There are various types of investment avenues offering good returns in India. With numerous options to choose from, people get confused while finding the best investment options for themselves. You should analyse your requirements and risk appetite before choosing investment plan. There are several governments backed safe investment options in India that you can opt for.
Which Investment Options are the Best for You?
Fixed Deposits (FD)
Many people wonder what are the best investment options in India? Bank fixed deposits can be considered as one of the most preferred investment options. There are hardly any chances for a bank to default on its FD. Moreover, they offer higher interest rate when compared to a savings account. Investments in FDs for 5 years also gets covered for tax deductions under section 80c. Currently, according to the Income Tax Act 1961 investors get a chance of deduction of up to Rs 1,50,000 a year for the FD. Senior citizens get a slightly high rate of interest. The fixed deposits also come with lock in period. Withdrawing amount in that period would result in penalties. There are several financial institutes offering FD apart from the banks.
Important features of FD:
- They offer assured returns
- They best suit investors who are averse of taking risk
- Partial withdrawal is available
- You can also get loan against this balance
Public Provident Fund (PPF)
Generally, people nearing retirement worry a lot about investments. Which investment is best for them? PPF scheme has government backup. The scheme has a lock-in period of 15 years. It can be considered as a safe investment and it has sovereign guarantees backing it. Similar to a Bank FD, PPF also provides high interest rate of 7.1 % P.A.
Important features of PPF:
- The scheme best suits for term financial goals as it comes with an extended lock in period
- The scheme is not linked to the markets. So, the returns are assured over time
- After maturity you can redeem the entire Corpus or extend for a block period of 5 years
National Pension Scheme (NPS)
National pension scheme is another retirement scheme which has government backup. Pension Fund Regulatory and Development Authority PFRDA manages the scheme. It is a combination of different Investments like fixed deposits liquid funds and corporate bonds. There are numerous schemes under NPS from which one can choose according to the necessity. The interest rate changes depending on the funds.
Important features of NPS:
- This scheme is open for all employees working in all sectors (except those in the Armed Forces)
- One can avail tax exemption of up to Rs 1.5 lakhs a year on contribution made to NPS according Sec 80C to Income Tax Act. However, tax laws are subject to change from time to time.
- One can choose active or auto way to manage the portfolio to determine one’s say and control in the choice of asset allocation and funds
Gold can be considered as traditional investment. Almost all Indians are fond of this yellow metal. Most of the gold investment are done in the form of jewellery bars and coins. You can also go ahead with sovereign gold bonds and gold ETFs (Exchange Traded Funds) apart from purchasing physical gold.
Important features of Gold:
- Gold Investments provide way to hedge against the inflation
- Gold price is generally inversely proportional to the stock markets
- Gold prices will not fall significantly, hence it provides protection for your capital
Unit Link Insurance Plan (ULIP)
In this scheme, the benefits of saving are combined with protection within a single plan. A percentage of premium amount goes towards the insurance whereas rest of the amount gets invested in bonds, stocks or Mutual Fund.
Important features of ULIP:
- Scheme provides flexible investment choices. Investors can decide depending on their financial goals, market expertise and risk appetite.
- The scheme provides absolute clarity including all the charges, estimated return rate and other information prior to the Purchase.
- The scheme also provides tax exemptions against the premiums paid under section 80c. However, one must note that tax laws are subject to change.
Which investment is best? The answer totally depends on one’s needs and goals. There are several investment ideas in India. Perform proper research before deciding on the right investment option.
Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.