Choosing the best investment options for wealth management is an area of concern for people of all income groups. While accumulating money is crucial for a financially secure future, it does not make sense that you rely on savings alone.
Instead, opting for the top investment options in India is one way you can make your money grow over the years. Investments are often seen synonymous with the stock market or equity money. However, it is only partly true. Apart from these, some of the best investment options in India include fixed deposits, Unit Linked Insurance Plan (ULIP), Liquid funds, and government bonds.
There are several long-term and short term investment options which you can opt for, considering your goals and risk appetite. Many top investment options in India offer additional returns in the form of guaranteed additions. At the same time, it is prudent that you consider diversifying your portfolio with good investment options for maximizing returns and minimizing associated risk.
Some of the top Investment Options in India
Listed below are some of the best investment options in India:
1. Fixed Deposits
2· Mutual Funds
3· Direct Equity
4· Post Office Saving Scheme
6· National Pension Scheme (NPS)
7· Unit Linked Insurance Plans (ULIP)
8. Liquid Funds
9· Public Provident Funds (PPF)
10. Senior Citizen Savings Scheme (SCSS)
Let us look in detail at some of the best investment options available in India for growing your money:
1. Fixed Deposits (FD)
Fixed deposits are often considered amongst the safest, stable, and among the best short term investment options. You can invest in fixed deposits for the following reasons:
- To accumulate higher returns from various FD schemes
- Hassle-free renewal each year will give you compounding benefits
- Fund security
- No depreciation on the principal amount
- No market fluctuation effect
- Guaranteed returns
All these reasons make a fixed deposit one of the best investment options, which also offers guaranteed returns. If you are seeking a healthy balance between returns and safety, you can start investing in fixed deposits as soon as possible. You can also opt for a monthly basis saving option provided by most banks and other financial institutions.
2. Mutual Funds
While investment in mutual funds is subjected to market risk one should evaluate the risk before investing. If you understand the market and its risks, mutual funds can become your best investment options to grow money multifold. Whether you are going for short term investments or long term, you can create an investment portfolio based on your preferences.
If you have a lower risk appetite and want a fixed income from mutual funds, monthly systematic investment plans, or systematic withdrawal plans can be good investment options. It can also be a favourable choice if you are looking for a high return investment in India.
3. Direct Equity
One of the first things you should figure out is whether you are looking for long term or short term investments. Direct equity investing is one of the best investment options for long term purpose. It is about the equity shares of a company, which binds you in legal terms related to the company ownership.
By buying a company’s shares, you also get the right to get involved in company meetings and have your say on the company’s decisions. Also, you get the profits as distribution in proportion to your shareholding in the company.
As an investor, you must know that a company’s performance has an impact on the share price, both positive and negative. Depending on the market conditions and your risk appetite, you can also choose to give up the shares back later either to the company or a third party.
4. Post Office Saving Schemes
These are deposit avenues for investors made available by India Post, the body that controls postal chain in the nation. This investment option was once introduced to help people inculcate the habit of disciplined savings in life while also providing investment avenues to aid in financial planning.
What makes these schemes one of the best investment options is the ease of enrolment or application. You can invest in these savings schemes by visiting the nearest post office branch.
Saving schemes that fall under post office investments include:
- Post Office Savings Account
- Post Office Time Deposit Account (TD)
- 5-year Recurring Deposit Account (RD)
- Monthly Income Scheme Account (MIS), and many others
Just like individuals, companies and government bodies need fund for infrastructural development and social programs, for which they issue bonds to the public markets. The interested investors then buy the bonds to help these entities raise money.
In other words, bonds are fixed-income investment options that cover the loan made by an investor to a corporate or governmental borrower.
What makes them one of the best investment plan in India is that the terms for fixed interest payment, loan principal, and tenure are all included in the bond details. Hence, it assures you of the safety of your investment along with an additional return.
Also, bond prices are inversely proportional to the offered interest rates. It means that these price fall when interest rates increase and vice versa.
6. National Pension Scheme (NPS)
National Pension Scheme is a government-initiated investment option, which have the objective of securing the financial life of a citizen after retirement. Think of NPS as the best investment plan in India if you have minimal or no risk appetite and want to save for your retirement.
Under this scheme, you can invest in government bonds, equity, and other alternative investment options as per your preference. Not only NPS is one of the best investment options, but it is also the safest option to save and grow money for retirement. You can start investing in the National Pension Scheme starting from Rs 500, having an interest rate of ~8-10%.
Another investment option for individuals who want market linked returns along with insurance is Unit Linked Insurance Plan (ULIP). You can buy a life insurance which helps to invest in different funds and give you life cover option at the same time. ULIP has become one of the best investment plan in India.
This top investment option in India offers dual benefits of insurance and market investments, which helps you systematically grow your money. You can choose the most suitable policy tenure based on whether you prefer long term or short term investment options. Additionally, ULIP also offers tax benefits under section 80C of the Income Tax Act 1961.
8. Liquid Funds
Liquid funds are like stock market investments, wherein money is invested in government bonds and securities. Since there is no lock-in period, it allows you to withdraw money as per your requirement; thereby making it one of the best investment options in the market.
When it comes to short term investments, liquid funds are the one of the best investment options in India. You can invest in it for 3-5 years and withdraw money as per your requirement for fulfilling your short term goals. They are less subject to market risks than mutual funds, which also makes it one of the best investment options.
9. Public Provident Fund (PPF)
A government-backed investment option, Public Provident Fund, provides you risk-free returns making it one of the best investment options. The interest is revised and paid by the government every quarter.
Although the maturity period of PPF is 15 years, you can start the partial withdrawal of your money after completion of six years. However, you can also use your PPF balance as security to take loans. It falls under the EEE category of tax savings, since the principal amount, interest earned, and maturity amount – all are eligible for tax savings. Thereby PPF is one of the best investment options available. As per Section 80C of the IT Act 1961, you can avail tax deductions for your contribution towards the PPF account.
10. Senior Citizen Savings Scheme (SCSS)
It is one of the best investment options backed by the Government of India and is meant for people above 60 years of age. The amount deposited in this scheme matures after five years from the date on which the account was opened. It can also be extended for once for the next three years.
What attracts senior citizens in India to this scheme the most is the interest gained over savings. Currently, the SCSS interest rate is 7.4% as of Quarter 1 for FY 22-23, which is the highest amongst other saving schemes available in Ind Types of Investment & Their Risk Profiles
As an investor, you must make investment decisions based on your risk appetite. Based on the associated level of risk, various investment options in India are classified as follows:
|Levels of Risk Involved||Investment Options||Description|
|Low||Fixed Deposit||Assured returns with no risk to investments|
|Low||Public Provident Funds||Government-backed investment option for retirement planning|
|Medium||Balanced Mutual Funds||Holdings that are balanced between debt and equity|
|Medium||Debt Funds||Mutual funds that invest in fixed-income securities like bonds|
|High||Direct Equity||Long term investment option to get ownership rights of a company|
|High||Equity Mutual Funds||Mutual funds that invest mainly in stocks|
FAQs About Choosing the Best Investment Options in India
Q. Investing seems difficult. How to choose the best investment options?
A. To start your investment journey, you should identify your goals, i.e. whether you prefer long term or short term investment options. Then consider the level of risk you are ready to take with the amount you have.
Q. What types of investment options in India are suitable for an average person?
A. As detailed above, there are various investment options in India that you can choose to build your portfolio. What is most important is that you have a financial goal(s) associated with your investment decisions. A diversified portfolio of long term and short term investmentscan be favourable.
Q. Is it too risky to invest in stocks?
A. Stocks are high risk-high return investment options. It means that you get higher returns for the calculated risks you take while investing money. Since the returns are market-linked, it is not easy to predict the related ups and downs. So, be sure you understand the risks associated with it before investing.
Q. Why should I check my risk tolerance before investing money?
A. Risk tolerance is about how many risks you are willing to stomach. Knowing about it is crucial to choose good investment optionsas it helps you avoid financial burden, if any that may come up with your investment decisions.
Q. What do you mean by a diversified investment portfolio?
A. Having a diversified investment portfolio means investing in a wide variety of assets, and not just in any specific type. It helps protect your investments if any of the assets falters.
These, as mentioned above, are some of the top investment options available in the market, which you can opt as per your goals and risk appetite. However, there are other investment +insurance plans offered by Max Life that provide benefits for life insurance as well as guaranteed benefits on maturity. The Max Life Smart Wealth Plan is a comprehensive plan which can meet your financial goals adequately.
Q. What Are the Best Investment Options for Good Return?
A. There is no single best investment option for each individual. It depends on your financial standing, investment goals and risk appetite. There are several long term and short term investment optionsin India, which can fulfil the requirement of diverse financial profiles. You can consider the short term investments to fund goals in the near future, whereas long-term investments for milestones such as retirement.
Q. Is It Good to Choose Long Term Investment Option?
A. Choosing between long term and short term investment optionslargely depend on your risk tolerance. Long-term investing options provide stable earnings while reducing risk. So, make sure you are aware and set realistic expectations from your investment options.
Q. What Are the Risk Factors I Should Consider While Selecting Investment Options?
A. Some risk factors that you should consider while creating an investment portfolio includes market fluctuations, time horizon, personal risk tolerance, inflation risk, liquidity risk, etc. It will help you weigh good investment options aligned with your needs and choose the right long term and short term investments.
Q. What Are the Best Investment Options for Tax Saving in India?
A. Life insurance plans, PPF, Fixed Deposits, ULIPs, ELSS are some of the best investment plan in India for tax saving purpose.
Q. Where to Invest Money In 2023?
A. It is best to map your upcoming financial goals to determine long-term and short-term investment options. Then, based on your unique profile, you can build a strong and diverse portfolio that caters to your specific financial needs.
Investing in the best investment options in India is a critical step towards achieving your financial goals and securing your financial future. Whether you prefer low-risk, medium-risk, or high-risk investments, there are options to suit your risk tolerance and time horizon. Remember that diversifying your portfolio and understanding your risk tolerance are key to making informed investment decisions.
By exploring the various investment options available in India in 2023, you can build a strong and diverse investment portfolio that aligns with your unique financial needs.