Best investment options available in India

Mutual Funds:

Mutual funds are another form of investment that generates higher income over a period of time. It's a common pool of money where multiple investors invest in equities, bonds, and other market instruments. As an investor, you can buy mutual fund units in any particular scheme and these units can be cashed based on the fund's Net Asset Value (NAV). Mutual fund schemes other than close-ended and Equity Linked Saving Scheme (ELSS)

Equity Shares:

Equities are the chief source of funding for any company that allows voting rights and claims to investors on assets. In equities, the shares are expressed in terms of face value, issue price, market value, etc. If you invest in equities, you have high chances of making a return which is twice or thrice as high as your capital. But at the same time, the risk factor associated to equities is high as well.

Real Estate:

Buying and reselling land and buildings is often considered a safe bet by investors in India. It's a great investment option that is certain to gain value with time. You can use real estate as a part of your overall wealth building strategy if you have a fairly good sum to invest in. But when you buy property with the sole purpose of investing, make sure you consider all the related charges and the way you rent it out or resell.

Gold Exchange Traded Funds (ETF):

Gold ETFs offer greater transparency and it is well suited for beginners and small investors. ETFs are considered better than traditional forms for gold investment chiefly because of the following reasons:

1. You need not worry about adulteration or impurities
2. It's held in electronic format
3. You can track your investments real time
4. Offers great liquidity

Post Office Schemes:

If you are looking for an investment avenue with short locking period, then post office schemes are the best option to go for. The monthly income scheme of the Indian postal service is considered one of the safest options to park your funds as it offers higher returns without any form of risk. It offers returns in the form of fixed monthly income, at the rate of 8.5% per annum.

Unit Linked Insurance Plan (ULIP):

ULIP is a financial instrument which facilitates investments in equities and bonds while offering protection at the same time. It an integrated plan in which one portion of the investments are apportioned towards stocks and bonds as chosen by the individual and the remaining is maintained as a life insurance cover. Just like mutual funds, ULIPs too have a risk element attached to it. However, the risk is higher in equity investments than debt investments.

Initial Public Offerings (IPO):

Initial Public Offerings, also known as stock market launch are types of offerings by newly launched companies where they invite public to buy their shares without listing on stock exchange. Since it is the first time the company is opening investments to public, it is known as initial public offering. Companies initially issue their shares at a low rate, but when they get listed on Stock Exchange the prices go up. So, if you have a knack for investments, then IPO is worth your money.

Fixed Deposits and Recurring Deposits

Fixed Deposits (FD) and Recurring Deposits (RD) are the popular investment among other investors specifically those who are looking for guaranteed returns with minimal risk. RD and FD accounts can also be opened easily with popular banks, Non-Banking Financial Companies (NBFCs), and post office. The following are the key features of FD and RD:

1.  It provides assured returns.

1.  It comes with easy and simple renewal and withdrawal facility.

1. There is no risk involved.

1. The investors can avail loan against FD in case of emergency.

National Pension Scheme (NPS)

Initially, the National Pension Scheme or NPS was launched to replace the Central and State Government schemes. However, from 1 May 2009, the NPS was made available for general citizens as well. NPS investments can be done into two accounts: Tier 1 account and Tier 2 account. According to the new rules, the NPS Tier account holders will get tax benefits. On the other hand, the tier 2 account does not provide any tax benefits and it is optional. The investors can invest the amount as low as Rs.500 per annul. You will get carious investment options such as debit, equity, and government bonds. However, it does not provide any guaranteed returns because they invest in market linked instruments.

Liquid Funds

Liquid funds are basically the investments done in stock market where the funds are invested in securities and government bonds. Liquid funds does not have lock in period, so the investors have the right to withdraw the money anytime based on their requirement. This is the reason, it is known as the best investment option in the market.  In case you are looking for short time investment, liquid funds are the ideal option for you. You can invest in stock for three to five years and withdraw it accordingly.

Senior Citizen Savings Scheme (SCSS)

Senior Citizen Savings Scheme is backed by the Indian Government and it is introduced for the people above 60 years of age. The amount that is deposited by the investors will mature after five years. However, it can also be extended for the next three years. Currently, it is one of the most popular investment schemes as it provides higher interest rate of 7.4%.

Comparison Table:

Comparison Chart for Various Investment Options in India 

The table below highlights the risk level for various investment options in India:

Investment options for Long term

The following are the investment options for Long Term:

1. Direct Equity: Direct Equity investments are those investment instruments that are ideal for aggressive investors and allow them to invest in listed equity stocks of companies on the stock exchanges. This is one of the most volatile investment options with a high risk-return ratio that is ideal for long term horizon and helps to generate inflation-adjusted wealth.
2. Real Estate: One of the most popular investment options among the Indians that has a record of offering high returns in the past. It is effective in combating inflation and is a great source of secondary income. Though it is one of the most useful options, the predominant factor that decides the success rate is the location of the property.  
3. Small Saving Schemes Like PPF: One of the most popular and safe investment options that allows beneficiaries to achieve long-term financial goals with 15-year plan is the best investment plan. This is a safe-investment option for self-employed individuals that offers tax benefits, low risk factor, high liquidity, and extensive investment period.
4. Gold: This is one of the go-to investment options among most Indian families. But with the rising price of the yellow metal, people prefer investing in other forms of gold such as ‘paper gold’ which is Gold ETF (Exchange Traded Fund). The ETF NAV (Net Asset Value) goes higher once the price of gold rate goes up.
5. ULIPs: A Unit Linked Insurance Plan (ULIP) is an investment option that comes with insurance and investment avenue. This investment instrument offers market-linked returns, where one part of the premium goes to life cover and the other to the funds chosen by the policyholder.
6. NPS (National Pension System): One of the government backed investment plans regulated by Pension Fund Regulatory and Development Authority (PFRDA) that helps securing your retirement financially.
7. Equity Mutual Funds: One of the best investment options for small investors and allows them to invest in equity stocks and related securities. Investors can invest as little as Rs 500 through equity mutual funds and offer a high risk-return ratio.

Investment Options for Medium term

The following are the investment options for Medium Term:

1. Post Office Time Deposit: National Savings Time Deposit are the time deposit scheme offered by the Post Offices that enables investors to invest in these schemes for short-medium term. These schemes are beneficial as they provide higher returns than banks and have no additional risk factors as these are backed by the government.

1.  Hybrid Funds: Hybrid funds invest in more than one asset class, thereby offering the stability of debt funds and potential growth rate of the equity funds.

1. Debt Funds: There are sixteen different types of debt funds that have varying risk factors and rates of return. Out of which three of these funds are balances between the risk level and return for medium-term financial goal, such as Corporate Bond Funds, Short Duration Fund, and Banking and PSU Funds.

1.  National Savings Certificates (NSC): This is a government backed savings product offered by Post Office that matures in five years and provides interest at a rate of 7.00%. The entire amount is payable only at maturity and comes with lock-in period and subdued returns compared to other funds, such as Hybrid or Debt Funds.

How to find the best investment plan?

The following are the ways to find the best investment plan:

1. Determine your financial goal: Financial goals of investors vary and hence, depending on your goal setting you can choose the investment options. Investors can choose from Fixed deposits, PPF (Public Provident Funds), ULIP (Unit Linked Insurance Plan), and Mutual Funds. The longer you let your funds sit in the long term the higher will be the returns.

1. Withdrawal facility: Look for an investment option that provides a five-year lock-in period and allows partial withdrawal options to fulfil your financial obligations.

1. Assess the risk profile: Investors tend to invest in low-risk funds in case the risk of investment is high and market conditions are fluctuating. But it is recommended to invest in a high-risk fund as the return value is more from these funds than from the low-risk funds. Choose from high-risk funds to balance and secured funds depending on the risk to earn more returns.

1. Death benefit: Invest in term insurance plan to earn regular income on monthly basis even after the sudden demise of the insured or the breadwinner.

1. Determine the brand value and consistency: Deciding on the investment plan is quite risky and confusing. Consider the brand value and word-of-mouth popularity to select the ideal investment option that fits your financial goals.