Most investors want to make investments that provide them with significant returns as fast as possible while minimising the danger of losing their principle. This is why many people are always on the search for great investment programmes that will allow them to quadruple their money in a matter of months or years while posing little or no risk.
Returns and risks are precisely proportionate, meaning that the greater the risk, the greater the likelihood of returns. Financial and non-financial assets are the two primary kinds of investment opportunities in India. We may further split financial assets into market-linked securities such as mutual funds, live stocks, and other market-linked securities, as well as fixed income products such as bank FDs, Public Provident Fund (PPF), bank RDs, and other fixed income products. Gold investments, real estate, treasury bills, and other non-financial assets are examples.
Buying individual equity stocks of the companies listed or unlisted on the stock exchanges is known as Direct Equity investment. You can get capital gains or dividend returns from your direct stock investments. The performance of stocks depends on factors such as market position, company’s performance, etc.
- This option is one of the most volatile investments and has a high risk-return ratio
- One of the best investment options to generate inflation-adjusted wealth
- Suitable for a long-term horizon
You need to have a bank account and Demat account to start investing. It is important for you to have a high investment risk appetite if you want to invest and benefit from stock investments consistently.
If you understand the workings of equity stocks and markets well you can invest using your research or advice from a certified broker. However, you also need the ways of managing your investment risk.
2. Bank Fixed Deposits
Fixed deposits have historically been used by Indians. Guaranteed deposits, as the name implies, guarantee investors a predictable and fixed return. Interest may be paid monthly, quarterly, or annually, depending on the bank’s policy. There are two types of FDs available: cumulative and non-cumulative. The interest component of a cumulative fixed deposit is added to the principal each cycle, compounded during the deposit’s duration, and paid at maturity.
The accumulated interest on non-cumulative fixed deposits is paid to the investor on a regular basis. This provides the investor with a consistent revenue stream. Throughout the term, the principal amount remains constant. FDs ensure financial security and are a great way to invest your contingency fund, or if you’re financial goal is less than 3 years away. In addition to banks, there are a number of NBFCs (non-banking financial companies) that also provide FD products.
3. National Pension System (NPS)
The Pension Fund Regulatory and Development Authority (PFRDA) manages the National Pension System (NPS), a long-term retirement-focused investment programme (PFRDA). For an NPS Tier-1 account to stay active, the minimum yearly contribution has been decreased from Rs 6,000 to Rs 1,000. It is made up of a variety of assets, including stocks, fixed deposits, corporate bonds, liquid funds, and government funds. You may choose how much of your money to put into stocks through NPS based on your risk appetite.
4. Unit Linked Insurance Plan (ULIP)
Unit-linked insurance plans are considered as one of the best investment options in India. The ULIP plans offer the dual benefit of insurance and investment. Besides, ULIP plans also provide the advantage that is tax exemption. ULIP plans arrive along with a lock-in period of 3 years-5 years. Under ULIP, a part of the premium is used for insurance coverage whereas the remaining premium is invested in market-linked instruments such as shares, bonds, much more.
5. Debt Mutual Funds or Bond Funds
We have seen that how investing in equity can give you the best of returns but also possess high risk. What if you do not have a high-risk appetite and do not want to take much risk? If that is the case then you can consider Debt Mutual Funds.
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 debt funds can have a varied risk profile.
Having gold in the form of jewellery comes with its own set of issues, such as security and expense. Then there are the’making charges,’ which usually range from 6 to 14 percent of the gold price (and may go as high as 25 percent in case of special designs). There is still an alternative for individuals who wish to purchase gold coins.
Gold coins are currently sold by several banks. Paper gold is another option for gold ownership. Gold ETFs may be used to invest in paper gold, which is more cost-effective. Gold is the fundamental asset in such an investment (buying and selling) on a stock market (NSE or BSE). Another way to get paper gold is to purchase Sovereign Gold Bonds.
7. Senior Citizens’ Saving Scheme (SCSS)
Senior Citizen Saving Scheme or SCSS is an investment option designed for people who are retiring or have retired. It is a government-backed investment option where you can invest in a lump sum and return get a regular income stream post-retirement.
You can open an SCSS account in 2 ways
- Via post-office
- Via Bank
SCSS is a very popular investment option for senior citizens due to its guaranteed and attractive returns. The current rate of returns is 7.4% (as per Q2 FY 2021-22). These rates are subject to change quarterly.
8. Mutual Funds
Mutual funds, one of India’s most popular investment alternatives, are an excellent long-term investment strategy that provides significant returns. It is a market-linked investment option that invests in a variety of financial products, including equities, debt, stocks, money market funds, and more. Returns are calculated based on the fund’s market performance. Even while mutual fund investments have a greater risk profile, they provide much higher returns when compared to other top investing alternatives. Mutual funds provide two primary investing options:
- Equity Mutual Funds:
- Debt Mutual Funds:
9. Real Estate
The house that you live in is for self-consumption and should never be considered as an investment. If you do not intend to live in it, the second property you buy can be your investment.
The location of the property is the single most important factor that will determine the value of your property and also the rental that it can earn. Investments in real estate deliver returns in two ways – capital appreciation and rentals. However, unlike other asset classes, real estate is highly illiquid. The other big risk is with getting the necessary regulatory approvals, which has largely been addressed after coming of the real estate regulator.
Read more about real estate.
10. RBI Bonds
The RBI Taxable Bonds have tenure of 7 years and offer an interest rate of 7.75 per annum. These bonds are furnished in Demat mode only and are accredited to the Bond Ledger Account (BLA) of the investor. The bonds are issued for Rs. 1000, and as proof of the investment, the investors get a Certificate of Holding.
With the non-cumulative option, the interest can be accessed as regular income, on the contrary, the re-invested interest is offered within the cumulative option. This makes these bonds one of the best investment options in India.