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Best Investment Options In India-Top Saving Schemes

There are numerous investment avenues in India that offer good returns. With a plethora of options to choose from, it’s quite obvious that one would not be sure of where to invest. To term a particular investment avenue as the ‘best’, we need to analyse one’s requirement and risk appetite. There are investment options that suit an individual’s goals and requirements.

There are 2 ways to make money – Work for money or let your money work for you. For an example If you put Rs. 100000 into a box and open it after 5 years, you will get the same Rs. 100000. On the other hand,  if you invest the same amount in Fixed Deposit, you will get around Rs. 133000 back after 5 years because your money was working for you. So one of the major reason of investing is to grow wealth over time.

  1. Bank Fixed Deposit (FD)
  2. Public Provident Fund (PPF)
  3. National Pension Scheme (NPS)
  4. Gold
  5. Equity-Linked Savings Scheme (ELSS)
  6. Recurring Deposit (RD)

1.Bank Fixed Deposit (FD)

Bank FDs are considered as one of the safest investment options in India as there are hardly any instances of a bank defaulting on FD. Bank FDs offer a much higher rate of interest than a regular savings bank account. Investments in 5-year tax-saving FDs are covered under Section 80C of the Income Tax Act, 1961, and investors can deduct up to Rs 1,50,000 a year by investing in this.

FDs offer a slightly higher rate of interest for senior citizens. The rate of interest varies across the investment tenure, amount, residential status (NRI or not), and bank. FDs come with a lock-in period. If you wish to withdraw within the lock-in period, then the bank would levy penalties in the form of deducting interest accrued on the investment. Apart from banks, other financial institutes also offer FDs.

2.Public Provident Fund (PPF)

PPF is a government-backed investment scheme. PPF investment has a lock-in period of 15 years. PPF is considered as one of the safest investments as sovereign guarantees back the scheme. Like bank FDs, PPFs offer a much higher rate of interest than a regular savings bank account.

3.National Pension Scheme (NPS)

NPS is another government-backed retirement scheme. The scheme is managed by the Pension Fund Regulatory and Development Authority (PFRDA). NPS is a combination of various investments such as liquid funds, fixed deposits, and corporate bonds. There are various schemes under NPS, you can choose as per your requirement. The rate of interest various across the funds.

4.Gold

Investing in gold is a traditional investment. Indians are very much fond of the yellow metal. Gold investments are made in the form of purchasing gold jewellery, coins, and bars. Apart from possessing physical gold, investments in gold can be made by investing in gold ETFs and sovereign gold bonds.

5. Equity-Linked Savings Scheme

ELSS is the only equity-linked and mutual fund scheme that is covered under Section 80C of the Income Tax Act, 1961. ELSS has the lowest lock-in period (3 years) among all Section 80C avenues. Also, ELSS offers the highest rate of returns among Section 80C options, and hence, it is one of the most popular investment options in India. It provides the twin benefit of tax deductions and wealth growth. Investing in ELSS has moderate risk.

Do you have enough time and skills to manage your own portfolio?

Do you have a great knowledge of market?

“Mutual Funds” comes into play when your answers for above questions are “NO” but you still want to invest for great returns. Mutual fund is common money collected from interested investors and invested in stocks, bonds etc by expert professionals who have sound knowledge of the market. They invest money on the behalf of investors and the profit made is shared among all the investors. Minor fee is charged for managing your investment

So, depending upon where your money experts are investing and risk involved, mutual fund can be of different types – Equity Funds, Debt Funds, Balanced Funds and Liquid funds etc. The people with higher risk appetite can go for equity funds where a minimum of 65% fund is invested in equity and equity related securities. More the risk involved, more the money you can make/loss.

On the other hand Debt/Income funds are suitable for those who want to build up wealth with moderate risk.

You can pay all the money you want to invest in one go (Lump sum) or choose an amount to pay per month(SIP-systematic investment plan).The good thing about mutual funds is that one can start with as low as 500 Rupees per month.

Apart from the investment avenues covered in this article, the other popular investment options in India are the National Savings Certificate (NSC), stock markets, and real estate.

6. Recurring Deposit (RD)

Recurring deposit is an alternative to FDs. Under RDs, individuals invest a fixed sum regularly. Like FDs, RDs too offer a much higher rate of interest than a regular savings bank account. You can furnish your RD investment as a collateral to avail secured loans.

Apart from the investment avenues covered in this article, the other popular investment options in India are the National Savings Certificate (NSC), stock markets, and real estate.

Read How To Save More Money

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