14 Best Investment Options In India
What is an Investment Plan?
Investment Plans are financial products that provide the opportunity to create wealth for future. Investment plans offer to help individuals in disciplined and periodic investment into different funds overtime so as to achieve their future financial goals.
How do I go for an investment plan?
The first step in planning your investments is to figure out the right investment that fits your profile and needs. Investment planning requires choosing investments carefully after doing adequate research and not falling for quick-buck schemes that promise high returns in a short time. You must review your stock and mutual fund investments regularly and keep an eye on the tax implications on returns and capital gains that you make form specific investments. In India, there are a lot of investment options that can work for you. Such 14 Best Investment Plans are listed below:
14 Investment Plans for You:
1) Public Provident Fund (PPF)
Traditionally considered to be among the best and safest investment modes in India, PPF is one of the most popular small savings scheme. PPF account holders can invest up to Rs 1.5 lakh in a financial year while the minimum deposit required is Rs 500. Deposits can be made in lump-sum or in 12 installments. PPF deposits qualify for deduction from income under Section 80C of the Income Tax Act. In terms of income tax implications, PPF accounts also qualify for EEE (exempt, exempt, exempt) tax category, which means an investor is not liable to pay tax at all three levels - investment, earning and withdrawal.
2) Mutual Funds
Mutual fund dealers allow you to compare the funds based on different metrics, such as level of risk, return, and price. Also, as the information is easily accessible, the investor will be able to make wise decisions. Besides, Mutual Funds offer benefits in liquidity and professional management.
3) Direct Equity
Direct plans help you to save money on commissions and marketing-related expenses. This small saving is invested in the scheme and it may help you to make extra returns over a long period.
4) Real Estate Investment
Investment in real estate is one of the most lucrative and beneficial in India, as the potential for development is huge and the market is growing.
5) Gold investment
Traditionally considered to be among the best options, gold investment schemes offer you the chance to convert a blocked asset into high-value liquidity.
6) Post Office Saving Scheme
Ideal for retired people who need regular income, it comes with the option of account conversion.
7) Company Fixed Deposits (FDs)
Company FDs offer higher interest rates than bank FDs and are ideal for long-term investments.
8) Initial Public Offerings (IPOs)
IPOs, launched by reputed companies is an ideal long term and low-risk investment option.
9) ULIPs (Unit Linked Insurance Plans)
ULIPs offer a range of benefits and provide the joint benefits of investment and insurance. Known for tax benefits, ULIPs are among the top investment mediums in India.
Bonds are often liquid it is often fairly easy for an institution to sell a large quantity of bonds without affecting the price much.
11) Bank FD
Bank fixed deposits are extremely popular in India. Coming with cumulative/non-cumulative options, bank FDs offer fixed returns over the investment tenure and the returns are payable on a monthly, annual or bi-annual basis, depending on the bank policy.
12) Senior Citizen Savings Scheme (SCSS)
SCSS's are tax free and risk-free investment options for senior citizens above the age of 60. They offer big interest rates and are quite lucrative.
13) RBI taxable bonds
These RBI bonds have tenure of 7 years and are issued in demat format (they are credited to BLA or Bond Ledger Account of the holder).
14) National Pension Scheme
It is a government-organized pension product for the employees of all the sectors in India and offers plans based on equity debt, corporate debt and government bond. In NPS a minimum contribution of Rs 6,000 a year is required while there is no upper cap.
HDFC Life offers saving and investment plans for securing your finances and helping you build your financial base. For details, click on the mentioned link: https://www.hdfclife.com/savings-plans
When should you start investing in investment plans?
Investment is a journey and not a destination. It is a process where you will be making a series of financial decisions with one goal, earning returns and achieving your financial goals without taking too many risks. Investing when you're young is best however you can invest as soon as reasonably possible if all your debt is paid off and you have already built an emergency fund that will provide you with a minimum of 3 months income if you lose your job, then go right ahead and invest immediately whether you are 20, 30 or even 50 years old.
Why should you invest?
Investing is an act of committing your savings to an endeavour, with the objective of increasing your wealth and earning additional income or profit.
With every milestone in your life, you make sure your family's dreams and necessities are fulfilled, you are able to plan and take vacations, get married, go abroad to study, attend to unforeseen events, etc. Hence, we need to plan and invest our savings which will depend on what are your financial goals are. These investments will help you accomplish those goals and help you attain your financial independence by putting your money to work.
How to choose an investment plan?
To choose an investment plan, you need to know your objectives, liquidity needs, investment horizon and your risk appetite. Once you have a clear goal, figuring out which plan you should invest in becomes very easy. You can invest either in financial assets like stocks, mutual funds, bank deposits, PPF, etc. or non-financial assets like gold or real estate.
We recommend that you follow these parameters:
- Do adequate research
- Be aware of schemes that promise high returns in a short time
- Review your investments periodically
- Consider your tax implications on returns and investments.
- The sooner you start investing, the better.
What documents are required to buy investment plans?
Form 26 AS
Bank statement showing your salary credit.
IT returns of previous 2 years not filed together along with income calculation
IT returns of previous 2 years
Income computation, if not available then years of ITR not filed together
National population register containing address, aadhar number and name.
Municipal Birth certificate
P&L account and CA balance sheet of previous 2 years
Any other document issued by the central government.
Frequently asked questions (FAQ)
What is the difference between a savings plan and an investment plan?
The terms 'saving' and 'investing' are often used interchangeably, but this isn't always accurate. Savings and investments are two different types of financial tools that are used to fulfill different needs.
- Savings: This refers to setting some money aside to be used in the future. The money is usually kept in a savings account and can easily be accessed, especially in emergency situations.
- Investment: On the other hand, investment refers to buying assets like bonds, stocks, real estate or mutual funds to help your money grow.
While a savings plan enables you to build up a corpus over time, an investment plan provides you with an avenue where you can help your money grow.
Why Should I Opt for an Investment Plan?
Each and every one of us has some goals that we would like to achieve. A good investment plan is absolutely crucial in order for us to realize these goals. In today's atmosphere, simply earning and saving is not enough. In order to be able to afford a home or a financially-secure retirement, it's vital that you find investment avenues that will allow you to grow your money over time. Remember, it's important to have a goal in mind before you start investing this will enable you to streamline the process.
Should I Opt for a Short-term or Long-term Investment Plan?
The answer to this will depend largely on your financial goals. However, it's always a good idea to have a good mix of both short- and long-term investments in your portfolio. Short-term investment plans will enable you to achieve your short-term financial goals, such as building up enough money to purchase a car, while a long-term investment plan could enable you to achieve your long-term goals like building up enough money to purchase a house. On the whole, long-term investment plans are generally preferred since safer investment tools can be used to enjoy better returns in the long run.
How much can I withdraw from my investments?
There are no set rules and you can withdraw periodically unless there is a lock-in-period. You can withdraw a lump sum amount or as and when required. However, you should withdraw only if you need money for an emergency or for a specific goal. If you make a profit, you can reinvest the money but before you do, take into consideration the fees and taxes you will be paying for every time you do this.
What is the safest investment with highest refund?
There are many investment avenues that can give you good returns but If you are not sure, then you need to analyse your requirement and risk appetite to consider a certain investment option as the best. Indians generally prefer to invest in government-backed instruments since they are considered safe but the following options can also give you good returns
- Fixed Deposit (FD)
- Public Provident Fund (PPF)
- National Pension Scheme (NPS)
- Equity-Linked Savings Scheme (ELSS)
- Recurring Deposit (RD)
- Real Estate
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