It is a known fact that Indians save more than they spend. However, returns are almost always associated with risk.
The higher the risk, the better the chances of gravity-defying returns.
This article gives you information about the top-10 investment options for Indians.
The list starts with low-risk financial instruments and gradually moves to high-risk ones.
The 10 Best Investment Options for Indians
- Fixed Deposit
Fixed deposit, a.k.a. FD, is the most popular investment instrument in India. Corporate housing finance companies like PNB Housing offer the best fixed deposit rates in India.
FDs offer guaranteed returns, which help investors plan for the future. You can invest for any duration between one year and ten years. Also, you can choose between cumulative and non-cumulative deposits depending on your financial objective.
- Equity Mutual Fund
Equity mutual fund is the best financial instrument for those willing to earn higher returns from the capital markets without investing in direct equity.
However, unlike FD, the returns are never assured. Sometimes, the returns may be much better than the best fixed deposit rates in India, while at other times, it may fetch you negative returns.
- Debt Mutual Fund
Debt mutual funds invest in company bonds, debentures, sovereign bonds, treasury bills, etc.
The returns from debt mutual funds vary widely. If you are lucky enough to find the best debt mutual fund, your capital may grow faster. However, the past performance of a mutual fund might not indicate its future performance accurately.
- Stock Investment
To invest in stocks, you will need to open a Demit account and a trading account.
Unlike FD, you may have to pay a maintenance fee every year for maintaining the accounts.
Moreover, every time you trade, the brokerage house and the government will deduct a fee.
However, if you know the market and the economy front and center, nothing can beat the returns from direct equity investments.
- Post Office Schemes
India Post offers several small savings schemes for Indian citizens. They include the Monthly Income Scheme, Time Deposit, Senior Citizen Saving Scheme, Recurring Deposit, etc. Some schemes like SCSS and MIS have a fixed maturity term of five years.
The interest rate of Post Office schemes like MIS and Time Deposit is lesser than PNB Housing FDs.
PPF or Public Provident Fund is available to all Indian citizens above 18 years. The account enables you to claim a tax deduction of up to INR 1.5 lakh in a financial year. PPF has a lock-in period of 15 years, and you can invest up to INR 1.5 every year.
ULIP or Unit Linked Insurance Plan is quite popular among investors. It is not uncommon to find an investor investing in both FDs and ULIP. ULIP combines insurance and the capital markets and tries to maximize the returns. You can also get tax benefits under Section 80C of the Income Tax Act.
- National Pension Scheme (NPS)
NPS is a government-backed pension scheme for retirement planning. The scheme is open to all Indian citizens above the age of 18. Unlike FD, the returns are not entirely guaranteed, as a part of your savings is invested in equities.
Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a scheme for Indian citizens aged 60 and above. Presently, only LIC offers the scheme and has a lock-in period of ten years. Unlike FD, you cannot close the account prematurely.
Gold is a traditional investment instrument in India. You may invest in Sovereign Gold Bonds, Gold ETFs, or mutual funds that invest in gold. However, unlike an FD, the returns from your investment in gold is never guaranteed.
As an intelligent investor, you should diversify your investment across various asset classes. Try investing a significant corpus in a fixed return financial instrument like FD.
Also, choose a financial institution that offers the best fixed deposit interest rates to fulfil your financial goals faster.