How to invest money in India: Investment Options in India

If you are an Indian having surplus money in the bank account and wish to multiply it as well. Then, here we provide you with the best investment options available for you in the market. There is always a fear in the investor’s mind. What if my investment goes wrong? If I don’t get a suitable return on investment? All your worries will vanish after you read our in-depth researched article. Explore the medium through which you can solve your doubts regarding how to invest in the Indian financial diaspora.

Investment plans for a salaried person

#1 Public Provident Fund (PPF)

It is one of the most popular Long-term Saving-cum-Investment plans. Safety, attractive Interest rate, and tax benefits attributed to its popularity. People who invest in PPF use it as a tool to build a corpus for their retirement. They put a chunk of amount regularly, over long periods (Generally for 15-year-term period maturity which can also be extended). You can invest as small as ₹500 and a maximum of ₹1, 50,000 in a year.

#2 Equity Linked Saving Schemes (ELSS)

ELSS is a type of mutual fund where the money is invested predominantly in equity and equity-related instruments to generate higher returns. The benefit of ELSS is that there is a tax exemption if your investment is up to ₹1, 50,000. This investment plan is for all those who want to reduce their tax liability and are looking for equity Investment Avenue that delivers significant returns in the long run.

#3 Tax Saving Fixed Deposit

You can invest a minimum of ₹10,000 and a maximum of ₹1, 50,000 for the tenure of 5 years. It offers attractive interest rates and tax saving options. To important things to note- 1) Interest earned is taxable 2) It only allows one-time lump-sum deposits.

For Higher Return on Investments

Return on Investments

#4 Direct Equity Investment

Investment in Equity can be highly rewarding but on a cautious side, it involves higher risks. It can be highly profitable for you if you know how to decode the financial statements of the company.

#5 Mutual funds

Mutual Funds are the pool of money managed by the Asset Management Companies (AMCs). They have Fund Managers who shoulders the responsibility of managing and monitoring a fund. Thus, the money collected from the number of investors who share a common objective is then put in stocks, bonds, debt instruments, and multiple other money market securities.

Mutual Funds can be subscribed at a low cost. You can start investing in mutual funds with as low as of ₹5,000 or ₹500 for monthly Systematic Investment Plan (SIP).

Some Short-term options

#6 Liquid Mutual Funds

Examples of highly liquidated short-term instruments are- Treasury Bills, commercial paper, certificates of deposits with a maturity period of up to 91 days. This is a good short-term investment plan for those who have idle cash at hand. But, a cause of concern would be that it offers fewer returns when compared to Fixed Deposits.

#7 Recurring Deposits

Recurring Deposits (RD) that most of the banks and NBFCs in India with the term-deposit varying from 6 months to 10 years. It provides customers with the flexibility to invest an amount of their choice per month and save some amount with ease. 5.00% – 7.85% is the interest rate which is offered by the financial institution. The rate of interest tantamount to that offered for a Fixed Deposit but is higher than any saving accounts.

Five- years plans for Investment

# 8 Sovereign Gold Bond Scheme

SGBs are substitutes for physical gold and are government securities denominated in grams of gold. On maturity, the bonds can be redeemed in cash. The Reserve Bank issues the bond on behalf of the Government of India. The minimum investment for one gram can be made with a maximum ceiling allowed for 4kg.

#9 National Savings Certificate (NSC)

National Savings Certificate (NSC) is a tax saving investment that a person can purchase from any post office by an Indian Resident. Being a fixed return and low-risk Government of India-backed investment, NSC is generally preferred by those who want to invest in fixed return instruments.

#10 Tax Saving FD

This option provides you complete capital protection with additional interest income for 5 year-lock in period at a similar rate to 5 years FD.

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