When we talk about the best investment plans in India, there are multiple investment optionsVaranasi Stock. But the question is which investment plan is suitable for you. One way to select the best investment plans for your portfolio is to divide your financial goals into 3 buckets: long-term, medium-term, and short-term. Doing so will give you an idea about the time you have in your hand to achieve the goal. After this, you can choose among the available options as per your risk appetite and individual goal.
This blog will look at some of the best investment options in India that fit into these 3 buckets, i.e., long-term, medium-term, and short-term.
An investment plan is like a roadmap for your financial journey. It helps you decide why, where to invest, and how much to invest so that you can achieve your financial goals. These goals can be buying a or rent a house or car, children’s education or marriage or retirement planning.
There are multiple high return investment options in India, such as equity, mutual funds, fixed deposits, bonds, etcSurat Wealth Management. So, it is mandatory to analyze the pros and cons of these investments and select the one that best fits your requirements while making an investment plan.
An investment plan should be tailored to your objectives and risk tolerance. Making an investment plan is not a one-time process, you should regularly revisit and adjust your investment.
Investment types in India can be classified into high, low, and medium-risk options based on the level of risk and potential returns. Let’s understand each type of investment in detail:
Low-risk investments are those types of investments that possess a very minimal level of risk, or zero level of risk. They offer stable returns, which are typically the guaranteed return on the investment. These types of investments are suitable for risk-averse investors looking to earn guaranteed returns. Some examples of low-risk investments are Fixed deposits, Public Provident Fund, Sukanya Samridhi Yojana, etc.
Medium-risk investments are those types of investments that are slightly riskier than low-risk investments. These investments seek to produce decent returns while assuming a moderate level of risk. They are appropriate for investors seeking a portfolio that balances growth and stability. Some examples of medium-risk investments are Debt funds, Corporate Bonds, Government Bonds, etc.
High-risk investments are generally market-linked investments that carry higher levels of risk. These types of investments seek to give higher returns in future, that too with significant volatility and uncertainty. They are suitable for investors willing to take higher risks and want to earn a return from market fluctuations. Some examples of high-risk investments are stocks, mutual funds, Unit Linked Insurance Plans, etc.
Long-term goals are the ones that you want to achieve in the next 7-10 years. It includes volatile investment options that can deliver high returns over the long term. Here are some of the best investments for the long term in India:
One of the best ways to create wealth for your long-term goals is to invest in equities. There are many examples of stocks that have multiplied investors’ wealth over time. For example, the Indian non-banking financial company Bajaj Finance has delivered an annualized return of over 44.1% in the last 15 years.
Equity Mutual Funds primarily invest in stocks. But they don’t concentrate your money on just 1 or 2 stocks. These funds diversify your investments across multiple stocks. More importantly, professional fund managers run these funds. So they invest your money only after adequate research. As a result, it increases your chances of earning good returns over the long term.
Here are some popular Equity Funds categories and their long-term performance.
*Data as of 8 Jan 2024
Calculate your mutual fund returns though Mutual Fund Calculator.
The National Pension System (NPS) is a long-term retirement-focused investment product. It mixes assets like equities, government, and corporate bonds. You can decide how much of your money can be invested in different asset classes based on your risk appetite.
Calculate your NPS withdrawal amount after retirement through NPS Calculator.
A Unit-Linked Insurance Plan (ULIP) combines life insurance and investment. A part of your premium is invested in asset classes like equity and bonds to generate wealth over the long term. Another part of your premium goes towards a life insurance cover.
It is certainly one of the most popular investment options among Indians. Nevertheless, while property investments have delivered stunning returns in the past, it has its own set of risks and limitations.
One of the major risks with real estate is that you may be unable to liquidate it quickly. And in a rush to sell the property, you may have to sell at a deep discount.
PPF is a government-guaranteed scheme offering a guaranteed interest rate. It is the most popular long-term saving option scheme for retirement purposes; however, it can also be used for other purposes.
Calculate your PPF maturity amount through PPF Calculator Online.
Senior Citizens Savings Scheme is the post office saving exclusively for senior citizens. The main objective of this scheme is to provide regular income to senior citizens after retirement.
Sukanya Samriddhi Account is a government backed saving scheme which offers you a guaranteed return on your investment. This scheme was launched under the initiative of Beti Bachao Beti Padhao Abhiyan, with the objective of promoting girl child welfare and education.
Calculate the return of your investment in Sukanya Samriddhi Account after maturity of the scheme through SSY Calculator.
Kisan Vikas Patra is another small saving scheme backed by the government of India that offers a guaranteed return on your investments. This scheme aims to promote long-term investing, specifically in rural areas. Here are some of the features of this scheme:
Sovereign Gold Bonds are issued by the Reserve Bank of India (RBI) on a regular basis. It is an alternative to physical gold investment. Although the returns are linked to the price of gold and guaranteed by the Government of India, no physical gold is held as an underlying asset.
These are the debt securities that are issued by the government of India to raise funds for various purposes such as infrastructure development, financial budget deficits, etc. It is considered the safest investment option, as the government backs it.
Medium-term goals are those goals that are 3-5 years away, which can be saving for your wedding, a downpayment on a house, house renovation, etcJaipur Wealth Management. It includes investment options that can beat inflation by a decent margin with less volatility. Here are some of the best investment options in India for the short term:Surat Stock
National Savings Certificate or NSC is a post office savings product backed by the government of India. It works like a 5-year FD. It offers you guaranteed interest, but the entire amount is payable only at maturity.
Like banks, post offices also offer FDs. Known as National Savings Time Deposit, these investment options allow you to deposit your money for short-medium time periods. The advantage of National Savings Time Deposit is that they offer better returns than banks.
There are three Debt Mutual Fund categories that hit the sweet spot between risk and return for a medium-term goal. These three Debt Mutual Fund categories are Banking & PSU Funds, Corporate Bond Funds, and Short Duration Funds.
These types of mutual funds invest in more than one asset class. The most popular combination of asset classes these funds use is Equity and Debt. But some Hybrid Funds also invest in Gold or even Real estate. The advantage of these funds is that you can enjoy the growth potential of equity and the stability of debt in a single fund.
Short-term goals are those goals that are 1-3 years away, which can be saving for your vacations, buying a car, etc. It includes investment options that can minimise the risk to the capital invested and are easily accessible. Examples of short-term investments include:
Fixed deposit is one of India’s most popular investment options, offering guaranteed returns. The way FDs work is quite simple. You deposit your money in the bank, which assures you a certain return on your principal investment at the end of the tenure.
Calculate FD Maturity Amount through Online FD Calculator.
Debt funds are the type of mutual funds that invest in debt-related securities such as commercial paper, government bonds, corporate bonds, etc. These are very low-risk investment options and can quickly be easily converted into cash. Liquid Funds, Ultra-Short Duration Funds, and Money Market Funds are the 3 Debt Fund categories that fit well in your short-term investment basket.
‘Earn’ is a peer-to-peer (P2P) lending investment product offered by ET Money. It is powered by LiquiLoans, a P2P NBFC regulated by the RBI. It offers you a regular interest payout on your investment, which can be either monthly or at maturity, depending on your selected option.
Identifying the best investment plan that will help you to achieve your financial goals necessitates considerable analysis and research. Here are the steps to help you find the best investment plan:
Choosing the best investment plan in India requires careful consideration of multiple factors, including your financial goals, risk tolerance, investment horizon, and current financial situation. Here are some of the key factors to consider:Indore Investment
One of the most important factors to consider is your financial goals for which you are investing. It can be buying a car, children’s education or marriage, buying a house, or retirement planning. Based on the goal, you should select the investment option that helps you achieve that goal.
It refers to the risk you are willing to take while investing. Your risk-taking capacity determines which investment option is suitable for you. If you are willing to take a higher risk, you can choose to invest in market-linked investments, while if you do not want to take a higher risk, you can choose to invest in the government-guaranteed scheme.
Before selecting the investment, you should also consider the past performance of the investment and compare it with the alternative investment options. For example, if you want to invest in mutual funds, you can check the past returns of the funds and compare them with the benchmark.
Many investment options come with a mandatory lock-in period. It means you cannot redeem or withdraw your investment till the specified period expires. For example, in the case of ELSS funds, the lock-in period is 3 years, so you can not withdraw your investment before 3 years. You should also consider the lock-in period of investment and select one that fits your requirements.
There are certain expenses attached to the investment, which can reduce your return, such as expense ratio, exit load, brokerage fees, management fees, etc. Hence, you should also consider these expenses.
Nevertheless, the price of gold usually rises when people look to invest in safe-haven assets amid a crisis. So they are a good hedge against inflation or equities.
Generally, to invest in any investment avenues in India, you have to provide some mandatory documents such as KYC documents, bank details, Form 16 etc. However, it varies from investment to investment. The following table shows the required documents for some of the popular investment options:
You need to have income Proof, Address Proof, Age Proof, and identity Proof. The following table shows the acceptable documents:
Until now, we have discussed the multiple investment avenues available to you, but how can you choose the best investment option for you?
The answer to this question varies from individual to individual, as everyone has their own set of goals and risk tolerance. Here are some of the investment options based on certain factors.
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