Everyone has different financial goals and to achieve them there is a plethora of investment options available. So, to simplify your investment decision, here is a list of 12 popular investment options.
Public Provident Fund
PPF is one of the safest options as it is a government-backed scheme. It is a fixed income product that enjoys the exempt-exempt-exempt (EEE) status because the amount invested is deductible from your income before calculation of tax as per section 80C of the Income Tax Act, and interest earned and maturity amount are tax-exempt. You can open a PPF account with either a post office or bank. It comes with a lock-in period of 15 years from the end of the financial year in which it was opened.
This is another popular fixed income product. One can invest either in a bank FD or company FD, or both. The minimum investment amount, tenure, and interest rate offered on FDs vary among banks and companies. There is no cap on the maximum investment amount. Generally, company FDs offer higher interest rates as compared to a bank FD but risks of investing are usually higher in the latter.
Equity shares or stocks
Investing in shares is risky. Therefore, one must have the bandwidth to analyse a stock before investing in it. You can invest either via initial public offerings or through the secondary market from stock exchanges.
There is no guarantee that you will get back the capital you have invested or of the return, as prices are volatile. Financial experts advise that investment in equity should be for the long term - at least 5 years or more. But equity is considered an essential component of an investor's portfolio as it is viewed as one of the few investments that can give inflation beating returns in the long run.
For those who do not have the wherewithal to analyse and pick individual stocks can take the MF route. MFs invest not only in equities but also in other asset classes like bonds, gold etc. They are managed by fund managers.
Depending on your risk profile and duration of your financial goal, you can decide on the type of scheme to invest in, i.e., equity, debt, or balanced MFs etc. You can invest in MFs either as a lump sum or monthly via SIPs.
If you wish to deposit money at regular intervals while looking for safety, RD can be an option for you. It can be opened with a bank or post office. The term of an RD will vary from one bank to another. The post office offers a 5-year RD account, whereas an RD with a bank like the State Bank of India comes with tenure of 12-120 months, as per its website.
Post office savings schemes
Other than the PPF and RD, the post office offers various other schemes. These include time deposits, Senior Citizens Savings Scheme, Monthly Income Scheme, Kisan Vikas Patra and National Savings Certificate. The features, limit on investment amount and interest rates offered varies in these schemes. They are considered quite safe as they are backed by the government.
Ulips offer insurance and investment under a single plan. It invests both in debt and equities. However, there are several charges that one needs to be aware of as they will affect your maturity amount. The maturity amount is tax-exempt as per current laws. Withdrawals are allowed only after expiry of the five-year lock-in period.
Sukanya Samriddhi Yojana
Parents of a girl child can invest in SSY for higher education and marriage purposes. The scheme was launched under the government's 'Beti Bachao Beti Padhao' campaign. The account can be opened at any post office or authorised bank branch. It has a lock-in period of 21 years. Partial withdrawals are allowed subject to certain conditions. You can invest a minimum of Rs 1,000 and maximum of Rs 1.5 lakh in a financial year.
National Pension System
Those who want pension in their retirement years can choose to invest in NPS. It is a defined contribution pension system where your contribution is invested in a mix of assets. Anyone between the age of 18 years and 60 years can join the scheme. Minimum investment amount is Rs 1,000 in a financial year with no maximum limit.
Although gold does not yield consistent returns like FDs, it is one of the most popular investment options for Indians. This is because gold is seen as something that can offer safety and stability during uncertain times. You can buy physical gold -jewellery, coins, bars - or paper gold - gold ETFs, gold mutual funds, Sovereign Gold Bonds and digitally via Paytm and Stockholding Corporation of India. Sovereign Gold Bonds will have matuity of 8 years.
There are various types of bonds such as zero-coupon bonds, tax-free bonds, taxable bonds, PSU bonds, 7.75% RBI Bonds. Features vary, therefore, before investing one must know the minimum investment amount, tenure, taxation on interest and maturity amount, and liquidity. You can buy the bonds for the first time whenever government or issuing company opens it for subscription or from the secondary market.
You can buy a property to live in or as an investment to earn rental income and/or sell it at later date to make capital gains. Price of a house varies with size, locality, location, and the state of the real estate market when you are buying or selling your house. While people have reportedly made huge gains in real estate, there are several risks involved such as untimely delivery, the risk of fraud in sale/purchase, low liquidity, the fact that it cannot be sold as sub-units etc. Further, according to market experts, although the likelihood of generating similar profits as earlier in real estate is low, certain pockets may offer some scope.