available in various tenures and can be purchased directly or through authorized intermediaries

    • They offer you a fixed income in the form of interest payments

    • Government bonds are tradable on the secondary market, offering liquidity

    • These are considered to be low-risk investment options, as the government is unlikely to default on its debt obligations

    • The Indian government offers a range of bonds with different maturities and features

    • They are considered low-risk compared to other best investment options like stocks or corporate bonds

20. Peer-to-Peer Lending

    Peer-to-peer lending, also known as P2P lending, is a form of debt financing that connects individual lenders with borrowers through online platforms. P2P lending platforms are the best investment options that provide a marketplace where you can review borrower profiles, assess credit risk, and select loans based on your preferences. 

    Features of Peer-to-Peer Lending:

    • Peer-to-peer lending allows direct lending to individuals or small businesses, bypassing traditional intermediaries

    • These best investment options offer higher returns compared to savings accounts or fixed deposits

    • P2P lending in India is regulated by the Reserve Bank of India (RBI) to ensure transparency, fair practices, and investor protection.

    • Online P2P lending platforms are easily accessible for convenient investing

    • You can choose borrowers based on their risk appetite and lending preferences

    • You can support individuals or small businesses seeking loans, which contributes to financial inclusion.

Which Is the Best Investment Option For You?

The above-mentioned best investment options in India can be categorized as either market-linked or based on fixed-income investments. With various safe investments with high-return options available in India, you must be wondering where to invest your money. 

You can consider the following factors while making wise investment decisions:

• Understand Your Financial Goals: Clarify your financial objectives, such as saving for your child’s education, buying a house, or planning for your retirement.

• Understand Your Investment Options: Gain a thorough understanding of the roles played by different types of best investment options, for example:

• Market-linked investment options are exposed to market fluctuations but offer a high return on investment.

• Fixed-income investment options allow for wealth accumulation at a fixed rate of return.

• Assess Your Risk Tolerance: Consider how comfortable you are with the possibility of losing some or all of your investment.

• Time Horizon: Determine how long you plan to invest. Short-term goals may require different investments than long-term ones.

• Diversify Your Portfolio: Do not put all your money into a single investment option. Diversify your portfolio by spreading your money across different asset classes, such as stocks, bonds, real estate, and fixed deposits.

• Consider Tax Implications: Some best investment options offer tax benefits, while others may have tax liabilities.

• Keep an Emergency Fund: Before investing, ensure you have an emergency fund with at least three to six months’ worth of living expenses. This fund acts as a financial safety net.

• Stay Informed: These best investment options continuously educate yourself about the financial markets and investment options.

• Start Early: The power of compounding works best when you start investing early. Even small, regular contributions can grow substantially over time.

• Review and Adjust: You can regularly review your investment portfolio to ensure it aligns with your goals and risk tolerance.

In Conclusion!

A smart way to invest is to understand the different investment options available in the market thoroughly. However, you should always keep savings and investing separate as both serve different needs. 

In the end, choosing the best investment option becomes easy with the help of a professional and knowing your risk appetite and goals beforehand.