To create your wealth, you need to choose the best instrument from among the many investment options available in India. You need to make your investment wisely. This way you will be able to increase your amount and make your money work. Although every investment plan may not earn your best returns. Likewise, it is still better than keeping your money idle.
Therefore, it is of significant value that you make the right investment at the right time.
We are listing below the investment options for you. So you can choose the one that works best for you. Because you would be better aware of your financial situation. Or the risk you are willing to take. Next, the financial goals you are looking to achieve. Whether planning to create a Capital, Tax Saving, or to support your Monthly Income. Do you have a Lump Sum to invest or are you planning to invest in SIP Plan? Moreover, you will best know the kind of Returns you are looking for.
PPF or Public Provident Fund
PPF is one of the most popular options. The main reason for its popularity is that your money is guaranteed. It offers the safety of your fund. Because all PPF accounts are managed by the Central Government. And the Returns are guaranteed as well. To add to the icing on the cake, the Returns are fully exempt from Tax. You can start investing with a minimum amount of Rs. 500 yearly. The maximum limit for such investment has not been prescribed. However, the exemption limit has been specified as up to Rs. 1,50,000, under Section 80C of the Income Tax Act.
Besides, you can also avail of a loan facility at the end of 3rd & 6th-year.
The Interest rate on PPF investments is quite high. Especially when compared with Bank Fixed Deposits or Recurring Deposits. As of now, the Interest Rate on PPF is 8% per annum.
Mutual Fund Investment Options
Mutual Funds are gradually becoming the topmost preferred form out of all the investment options in the market. It pools money from many investors. In turn, you get Mutual Fund units. The accumulated Fund maybe then invested in Equity (investing in shares), Debt (investing in Government Securities or other Market Instruments), etc. They help you earn Higher Income. You may need to keep invested for, at least, a certain time duration. The Close-ended and ELSS Funds have a minimum investment period. The rest of the Mutual Fund Schemes do not have any such requirement, generally.
You are to choose a particular plan to invest and buy units. You can redeem these units later, as per your requirement. The amount you will receive on redemption would be based on the Fund’s Net Asset Value (NAV).
Investing in Equity
Equity is the Starting Capital for all companies. It is as vital as the air to breath for any company to operate. Besides being the main source of funding for the business. It also gives claims to investors on its assets and income.
You are quite likely to earn a Return that is 2-times as high as your investments. Sometimes, it may even go 3-times or more. On the other hand, it may not earn any return at all. Or you may lose the amount you invested even.
In simpler words, the Risk Factor of investing in Equity is very high.
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.
Investment Property Options
Buying and investing in Land and Building is considered one of the great investment options in India. It is also a safe option that would increase in value for certain. Although, for investing in this option, you need to have quite a good amount of money. Still, it should be an essential part of your plan of creating wealth. It is a significant factor, incidentally, to retire in comfort.
Just make sure you look into all aspects. Likewise, consider all the related expenses. Abide by all legalities at the time of renting and/or reselling. Especially if you are buying property only as an investment.
Exchange-Traded Funds or ETFs
Gold or other Assets
Gold or precious metals and stones have been a traditional form of investment. They offer quick liquidity. Moreover, it is one of the stable investment options, even during times of economic recessions. Gold can also be used to store value or as a hedge against inflation.
Investment Options by the Indian Post
Schemes from the Post Office are a good option to invest too. Especially if you are looking to invest for a short period. The Monthly Income Plans by the Indian Post is considered quite safe. It offers High and Fixed Returns, so the risk factor is non-existent. Moreover, you receive the Return as a monthly income. This you may use to support your income. Or you have the alternative to re-invest in some other scheme. And this scheme need not be of the post office.
Currently, the rate of interest is 8.5% per annum.
Life Insurance ranks 3d or 4th in the list of investment options for most of the Indian households. Various plans can help you in meeting the expenses that come along your life san. Such as children’s education, marriage, retirement, etc. It also comes to your rescue in an emergency or an illness.
In case of death of the policyholder, even soon after registering the policy. The nominee will receive the entire sum assured.
You can choose the duration. Whether long-term or short-term, as suitable to you. You also have the option to choose for partial withdrawals Or take a loan against the policy. Or you may even surrender the policy in case of an emergency and take the surrender value.
Unit Linked Plans or ULIPS
A portion of the Portfolio Fund under ULIP is invested in equities and bonds. This makes them very similar to Mutual Funds investments. Also, the risk factor connected with market fluctuation is similar. The insurance companies also float funds, to invite investments from the public.
The balance part of your investment is maintained as a life insurance cover. ULIPs are also a sort of Insurance Policies. In the sense, they provide a life cover. This is the point of the major difference between ULIPs and Mutual Funds.
Initial Public Offering
IPO is when newly launched companies invite the public to buy their shares. These new companies are yet to get listed on the Stock Exchange. Whether NSE (National Stock Exchange) or BSE-Sensex (Bombay Stock Exchange). IPOs are the stock market launch for such companies. Because it is the first time that the company is offering its shares, hence it is known as an Initial Public Offering. The price of the share at the IPO is basic. And most of the times, significantly lower than the price at which these shares would be available later on.
If you are an expert at stocks. And understand the fluctuations in the market. In that case, investing in IPOs are the way to go.
Comparing the Various Investment Options
|Investment Option||Minimum Limit||Maximum Limit||Lock-in Period|
|PPF||Rs. 500||Rs. 1,50,000||15-years|
|Mutual Funds||Rs. 500||No Upper Limit||Lock-in Period is applicable to ELSS only|
|Equity||Differs per company||No Upper Limit||N.A.|
|Land & Building||No Lower Limit||No Upper Limit||N.A.|
|ETFs||Variable as per fund||No Upper Limit||N.A.|
|Gold||No Lower Limit||No Upper Limit||N.A.|
|Post Office||Rs. 1,500||Rs. 4,50,000||5-years|
|Life Insurance||Rs. 1,00,000||No Upper Limit||5-years|
|ULIPs||Rs. 1,00,000||No Upper Limit||45-years|
|IPOs||Differs per company||No Upper Limit||N.A.|
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