Most investors want to accumulate their wealth in a short span of time without the risk of losing the principal amount. The idea and the pattern of investing is fast-changing and evolving. Nowadays, the investors do not have the patience to lock-in their money for a long tenure, they are looking for higher returns and can stomach the risk associated with the same. Risk and returns go hand-in-hand, the higher the returns, the higher the risk associated with it. Broadly, investment options in India can be categorised into: 1) Financial assets 2) Non-financial assets.
Stocks, Mutual funds, Public Provident Fund (PPF), bank fixed deposits (FDs) fall in the financial category, whereas investments in gold and real estate come under the non-financial assets.
Take a look at the best investment options in India:
1) Stocks: Stocks can be a great investment. But the markets are volatile and there is no guaranteed return. Equity has been able to deliver higher than inflation-adjusted returns compared to all other asset classes over long periods, equity has been able to deliver higher.
2) Mutual Funds: A mutual fund is made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers.
Equity mutual funds: The largest category is that of equity or stock funds. As the name implies, this sort of fund invests principally in stocks.
Debt mutual funds: These are suitable for investors who want steady returns. They are less volatile and, hence, considered less risky compared to equity funds. Debt mutual funds primarily invest in fixed-interest generating securities like corporate bonds, government securities.
3) National Pension System: NPS is a pension-cum-investment scheme launched by Government of India to provide old age security to Citizens of India. It brings an attractive long term saving avenue to effectively plan your retirement through a safe and regulated market-based return. The Scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA). National Pension System Trust (NPST) established by PFRDA is the registered owner of all assets under this pension system. NPS is a market-linked option, and interest rates have varied between 8%–10%.
4) Public Provident Fund: PPF is a long-term, popular investment scheme among investors. The interest payable on public provident fund scheme is determined by the Central Government of India. It aims to provide higher interest than regular accounts maintained by various commercial banks in the country. Interest rates currently payable on such accounts stands at 7.9%.
5) Bank fixed deposit (FD): A bank fixed deposit is considered to be the safest choice for investing in India, especially for senior citizens. Under the deposit insurance and credit guarantee corporation (DICGC) rules, each depositor in a bank is insured up to a maximum of Rs 5 lakh for both principal and interest amount.
6) Real Estate: The house that you live in should never be considered an asset as you are paying an EMI for it and thus it is a liability actually. Although, the second property that you buy can be your investment. Investments in real estate deliver returns in two ways – capital appreciation and rentals.
7) Gold: The yellow metal has always been a valuable asset in India. Possessing gold in the form of jewellery has its own concerns such as safety and high cost. However, for investment purposes, one can invest in gold in three different ways – physical gold, sovereign gold bonds, Gold ETFs.