Best Investment Options in India in 2024
- Direct Equity – Stocks
- Equity Mutual Funds
- Equity Debt Funds
- National Pension Scheme (NPS)Public Provident Fund (PPF)
- Bank Fixed Deposit
- Senior Citizen Savings Scheme (SCSS)
- Unit Linked Insurance Plans
- Real Estate Investment
- RBI Bonds
- Pradhan Mantri Vaya Vandana Yojana
- Gold
- Guaranteed Saving Plans
Generally, investment plans help you attain your life goals if you choose them as per the financial plan that you have. Whether you have a short-term or long-term financial goal, consider your financial milestones and choose a plan accordingly.
Below are the top investment options in India, starting with the best investment plans:
1. Direct Equity – Stocks [H3]
Direct equity stocks are one of the best investment options for aggressive investors. Direct equity investing involves investing in listed equity stocks of companies on the stock exchanges. You can get capital gains or dividend returns from direct stock investments. Stock performance depends on factors such as market position, company performance, etc.
You need to have a bank account and a Demat account to start investing in this. Also, if you want to invest and benefit from stock investments consistently, you must have a high-risk appetite. Understand the functioning of equity stocks and markets before you start investing.
2. Equity Mutual Funds
Equity mutual funds are primarily invested in equity stocks and related securities. These are some of the best investment plans in India for small investors who want to benefit from equity market growth. You can start investing in well-diversified portfolios of equity stocks with as little as Rs 500 through equity mutual funds.
These funds can invest anywhere between 70 to 95% of the fund value in equity stocks and related instruments. Since these are equity-based, they offer a high risk-return ratio. Typically, there are two types of equity mutual funds:
Actively Managed Mutual Funds
The fund manager is actively involved in these types of funds. The fund manager's expertise and capability play an important role in the fund's performance. They choose the stocks that the fund will invest in based on research and analysis. Active funds are considered riskier than passive investment options.
Passively Managed Mutual Funds
In this type of fund, the fund manager doesn’t play a major role. The fund is based on a particular index or market portfolio. For example, a fund that is built up of stocks of NIFTY50, etc. The performance of the index determines the performance of this fund.
Debt mutual funds or bond funds are investment options to consider if you do not have a high-risk appetite or want to avoid volatility. These are also a diversified portfolio of fixed-income securities.
In Debt Funds, the amount is invested in fixed-income securities, including government and corporate bonds, debentures and other long-term fixed-income securities. Depending on the type of securities held in the portfolio, funds can have a varied risk profile. You should check the ratings of the securities held by the fund to assess the risk before investing.
Funds with top-rated securities or government bonds are suitable if you want the stability of returns with less risk. Thus, you can consider debt funds when:
Note that the risk of changing interest rates will still be present in all debt funds.
National Pension Scheme (NPS)
The National Pension System is one of the government-backed investment plans designed to help you secure your retirement financially. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
This helps you to create a strong retirement corpus at your disposal. You can use the NPS retirement account as a salaried or self-employed investor.
There are two types of NPS accounts
The primary difference between NPS and other provident fund investments is that NPS allows you to build your corpus aggressively. It follows an auto-rebalancing method to maintain a portfolio with a declining risk as you age. Additionally, you can avail of a deduction of up to Rs 2 lakhs for your contribution.
The risk-return on NPS investment will depend on the portfolio mix you choose and the length of time you stay invested. Thus, this retirement investment option works well for both risk-averse and aggressive investors.
5. Public Provident Fund (PPF)
PPF is one of the most popular and best investment plans for people considering putting their money into safe investment options. The 15-year plan is the best investment plan to achieve your long-term life goals safely. Originally introduced as a safe retirement investment plan for self-employed, the plan has been popular for long-term investors because it provides:
Know more about the Public Provident Fund.
6. Bank Fixed Deposit
Bank fixed deposit is another popular investment option in India that ensures the safety of your money and provides stable returns. You can invest a lump sum amount and it will offer a fixed rate of interest for a specific term. After your term is over, you will receive the principal with compound interest added over the term.
Consider the following things while investing in a bank fixed deposit:
7. Senior Citizen Savings Scheme (SCSS)
Senior Citizen Saving Scheme or SCSS is one of the best investment plans, which help investors fulfil their retirement goals as it helps generate a stable income. It is one of the small saving investment options and you can invest a lump sum in this scheme after turning 60. You will receive a fixed interest payout every quarter.
You can open an SCSS account in 2 ways:
It is a very popular investment option for senior citizens due to its guaranteed and attractive returns. The current rate of returns is 7.6% (Q3 FY 2022-23). These rates are subject to change quarterly.
Here are some features of SCSS you should know:
8. Unit Linked Insurance Plans
A Unit Linked Insurance Plan (ULIP) can be considered as an investment option as it provides insurance along with an avenue for investment. A part of the premium paid by the policyholder goes toward the life cover, and the other part goes towards the funds chosen by the policyholder. This life insurance plan offers market-linked returns, and hence, an investor should weigh in both the pros and cons of the plan before investing in it.
Canara HSBC Life Insurance Invest 4G is a ULIP that offers life cover and market-linked returns. It has 8 fund options to choose from, with a partial withdrawal option.
9. Real Estate Investment
Real estate is a good investment option in India. It is, however, usually a big-ticket investment. The investment refers to buying properties such as homes, plots and land. This is one of the best investment options that can help you combat inflation. Investing in this can give you a shot at both regular and capital gain income.
You can put the building you have purchased for rent and earn a secondary income. This will ensure that you get monthly rent in the form of returns. If your property has appreciated, then you can sell it for a higher price and can get a capital gain.
There is a famous saying that there are three things important in real estate: ‘location, location, location’. This is the predominant factor that decides the success of your real estate investment.
Although real estate in a good location may be expensive, it can also fetch a higher rent and have better chances of appreciation.
10. RBI Bonds
RBI Bonds are one of the safest investment options in India. The Reserve Bank of India, i.e., RBI issues bonds to the public to raise money for the development of various government projects. These bonds have a specific term. After maturity, money is returned along with the interest generated.
You can buy these bonds from any of the 12 national chains along with 4 private banks. To acknowledge your debt, RBI will issue you a certificate of holding. This certificate will act as proof upon maturity.
These have a tenure of 7 years.
These can be cumulative, where the interest is reinvested, and non-cumulative, where you can receive the interest as a regular income.
The current interest rate is 7.75%** per annum. This is as per the Floating Rate Savings Bonds, 2020 (Taxable) scheme which started on July 01, 2020.
11. Pradhan Mantri Vaya Vandana Yojana
Pradhan Mantri Vaya Vandana Yojana (PMVVY) is one of the investment options available for the financial safety of senior citizens, i.e., those who are 60 and above. It helps you with a regular income stream after the age of 60.
It also offers interest of 7.4% per annum but it has longer validity. This is the ongoing interest rate that is available till March 31, 2023.
Here are some features of PMVVY for which you may consider this investment option:
12. Gold
In India, Gold is often seen as a go-to investment option to keep a family’s legacy safe. But rising costs and making charges have now made it almost impossible to buy gold as a family heirloom.
Instead, investment options like Gold ETFs allow you to build gold purchasing power gradually over time. These are commonly known as ‘paper gold’. It contains gold stocks and investments. Unlike expensive gold, these can be brought according to your capacity from the stock market.
Since this is an ETF, i.e., Exchange Traded Fund, this is managed passively. It mirrors the physical gold price movement of the same quality. The higher the gold rates, the higher the ETF’s NAV will grow.
Thus, if you invest a small sum regularly in SIP mode, you can accumulate more units at lower prices.
Since traded on the stock exchanges, these are volatile and possess more risk.
These are liquid and you can enter and exit from them as per your preference.
Research the stocks carefully before you decide to buy.
13. Guaranteed Saving Plans
Guaranteed savings or income plans offer life cover along with guaranteed returns to help you achieve the milestones of life easily. For example, Canara HSBC Life Insurance iSelect Guaranteed Future Plus is a life insurance cum savings plan that allows you to build a corpus over a period of time (as chosen by you), to help you attain your goals.
The returns are guaranteed based on the investment period and the number of annual contributions that you make.
