While saving money is important, investing your money in the right avenues is just as important if you want to build your wealth over a period of time. When investing, it is important that you keep in mind that not all invest options give you the same returns. Thus, you can opt for any investment option that best suits your appetite for risk. In order to help you find the right investment option, we have compiled a list of the top 8 investments option that are currently available in India.
The Public Provident Fund scheme or PPF is a popular investment option, especially since it offers tax benefits. Backed by the Government of India, this scheme also provides attractive interest rates, loan facility between the 3rd and the 6th fiscal year, and a partial withdrawal facility after the 7th fiscal year, to investors. Investors can invest a minimum of Rs.500 and a maximum of Rs.1.5 lakh for every given fiscal year. Tax rebates are provided up to Rs.1.5 lakh.
Another great investment cum tax saving option is the National Savings Certificate (NSC). This scheme is catered towards salaried employees, self-employed individuals, and government employees. While there is no maximum limit for investment, tax rebate is offered up to a sum of Rs.1 lakh, under Section 80C of the Income Tax Act, 1961. The interest rate offered for the NSC is 7.8%. Another advantage of investing in an NSC is that the certificates can be kept as a collateral for loans.
Mutual funds are another investment option that can generate high returns over a period of time. The key benefit of investing in mutual fund units is that small investors can access professionally-managed portfolios that are very diverse in nature. As an investor, you can purchase mutual funds units as per the fund’s NAV (net asset value). NAVs keep fluctuating, thus enabling you to participate in the performance of the fund.
Equity shares continue to be one of the most attractive investment options, due to the potential of receiving high returns over a period of years. Equity shares are offered to investors by companies in an effort to generate capital. Investing in a company’s equity shares gives the investor voting rights. While the chances of making a profit from equity shares are quite high, you will also have to bear the risk in case of a loss.
Another popular investment option, especially in Indian households, is gold. The key benefit of investing in gold is that its value quickly increases and it offers ready liquidity. However, if you are looking to invest in gold, it’s best to invest in Gold ETFs (Exchange Traded Funds). It is advisable to purchase Gold ETFs than traditional forms of gold like jewellery and gold bars, since there are no making charges involved, no risk of adulterations, and you have the option to track your investment electronically.
Real estate, being a fast-growing sector in India, is a popular investment option among residents and NRIs. While investing in real estate can be a great way to increase your wealth, it is also necessary that you consider factors such as the locality of the investment, current market conditions, possibility of rental income, etc.
An IPO or Initial Public Offering is the first time a company offers its stock to the general public. An IPO is a way for the company to raise money and support its growth and expansion plans. However, before investing in a company’s IPO, it is essential that you do a thorough background check on the company in order to be aware of the firm’s fund management team and what the company’s plans are with the funds generated through the IPO.
ULIPs or Unit Linked Insurance Plans, being offered by life insurance firms, provide policy buyers an investment cum protection option. When you invest in a ULIP, a portion of your premium payment is invested in a fund, while the remaining premium is used to maintain your life insurance cover. The policy buyer has the option to invest in any fund that is offered by the insurance firm, based on his/her appetite for risk. In case of ULIPs, the risk is entirely borne by the policyholder. However, insurance firms also provide policyholders the option to switch their funds, in case their fund of choice is consistently under-performing.
|Type of Scheme||Minimum Annual Investment||Maximum Annual Investment||Maturity Period|
|Public Provident Fund (PPF)||Rs.500||Rs.1.5 lakh||15 years|
|National Savings Certificate (NSC)||Rs.100||No maximum limit||5/10 years|
|Mutual Funds||Rs.500||No maximum limit||Close-ended funds come with a lock-in period|
|Equity Shares||Variable||No maximum limit||Not applicable|
|Gold||Variable||No maximum limit||Not applicable|
|Real Estate||No minimum limit||No maximum limit||Not applicable|
|Initial Public Offerings (IPO)||Minimum bid lot varies based on company||As per limits specified by the company||Not applicable|
|ULIPs (Unit Linked Insurance Plans)||Varies based on insurer||Varies based on insurer||As per policy terms|