Best Investment Options in India- | Finance

10 Best Investment Options 2020

1. Mutual Funds
2. Public Provident Fund
3. Bank Fixed Deposits
4. National Pension System
5. Recurring Deposits
6. Senior Citizens Saving Scheme
7. Unit Linked Insurance Plan
8. Gold ETF
9. Real Estate
10. Post Office Monthly Income Scheme

Well, as per me best investment idea is one that allows investors to accomplish their financial goals. The financial goal could be retirement, child education, marriage, buying a new house etc. For every financial goals, you need to make a plan and select an investment option as per your risk appetite.

1. Mutual Funds

Investors often end up in a dilemma when it comes to Mutual Funds. Of course, they are risky because they are market linked but higher returns cannot be overlooked. If you want to invest in markets but do not have required experience and expertise, you can opt to invest in Mutual Funds and get higher returns than many other investment options. These are market-related investments that invest money in various financial instruments such as debt, equity, stocks, money market funds, etc., wherein the returns are generated as per the market performance of the fund.

There are broadly three categories of Mutual Funds- Equity Funds, Debt Funds and Hybrid Funds each of which invest in different asset classes.

2. Public Provident Fund

Public Provident Fund (PPF) is a government backed investment plan which will help its subscribers to enjoy risk-free investments for the long-term. The interest rate on a PPF account is revised and paid by the Government every quarter. The current interest rate is 7.9%. There is a maturity period of 15 years under PPF. But, the money in your PPF account can only be partially withdrawn after a time period of 6 years. However, one can take a loan on the balance of PPF account.

Since this scheme is regulated by the Government, the principal amount as well as interest earned is completely secure. Also, PPF comes under the EEE category (Exempt-Exempt-Exempt) in which the principal amount, interest earned and maturity amount are exempted from tax. Contribution to PPF account (up to Rs 1.5 lakh per annum) is eligible for deduction under section 80C of Income Tax Act.

3. Bank Fixed Deposits

Following the traditional investment ways, Fixed Deposits are one of the most popular options available. These deposits are made with banks, with the guarantee of offering fixed returns over a fixed period of time. As per the bank guidelines, and the tenure of FD selected by the investor which varies from 7 days to 10 years. However, individuals can also choose from available tax-saver fixed deposits available for a fixed period of 5 to 10 years.

While investing in Fixed deposits, the investor has options of either making a cumulative deposit or choosing a non-cumulative deposit. In the cumulative option, the interest gets reinvested into the principal amount and is payable at the time of maturity, whereas, in the non-cumulative option, the interest is paid to the investor as per the underwriting.

4. National Pension System

Are you planning your investment for a good retirement fund but higher returns than other schemes? Here is a good option. National Pension Scheme (NPS) is a Government-backed scheme that allows its investors to invest in various market-linked instruments such as equities and debt; the final pension amount depends on returns from these investments. There is 75% to 50% equity exposure for National Pension Scheme which stabilizes the risk-return proportion for the investors.

NPS, regulated by the Pension Fund Regulatory and Development Authority of India (PFRDA), is open to all individuals between the ages of 18 and 60; the maximum age can, however, be extended to 70. The individuals can withdraw partial amounts (up to 25%) from the NPS after 3 years of opening the account.

5. Recurring Deposits

Recurring Deposits (RD) are term deposits offered by Indian Banks wherein the subscribers are allowed to make regular deposits and earn good returns. This instrument offers flexibility of investment by allowing the investors to choose the tenure on their own. Usually the tenure of a RD ranges from 1 year to 10 years. Individuals can open an RD account with their respective banks and proceed with deposits of fixed amounts every month. The interest earned is paid at the time of maturity along with the invested amount.

6. Senior Citizens Saving Scheme (SCSS)

Here is a 5 year saving scheme available for Indian Senior Citizens. Under this scheme, individuals above 60 years of age can make deposits for 5 years from the date of opening the account and earn good interest on the amount. The current rate of interest for this scheme is 8.6%. The tenure of this investment instrument can be extended by 3 years.

SCSS is offering the highest interest rate as compared to other saving schemes available in India. You can get your accounts opened through Public/Private sector banks or Indian Post Offices. Moreover, it is also counted in the list of best tax-saving schemes as the investment done under this scheme is tax-deductible under Section 80C, of the Income Tax Act, 1961 up to Rs. 1.5 lakh per annum.

7.Unit Linked Insurance Plans (ULIP)

Unlike Insurance policies, a Unit Linked Insurance Plan (ULIP) is a product offered by insurance companies that gives an investor both insurance and investment option under a single integrated plan. The investors looking for secure life plans and earning secure returns can opt to invest in ULIPs (Unit Linked Insurance Plan). Under a ULIP, the investor or policyholder can pay the premium either on a monthly or annual basis.

Similar to other insurance plans, the investors are supposed to pay an yearly premium in favor ULIP. A part of this premium is used for providing insurance cover and the rest of the amount is invested in the fund (Equity, Debt or Hybrid) chosen by the policyholder. The beneficiaries will get insurance cover or the market fund whatever is higher based on the chosen ULIP plan.

Aggressive and conservative investors can invest in either equity or debt oriented plans, respectively. While traditional insurance plans are known to offer returns of 4%-6%, Unit Linked Insurance Plans can offer you returns in double digits, specifically if invested in equity funds.

8.Gold ETF

Gold ETFs or Gold Exchange Traded Funds are instruments that function as a mix of stock and gold investments. These funds are traded on the National Stock Exchange (NSE) and can be bought and sold just like any other company stock. Gold ETFs are passive instruments based on gold prices, which make them completely transparent in terms of pricing.

While market-linked instruments are volatile in terms of risk, they tend to offer higher amounts of returns as well. Hence, the choice of financial instrument for the purpose of making investments should be made only after gaining complete information about the product and the market.

9.Real Estate

One of the fastest growing sectors in the country, the real estate sector holds huge prospects in sectors like hospitality, commercial, housing, manufacturing, and retail, etc. Retail investments are undoubtedly known to be safe investments with high returns in India. The risk involved is very low, while the chances of property prices increasing are very high. However, it is to be noted that it might get difficult to sell property quickly in case of urgent monetary requirements.

Real estate assets can be liquified as and when the investor or the owner of the property wishes to do so. Investors have the option to invest in Commercial or Residential properties or invest in Real Estate Mutual Funds to get high returns. Investments in commercial spaces such as offices or shops can not only generate higher returns but also contribute in diversifying the assets in investments

10.Post-Office Monthly Income Scheme (POMIS)

The monthly saving scheme regulated by Post Offices in India is one of the best schemes for monthly income. This is a Government backed saving scheme which allows the investors to save a specific amount every month. The maturity period of the scheme is 5 years from the date on which account is opened. Any individual who is a resident of India (not NRIs) is eligible to open a Post-office MIS account with a minimum Rs. 1,500.

Investors are free to open either POMIS account either individually or jointly. But, investors who are looking for a scheme which offers them tax-saving option cannot opt for this instrument because Post Office Monthly Income Scheme does not offer any tax rebate on the investments or maturity amount.