Why Investment Is Important? Every Indian should invest his hard earned money in Best Investment Options in India. Even though the national saving rate is about 30% of GDP, statistics say that “Only 1.2% of the Indian household financial savings is directly invested in shares” which is said to be the asset class with highest returns in the past. It clearly shows that we are investing money in unproductive assets like Gold or low-yielding bank fixed deposits or traditional life insurance policies.
If you follow the tradition and just invest in gold, bank deposits & Life Insurance policies, you end up working all your life with just meager earnings. The money you earned should work for you. In this blog, you learn to change your way of thinking towards investing and I will help you to choose the Best Investment Options in India according to your goals.
Let’s find out all the Best Investment Options in India – The Type of Investment Plans Available for a common Investor.
10 Best Investment Options in India:-
1. Public Provident Fund
2. Bank Fixed Deposits
3. Post Office Deposits
4. Tax-Free Bonds
5. Investment in Gold
6. Life Insurance Policies
7. Real Estate Investment
8. Equities/ Stocks
9. Mutual Funds
10. Corporate Bonds
1. Public Provident Fund: – It is one of the Best Investment Options in India if you are looking for more secure and long-term investment option. The scheme is fully guaranteed by the Central Government. You can open PPF account in any post office or some PSU Banks (SBI) and Private Banks (ICICI). You can save tax on this deposit. A PPF account holder can deposit a maximum of Rs 1.5 lacs in his/her PPF account per financial year. The amount can be deposited in lump sum or in a maximum of 12 installments per year. The Ministry of Finance, Government of India announces the rate of interest for PPF account every quarter.
2. Bank Fixed Deposits: – This is very common investment option known to everyone in India. This is one of the Best Investment Options in India if you are looking for safe investment avenues without bothering about the low rate of return. You can park your funds for any number of years without bothering about the safety.
- Bank Fixed Deposits (FDs)
- Recurring Deposits (RDs)
- Public Provident Fund (PPF)
- Sukanya Savings Deposit Scheme
- Monthly Income Plans
- Atal Pension Yojna
- Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
- Pradhan Mantri Suraksha Bima Yojana (PMSBY)
PPF and Sukanya Savings Deposit Schemes are available only in few banks. FDs, RDs & Monthly Income plans are traditional investment options available in any banks. Now, you can also avail Pension plan from banks in the form of Atal Pension Yojna. You can avail Insurance plan in the form of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & Pradhan Mantri Suraksha Bima Yojana (PMSBY).
3. Post Office Deposits: – Post offices offers a different kind of investment opportunities for Indians. Postal RDs are very well known Best Investment Option and a safe investment option.
- Monthly Income Scheme (MIS)
- Senior Citizens Savings Scheme (SrCSS)
- Term Deposits
- Recurring Deposits
- Sukanya Samriddhi Savings Deposit Scheme
- Public Provident Fund (PPF)
- Kisan Vikas Patra (KVP)
- National Savings Certificate (NSC)
These investment options are suitable for those looking for safe investment option but the interest rate is quite low. These schemes have no extra benefits like tax benefits. Sukanya Samriddhi Savings Deposit Scheme is best investment plan for child (Girl). We will cover in more detail about these schemes in coming posts.
4. Tax-Free Bonds: – The bonds which are exempt from taxation on the ‘interest income’ are called Tax-free bonds. Several state-run companies raise funds to fund the projects through Tax-Free Bonds. Among Best Investment Options in India, this is suitable for those people who are in the highest tax bracket.
5. Investment in Gold: – You can invest in gold in many forms. You buy
- Gold Bars and Coins
- Gold ETFs
- Sovereign Gold Bond Scheme 2015
Every household in India has an investment in gold in the form Jewelry. You can also gold bars and coins to invest in physical gold. It is the best way to invest in gold in the physical form rather than jewelry which will lose its value over the time. Gold ETFs (Exchange Traded Fund) are units representing physical gold which may be in paper or dematerialised form where each unit is equivalent to one gram gold. Buying gold ETFs means you are purchasing gold in an electronic form. Gold ETFs are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd. (BSE) like a stock of any company. Sovereign Gold Bond Scheme 2015 are issued by Reserve Bank on behalf of Government of India. SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.
6. Life Insurance Policies: – Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated amount of money to the nominee in exchange for a premium, upon the death of an insured person.
- Unit Linked Insurance Plans
- Pension Plans
- Money-back Plans
- Endowment Plans
- Term Plans
Unit Linked Insurance Plans (ULIPs) invest in debt and equities markets. The returns in ULIP on maturity are market linked, they do not provide fixed maturity value. ULIPs combine the benefits of life insurance policies with investment. Endowment Plans are considered as traditional insurance policy where you get fixed maturity value upon maturity. Pension plans provide income after retirement. Money-back Plans provide an option to get some return after maturity in spite of risk occurred to the policyholder.
7. Real Estate Investment: – It is a dream for every Indian citizen to have their own house. The risk of losing capital is very low if you chose right property at the right price, in other words, if you don’t overpay the property. Investing in real estate has several options like –
- Residential Property
- Commercial Property/ Rental Property
- Agriculture Land
It is a best long term investment option & one-time investment plan available in the market.
8. Equities/ Stocks: – Equities is an asset class with highest returns in the past among all other best investment options available. A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. One should learn the basics of stock market and how it works. Without proper knowledge never try to buy a stock. You will learn all the basics and advanced stuff. Learn the Fundamental Analysis and Technical Analysis. Equities are never easy, but It can create huge wealth.
9. Mutual Funds: – If you are so busy and you cannot spend the time to analyze the stocks and own a stock on your own, you can choose the Mutual Funds Option. Mutual funds are managed by experts in the field. The fund manager will manage your money by investing stocks or debt funds as per the choice of yours at some fee. All you need to do is select a fund or two to invest in from the universe of funds available in the market. I will help you to chose in the upcoming posts. This is the best investment plan for 3 years or 5 years period.
10. Corporate Bonds: – Corporate bonds are issued by the companies to raise funds by offering some interest rate on the amount deposited. The amount raised will be used for the projects or for the expansion of business. While choosing to invest in these bonds, You need to check the payment ability of the company. Usually, top rated companies offer less interest rate, companies with lower rating will offer higher interest rate. Don’t fall for the higher interest rate trap. Only chose the best company among the available.
Among these 10 Best Investment Options available in the Market, you need to choose the right option for your needs. It depends on Your Age, Financial Condition, Goals, Income stream & Time Frame (Investment Horizon). We will cover this topic in the next post.
There is no single best way of investing money in India.You can select from the numerous alternatives that are available and make it the best for you. People usually invest more in post office deposit schemes compare to bank deposits because of the collection agents available in post offices. At some places, even though banks are offering more interest rate on Recurring Deposits, people tend to deposit their monthly income in Postal RDs. This shows that we are lazy towards making right investment decisions. Stop Being Lazy!… Take some time every day to learn the investment. Choose the Best Investment Options in India. You can ask your doubts in the comments section. Thanks for Reading…