If you are seeking the best investment options, then you should certainly set store by some of the top choices available in India today. However, make sure that you carefully understand the nuances behind each investment and its intricacies before proceeding.
Below given are some of the options where you can consider investing:
- Mutual Funds- Undoubtedly the pick of the lot for creating future wealth though not without risks, mutual funds are steadily becoming popular choices in almost every portfolio. It goes without saying that mutual funds are riskier than many other investments since they are linked to the market although they provide better chances of earning higher returns in the long haul. You can always spread out your risks by investing through systematic investment plans or SIPs in mutual funds along with taking the help of your AMC and mutual fund advisor for investments.
You can invest in equity or debt mutual funds along with money market funds, balanced funds, international funds and more. Hybrid funds are a great option as well if you wish to tap into the earning power of equity along with the comparatively safer attributes of debt. Do your homework properly before investing. You should invest in equity funds if you have a higher appetite for risks, are seeking long term investment growth and tax savings (ELSS deductions under Section 80C). If you want to take lower risks and have a duration of 3-4 years for your investments with higher liquidity preferences, go for debt mutual funds.
- PPF (Public Provident Fund) – Public Provident Fund or PPF is a great investment option which is backed by the Government and will help you get a risk-free option for the long haul. The interest is revised on a quarterly basis and is decent enough while the maturity period stands at 15 years in all. You can partially withdraw the PPF amount after 6 years or take a loan on the PPF account balance if you wish. The principal and interest will be completely secure while the maturity amount will be exempted from taxation as well. PPF contributions are eligible for deductions under Section 80C as well.
- Bank FDs- FDs or Fixed Deposits at banking institutions may also be value additions to your investment portfolio. FDs are safe, popular and risk-free investments which have decent returns offered by banks depending on the tenure, type of FD, amount and other factors. You can choose tax-saver FDs which have minimum lock-in periods of 5 years or choose tenures between 1-10 years or even lesser, depending on your goals. You can choose interest payouts on your principal amount for the monthly, quarterly or annual basis while you may also choose to reinvest the interest for higher future benefits. The accumulated amount will then be paid out at maturity. Those seeking fixed returns with an extremely low appetite for risks should choose FDs.
- NPS (National Pension System) – NPS (National Pension System) is another investment scheme that has Government backing and enables investments in debt and equities with 50-75% exposure in most cases. NPS regulation is under the PFRDA and is open to people between 18-60 although maximum age may be increased to 70. Partial sums up to 25% may be withdrawn post 3 years of opening the account. Those seeking extra tax benefits up to Rs. 50,000 under Section 80CCD (1B) should choose NPS along with long-term financial needs.
- Recurring Deposits- RDs or recurring deposits are term deposits provided by leading banks and financial institutions in India where subscribers can deposit regularly for earning attractive returns. This offers ample flexibility with regard to choosing the tenure of the RD and it may range between 1-10 years on an average. The interest that you earn will be paid out at the time of maturity along with your principal investment amount.
- SCSS (Senior Citizens Saving Scheme)- This is a savings scheme for 5 years where those above 60 years of age may deposit for 5 years from the opening date and get an attractive interest rate on the investment amount. The tenure may be extended by another 3 years as well. The rates of interest are comparatively higher than many other savings schemes in the country. Deductions are also allowed up to Rs. 1.5 lakh annually under Section 80C.
- ULIPs- Unit Linked Insurance Plans or ULIPs combine insurance and investment in value addition for investors. You can invest by paying a monthly premium or an annual lump sum amount. A part of this will be used for ensuring insurance coverage while the remainder will be invested in equity, hybrid and debt funds that are chosen by the holder of the policy. Those looking for life coverage combined with investment benefits may want to consider these investment plans.
- Gold ETFs- Gold exchange-traded funds (ETFs) are instruments which work as a mixture of stocks and gold-based investments. The funds are traded on the NSE (National Stock Exchange) and may be purchased or sold in the manner of any other stock or share. Those willing to invest in gold markets may consider Gold ETFs along with those who have a lower appetite for risks. Those who desire gold investments minus making charges and additional expenses may consider this option as well. Market volatility will always be present but returns will be considerably higher as well.
- Post Office MIS (Monthly Income Scheme)- Post Office MIS can be a good option since it is backed by the Government and maturity period is 5 years from the date of opening the account. The minimum investment required is Rs. 1,500 and investors may jointly or individually open their POMIS accounts. However, those looking for tax deductions should know that there are no such deductions available on the maturity amount. Those who are averse to risks and want income on a regular basis should invest here along with those who wish to invest one-time for earning income subsequently.
- PMVVY Scheme- The Pradhan Mantri Vaya Vandana Yojana has been slightly changed by the LIC (Life Insurance Corporation) of India. The PMVVY scheme has been extended till March 2023 by the Central Government. One can invest through LIC agents or purchase directly from the LIC website. The new PMVVY scheme is for 10 years and an interest rate of 7.4% was declared by the Government (payable monthly) for investments made in FY2020-2021 till the 31st of March, 2021. The annual reset will apply from 1st April of a financial year. The maximum interest rate is 7.75%. This investment is for those above 60 years of age and has guaranteed returns on the monthly, half-yearly, quarterly or annual basis for 10 years. The maximum investment amount is capped at Rs. 15 lakh for each senior citizen with the maximum pension amount being Rs. 9,250 every month. The maximum monthly pension can be Rs. 18,500 if both spouses are above the age of 60. The investment amount, in this case, will be Rs. 30 lakh.
These are the top 10 investment avenues that you should definitely consider while planning out your financial portfolio. Make sure that you adopt a more balanced approach, i.e. mixing comparatively riskier investments with secure, guaranteed and low-return options. This will help you beat inflation comfortably while diversifying and spreading out your risks considerably at the same time. This will help you accumulate wealth comfortably for the future while meeting all future goals and objectives simultaneously. Carefully understand each investment type and how much of the portfolio you should allocate for the same before proceeding.