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investment options in india

Top 9 Investment Options in India

What is investment? Investment means invest your money in owning an asset or item which will generate income in future by increase in value of asset or item. We have lot of options to invest our money in India.

“Rule #1: Don’t lose money. Rule #2: Don’t forget Rule #1.” – Warren Buffett

For any investment to be done, you need to understand your goal behind investment. Like, for what reason you want your money to be increased like child’s education, retirement planning, buying property, etc.

Before taking decision where you want to invest your money, you should consider few factors like:

  • Time Horizon: in how many days you want your investment to be appreciated,
  • ROI: return on investment,
  • Risk appetite: risk of losing principal money (the money which you are going to invest)
  • Age factor: age matters as at young age a person can take risk but at older age risk taking capacity changes.

Investors want large return in shorter period without risk of losing principal money. But high return and low risk combination is very tough. More the risk, you can expect more return. Less the risk, less return is earned.

Read also: A Beginners Guide to Systematic Investment Plan

Below is the list of top best investment options available in India:

  1. Stocks: Buy share of a company. It means you are buying a small piece of company which will give you share in company’s earning. But its not easy to choose which stock you want to purchase. You need to have knowledge before investing. It is risky as if the value of share goes down and you sell your share, you can lose your money. Stocks can give you higher return if you keep it over long period of time.
  2. Mutual Fund: When you don’t have knowledge of share market then mutual fund is a good option. Mutual Fund takes money from different people and invest that money. And when Mutual Fund earns money on investment, it is distributed among all investors.
    There are three main types of mutual funds:
    • Equity Mutual Fund where money is invested in equities (stocks), it gives more return, but risk is also high
    • Debt Mutual Fund where money is invested in corporate bonds, government securities, treasury bills. It gives less return and risk is lower too. This option is good when you want monthly income.
    • Hybrid Mutual Fund: This type of mutual fund invests in both equity and debt. This option is good for investors who are looking for growth and regular income. Performance of mutual fund depends upon fund manager’s decisions of selecting equities for investing money. There are variety of mutual funds present in market.
  3. Public Provident Fund (PPF): Also known as savings-cum-tax savings investment. PPF is long term investment scheme with a lock-in period of 15 years. PPF helps to build a retirement corpus while saving on annual taxes. Anyone looking for a safe investment option to save taxes and earn guaranteed returns should invest in PPF. It is safe option of investment as it pays a high and steady rate of interest which are reviewed by government quarterly.
  4. Fixed Deposits (FD): Fixed Deposit is provided by banks or NBFCs which gives higher rate of interest until the given maturity date as compared to normal saving account. FD is a safer option as compared to investing in equities or mutual fund. By investing in Fixed Deposits (FD), you can get assured returns at fixed interval of time. It is one of the most preferred option in India. You have to pay penalty as lower interest rate for premature withdrawal.
  5. Senior Citizen Saving Scheme (SCSS): SCSS is a great investment option for individual who is 60 years and above. SCSS is available through Public and Private sector banks and India Post Offices. Under Senior Citizen Saving Scheme, deposit matures after 5 years and can be extended more by 3 years. Minimum investment limit is Rs 1000, and upper investment limit is Rs 15 lakhs.
  6. Real Estate: Buying a property is also a good investment option in two ways. First, capital appreciation (increase in the market price of an investment) and second, you can earn rental income on it.
    Location of the property plays an important role in earning returns on it. If location is good, then value of property appreciates, and you earn a good rental income. But also, you need more money to buy property in good location. If you buy a property in area which is in development stage, then you can earn a good money once the area is fully developed.
  7. Gold: Owning a gold is risky as you have to keep it at safe place. Gold jewelry needs making charges to be paid so buying gold coin is a good option when you think of investment.
    Gold ETF, or Gold Exchange Traded Fund is also a good option. Your gold investment is on paper. Gold ETFs are traded on stock exchange.
  8. National Pension Scheme (NPS): This pension scheme is initiated by government. NPS is voluntary and open to every Indian citizen, Investors invest in NPS at regular intervals. Investor can choose investment option from equities, government securities, and corporate bonds.
    Investor can take out certain amount after retirement and remaining amount will be received as monthly pension. NPS offers returns that are much higher than the traditional tax saving schemes like PPF.
  9. Systematic Investment Plan (SIP): SIP is a smart option when an investor wants to invest certain amount on regular basis. The chosen amount will be automatically debited from the investors linked account quarterly or monthly or weekly. This money is invested in certain mutual fund. SIP helps investor in saving money.

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We read about investment, 9 wise investment options available in India. Selection of correct option depends upon investor’s financial goals, time horizon, risk appetite. Instead of investing whole capital in one option, its always better to invest in multiple options. So, risk is divided. Take expert’s advice who stays updated with day to day market. Contact b4investing for advice.

Post Author: ashwini

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