Long-Term Investment

Table of Content

1. What are Long-Term Investments?

2. How to Plan for Long-Term Investment?

3. Best Long Term Investment Options in India 2025

4. Top 10 Long-Term Investment Options in 2025

5. Financial Goals or Objectives for a Long-Term Investment Plan?

6. Benefits of Long-Term Investment Plans

7. How to buy a long-term Investment Plan Online?

8. When to Focus on Long-term Investments Over Short-term

9. FAQs on Long Term Investment Plan in 2025

 

What are Long-Term Investments?

Long-term investment plans are assets that individuals or companies intend to hold onto for more than three years after investing. Investors face a substantial amount of risk while pursuing higher returns from these financial instruments. Some examples of long-term investment plans include stocks, PPF, NPS, FDs, and real estate, among others.  

You can start by developing a budget and disciplined savings habit in order to build a lump sum corpus. There are a number of savings plans available that can help you save up the corpus and build the habit. Then, watch the magic of compounding to expand that amount. You can utilise it for a strong financial future, free from the effects of inflation. 

How to Plan for Long-Term Investment?

Planning for a long-term investment is not a one-size-fits-all approach. It depends on several personal factors such as your financial goals, income, risk appetite, and life stage. Here's how you can create a strategy that works for you:

1. Start by Defining Your Financial Goals

Identify what you are investing in. Common long-term goals include:

• Retirement planning
• Funding your child’s higher education
• Buying a house or building an asset
• Achieving financial independence

These goals will determine how much you need to invest and your investment timeline.

2. Assess Your Income and Life Stage

Your current income and responsibilities play a major role in shaping your strategy.

• Early career (20s–30s): Higher earning potential and fewer responsibilities mean you can take more investment risks.
• Mid-life (40s–50s): With increased responsibilities, a mix of equity and debt instruments helps strike a balance between growth and stability.

3. Know Your Risk Appetite

Your ability to take risks changes over time.

• Long investment horizon: You can afford to invest in high-risk instruments like stocks or equity mutual funds.
• Shorter investment horizon: It is safer to opt for debt funds or fixed-income options.

4. Diversify to Minimise Risk

Avoid putting all your money into a single asset class. Diversification spreads risk and increases the chances of stable returns.

• Combine equity, debt, gold, and real estate
• Rebalance your portfolio annually to align with your goals

5. Explore Suitable Long-Term Investment Options in India

There are several reliable options available:

• Equity Mutual Funds
• Public Provident Fund (PPF)
• National Pension Scheme (NPS)
• ULIPs
• Direct equity (for experienced investors)

By aligning your investment strategy with your financial goals and life stage, and choosing the right long-term investment options in India, you set yourself on the path to lasting financial success.

Best Long Term Investment Options in India 2025

Let’s check some of the best investment plans for high returns in 2024:

Top 10 Long-Term Investment Options in 2025

If you are looking for the best long-term investment options in India in 2025, here is a list comprising their features and benefits:

PPF and EPF

The Public Provident Fund or PPF is among the most popular and safest long-term investment options in India. Investors with low-risk appetites choose this government-backed financial instrument. The following are the reasons why it is a popular choice:

• You can start investing with only ₹500.
• The maximum deposit amount in a financial year is ₹1,50,000.
• The tenure for PPF is 15 years, ensuring you have disciplined savings throughout.
• Partial withdrawal is permissible starting from the 7th financial year.
• The interest rate for PPF currently is 7.1% to 8%.
• Tax deductions are available on PPF deposits under Section 80C of the Income Tax Act, 1961*.
• Under Section 10D of the Income Tax Act, 1961*, the interest earned from PPF is also tax-free.

Stocks

Stocks, in simple words, refer to a fraction of ownership of a company that has issued them. In public exchanges such as the BSE (Bombay Stock Exchange) and the NSE (National Stock Exchange), these stocks are bought and sold. A stock owner can claim part of the company's earnings, liabilities and assets.

The following are the reasons why stocks are one of the best long-term investment options in 2025:

• No minimum amount to start trading in Indian stocks. You can start with ₹100.
• Stocks have higher liquidity, so it is easier to buy and sell.
• Versatility of stocks allows investors to park their funds in bonds, shares, derivatives and MFs.
• Stockholders can get higher returns in a short period.
• When companies generate profit, they can distribute part of that profit as dividends.
• Without indexation, long-term capital gains (LTCG) from stocks are 12.5%, whereas for short-term, it is 20%.

Mutual funds

These are professionally managed financial instruments that, at first, accumulate money from numerous investors. This amount then gets invested in a diversified portfolio, such as in stocks, securities and bonds, as mentioned in the scheme. Mutual funds allow investors to grab market opportunities without directly managing the investments.

There are plenty of reasons why mutual funds are most popular in 2025:

• These funds enable investors to park their funds in multiple assets and reduce risks.
• Ideal for growing wealth over time so you can achieve your financial goals easily.   
• With only₹500, you can start with a Systematic Investment Plan or SIP.
• The flexibility of these funds makes withdrawal extremely convenient.
• Mutual fund managers have enough market expertise, which helps investors understand market trends beforehand.
• Under Section 80C of the Income Tax Act, 1961, mutual funds such as ELSS (Equity Linked Savings Scheme) offer tax deductions.

Real Estate

Real estates allow its owners to have appreciation and rental income, so they can have passive income and stable cash flow. Depending on the location, management and asset class, the returns vary. The returns are competitive yet risk-adjusted.

The following are the reasons why you need to invest in real estate in 2025:

• The values of real estate increase over time.
• Rental income through property-dependent activities and appreciation brings profits.
• While paying the property mortgage, it lets you build equity, which contributes to your net worth.
• Inflation-hedging capability of real estate makes it a popular choice for those looking for higher capital values.

Bonds

For retail investors, there is no better long-term investment option than bonds. Besides adding a steady income stream, bonds protect investments even during times of market volatility. Reasons why you need to choose bonds in 2025 are:

• Your principal amount remains safe.
• Bond returns are predetermined, enabling you to have a strategic plan and avoid future surprises.
• Interest earned is completely tax-free in government-issued tax-free bonds.
• High-rated bonds are safe.

Gold

The intrinsic value of gold and its industrial application make it one of the safest long-term investment tools in 2025. For investing in gold, you do not need to have physical gold; modern gold investment options such as SGBs, gold mutual funds, and gold ETFs are hassle-free and safe.

Furthermore, in the following section, we will discuss multiple reasons to invest in gold for the long term:

• Gold is the second-oldest (after real estate) asset that gets traded even now.
• Investing in gold is one of the best ways to preserve family wealth for generations.
• Gold shields from economic uncertainty and inflation.
• It assists in preserving capital and plays a significant part in portfolio diversification.

 ULIPs

A unit-linked insurance plan (ULIP) offers dual benefits of an life insurance and investment. Whereas the life cover offers financial protection during unforeseen circumstances, investments help in growing your wealth over time.

The following reasons make ULIPs a smart long-term investment plan in 2025:

• Flexibility to switch funds, according to risk appetite, goal and market conditions.
• The riders enable policyholders to extend the policy coverage so that they can achieve specific goals.
• ULIPs allow investors to withdraw money after the lock-in period of 5 years.

Equity Funds

These are types of mutual funds where your invested money gets spread across a wide range of companies as stocks. This reduces stock-specific risks. As a consequence, you get exposure in multiple sectors, which reduces the risks associated with investing in an individual stock. However, market experts suggest investing for at least 5+ years for optimal benefits.

Here is why these are significant long-term investment plans:  

• The fund gets diversified, exposing more potential.
• You can either choose to invest in a lump sum or in the form of SIPs.
• Equity funds have higher returns compared to other funds.
• These funds can outperform inflation.
• Equity funds, such as ELSS or Equity Linked Savings Scheme, offer significant tax deductions as per Section 80C of the Income Tax Act, 1961.

Fixed Deposits

Guaranteed returns, flexibility and safety are the most crucial factors why fixed deposits are so popular for long-term investment.These offer capital protection along with guaranteed returns if the tenure is for an extended period. However, the returns from FDs are taxable.

If you are wondering what other reasons make FDs worth investing in, here is a list:  

• FDs are easy to manage; therefore, it is a suitable long-term investment option for young adults.
• The interest amount of an FD is up to 7.30%.
• During emergencies, FDs allow withdrawals.
• You can apply for loans against your FD.
• The simplicity of FDs makes it easier to handle for all kinds of demographics.
•  Compared to savings accounts, FDs have higher interest rates.

National Pension Scheme (NPS)

Investing in the national pension scheme (NPS) for the long term is beneficial because of its low cost, tax advantages and compounding interests. These market-linked plans, backed by the Government, help investors to beat inflation and secure their future with a steady income during retirement.

• It has a structured lock-in period ensuring your money is invested for its intended purpose.
• Tax benefits up to ₹2 Lakh in a financial year are possible.
• There is flexibility so that you can determine asset allocation based on your risk appetite.
• Returns range between 8% and 10% of your investment.
• One of the best savings options.
• When you retire at 60, 60% of the NPS amount can be withdrawn as a lump sum and 40% to purchase an annuity plan. 

Financial Goals or Objectives for a Long-Term Investment Plan?

Long-term investing is more than just a financial habit; it is a purposeful strategy to achieve life goals, build wealth, and secure your family's future. Whether you are living in India or are a Non-Resident Indian (NRI), investing in India's long-term avenues can be a smart move.

With the country positioned as the world’s fourth-largest economy and projected to grow at a robust 6.5% GDP rate in 2025, the growth outlook is strong. India also ranks 40th in the Global Competitive Index, and experts anticipate an even greater economic influence in the Asia-Pacific region.

This makes India a promising destination for long-term investments with solid return potential.

Common Long-Term Financial Goals

Long-term investments have proven to be the most effective when it comes to financial stability in the long run, not just for you, but for your loved ones. It is quite easy to under-save or overspend, but when you have a prominent goal, you move in the right direction while making the right decisions. These goals can be anything from paying off a significant debto to child’s education, retirement or buying your dream house.

NRI-Specific Financial Objectives

For NRIs, investing in long-term plans is beneficial since they can diversify their investment portfolios across geographical regions with different investment plans for NRI. Additionally, they can claim tax benefits too for Indian financial instruments, reducing tax liabilities.

In order to invest in India, NRIs need to have a Non-Resident Ordinary (NRO) or Non-Resident External (NRE) account to start investing in India.

Benefits of Long-Term Investment Plans

Choosing a long-term investment approach is not just about making your money grow; it is about gaining stability, confidence, and the freedom to live life on your terms. When you commit to staying invested over several years, you unlock several advantages that short term investment strategies simply cannot offer.

Here is how long-term investments work in your favour:

Compounding

Compounding refers to an increasing value of an asset because of the interest earned on both the principal and accumulated interest.

For example, if you start to invest in a long-term instrument such as a mutual fund with ₹1,00,000 and the annual interest is at 12%, your invested amount will grow to ₹1,76,236 in 5 years, even if you do not add anything more. In this case, your interest amount starts to get compounded, similar to a snowball effect. This is how the compounding works.

Less Volatility

Market volatility refers to unpredictable and sharp price movements of the market. It indicates that investments come with uncertainty and risks. Long-term investments are directly linked to effective risk management. Even if the market seems volatile for a short-term investment, it becomes stable in the long term.  

For example, a diversified portfolio comprising government bonds and high-quality, dividend-paying stocks serves as a great way to mitigate risks and volatility in the long term.

Tax Benefits

Many popular long-term investment options in India come with tax-saving advantages. Investments in PPF, ELSS, NPS, and life insurance qualify for deductions under Section 80C of the Income Tax Act, 1961^#, up to ₹1.5 lakh per year. These benefits help reduce your taxable income while encouraging consistent savings and investments.

More Time to Learn and Explore

With long-term investments, you can have the flexibility to experiment and explore various assets and portfolios.

For example, when you start to invest in SIPs, it is possible that whenever the price dips, if you have a low risk appetite, you become scared and think of shifting to another fund. However, if you take it as a learning journey, you will notice that prices tend to fluctuate in SIPs, and it does not mean your investment has become a waste.

Financial Freedom

Perhaps the most inspiring benefit of all, long-term investing brings you closer to your financial freedom.

• Whether it is retiring early, travelling the world, supporting your family, or launching a passion project, a well-planned investment corpus gives you choices.
• It frees you from living paycheck to paycheck and opens the door to a lifestyle you truly desire.

How to buy a long-term Investment Plan Online?

Purchasing a long-term investment plan requires proper research. You need to consider your risk appetite, age, investment type, tenure of the investment plan and financial goals, both long and short term. Once you have a clear idea of these, you can move on to the next step, which is purchasing.

Here are the steps to buy a long-term investment plan online:

• Step 1: Choose your investment plan and the platform.
• Step 2: Fill in your details like name, DOB, gender, email ID, and annual income.
• Step 3: Based on your details, the ULIP calculator will suggest potential investment plans for you.
• Step 4: Compare different plans based on their returns, interest rates and tax benefits.
• Step 5: Choose a relevant plan and proceed with the purchase.

When to Focus on Long-term Investments Over Short-term

Choosing between long-term and short-term investment strategies depends on your financial goals, time horizon, liquidity needs, and risk appetite. Both approaches have their place in a well-rounded portfolio, but knowing when to focus on one over the other is key to achieving your objectives efficiently.

Here is a simple comparison to help you decide:

But when should you focus on long-term investments?

Well, opting for long-term investment options in India is a good choice when your financial goals require significant capital over an extended period. These include:

• Retirement planning - to build a sizable corpus that supports your post-retirement lifestyle.
• Child’s education or marriage - where expenses are high and need planning over 10–15 years. You can use a child education planner to lay out the initial blueprint for your investments.
• Home purchase or asset creation - which benefits from higher returns through equity exposure.
• Wealth creation - If you want to build financial freedom or reach life goals like entrepreneurship or securing your future through a well-chosen retirement plan for early retirement. 

FAQs on Long Term Investment Plan in 2025

Q. Which investment is the best for the long term?

PPF, Mutual Funds, Stocks, Gold, and Real Estate are some of the good options. There's nothing called the best investment. You have to choose the option that aligns with your financial goals and investment horizon. 

Q. What are Long Term Investment Plans?

These are investment options that tend to generate reasonable returns over the long term or have a maturity period of over five years. 

Q. Why should I start investing for the long term?

You should start investing for the long term if your aim is retirement planning, wealth accumulation, or stable returns in the long run. You can derive the benefits of compounding and market appreciation with long term investment plans. If you have financial goals like children’s education, or buying a home, long-term investments help in achieving them by creating a huge corpus over time.

Q. What types of investments should I consider?

The types of investment you choose should align with your long-term financial goals and risk tolerance. You can consider various options such as stocks, equity funds, bonds, PPF, NPS, EPF, mutual funds, and real estate.

Q. What investment options are available for the long term?

Mutual Funds, Public Provident Funds, Fixed Deposits, Gold, National Pension Schemes, etc, are some of the available options.

Q. Are long term investment plans safe?

Yes, investments that offer a fixed interest rate can be considered as safe as they are not volatile in the short run.

Q. How to get a 15% return on investment?

For an attractive return of 15%, you should consider investing in equity mutual funds. You can also consider stocks performing beyond the benchmark index and real estate. Diversify your portfolio with a focus on compounding and high-growth sectors. Review your portfolio periodically, stay informed about the market trends, and make adjustments to align with your financial goals and market fluctuations.

Q. Which long-term investment gives the highest return?

The PPF tends to give the best return if you’re considering a safe investment option. On the other hand, investment in stocks gives the highest return over a longer period if you are willing to take risks. The returns are based on your risk capacity. 

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