Diversifying investments is one of the first steps of effective wealth management. However, finances can be a sensitive topic for many people. While most prefer not to discuss it publicly, starting conversations on the best investment plans is crucial. It will help younger earners who don’t know their way around the financial market and is ideal for seasoned investors looking to expand their portfolios.
Investments are the best way to fight inflation and ensure financial security. Thus, every young adult must be well-versed in the different plans available on the market. So, if you look at other ways to accumulate and manage wealth effectively, we’ve got your back!
But before we start, let’s look at the two types of investments:
Long Term
These will show considerable returns over long durations. They generally carry low volatility and are ideal if you have a lower risk appetite. Long-term investments are perfect for individuals with a steady income and should be started early.
Short Term
These can reap returns in a short period. However, they carry greater volatility and are preferred by those who can afford a higher risk appetite. You can invest in short-term plans at any point, and steady income isn’t necessarily important but preferred to mitigate risk.
Now that we’ve covered that, here are 10 of the best investment plans in India that you can consider for a secure future.
- Fixed Deposits and Recurring Deposits
- These are the most popular investments in India.
- They offered minimum risk and guaranteed returns.
- They are easy investment options and require only a bank account.
- FDs are preferred for lumpsum investment. The greater the money deposited, the higher the returns.
- RDs are suitable for small deposits, encourage savings, and show long-term steady growth.
- Mutual Funds
- These are good if you want to grow your money exponentially.
- They are suitable for long-term and short-term investments.
- However, you must be careful of the market risk involved. Ensure that your mutual fund aligns with your investment preferences.
- You can also opt for monthly funds, they will allow you to grow your wealth and make systematic withdrawals.
- Monthly or systemic mutual funds are ideal if you want to reduce risk and opt for a higher ROI.
- Direct Equity
- Direct equity is a long-term investment plan.
- It allows you to buy a company’s equity shares and gain ownership.
- It gives you greater rights over the company, such as involvement in board meetings and even voting on company decisions.
- Financially, you will get access to the company’s profits according to the share percentage you hold.
- For the best equity purchase, look into the company’s history, performance, and growth potential.
- It is more fluid since you can also opt to sell your share- to a third-party investor or the company itself.
- Government Bonds
- It works like equities and allows you to invest in government bodies.
- The money you deposit is used for development and policies.
- It allows you to earn returns based on a fixed interest and guarantees safety.
- Bonds are better if you’re looking to start small. You can buy bonds at lower prices and reap a higher interest rate.
- Liquid Funds
- It is a great short-term investment, ideal for investment periods lasting 2 to 5 years.
- It allows you to invest in government bonds and securities.
- It enables you to withdraw money or liquify your assets as and when required.
- Post Office Saving Scheme
- These allow you to make deposits under India Post, and it encourages savings and guarantees returns.
- It promotes financial planning through systemic savings investments.
- It is accessible to all citizens of India regardless of their financial background.
- Unit Linked Insurance Plans (ULIP)
- It allows you to gain market returns along with a life insurance plan.
- Life insurance allows you to invest in different funds and assets, giving you life-long cover.
- It is a two-in-one policy, making it very popular among Indians.
- It also entitles you to certain tax benefits under section 80C of the Income Tax Act 1961.
- National Pension Scheme (NPS)
- It is a long-term investment plan available to all citizens of India.
- It allows you to invest your money in two accounts:
- Tier 1 account that offers tax benefits under Section 80C and Section80 CCD (1B) (mandatory)
- Tier 2 account that doesn’t offer tax benefits (optional)
- It provides flexible investment options, starting from Rs. 500/annum making it suitable for students and low-income individuals.
- It allows you to choose your investment plan: Equity, Bonds, etc.