With multiple investment options available, identifying where to invest money can be confusing. It is important to understand each of them and then invest in the ones that meet your requirements.
Investment options available in India
1. National Savings Certificate (NSC)
2. National Pension Scheme (NPS)
3. Public Provident Fund (PPF)
4. Unit-linked Insurance Plans (ULIPs)
5. Equity Mutual funds
8. Real Estate Investment Trust (REIT)
9. Post Office Monthly Income Scheme
10. Fixed deposits
11. Government Bonds
12. Sovereign Gold Bonds (SGBs)
National Savings Certificate (NSC)
The National Savings Certificate (NSC) is a savings scheme backed by the Government of India. You can opt for it through a post office. It is a low-risk investment option aimed at helping people from low to middle-income groups. It provides deduction of up to ₹ 1.5 lakh per annum as per the provisions of Section 80C of The Income Tax Act, 1961.
National Pension Scheme (NPS)
The National Pension Scheme (NPS) is a government-backed pension scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It is aimed at providing retirement benefits to Indian citizens. It is open to all individuals, including employees from government, private and unorganised sectors. NPS offers a range of investment options to suit different risk profiles and investment horizons. It offers tax benefits of up to ₹ 1.5 lakh under Section 80CCD(1) of the Income Tax 1961. The overall limit is capped ₹ 1.5 lakhs under Section 80CCE of the Income Tax Act, 1961. Deduction up to ₹50000 u/s 80CCD(1B) from taxable income for additional contribution to NPS.
Public Provident Fund (PPF)
The government-supported savings scheme, Public Provident Fund (PPF), is another option suitable for retirement planning. It has a maturity period of 15 years. PPF is ideal for long-term financial goals and offers low risk. It provides deduction of up to ₹ 1.5 lakh per annum as per the provisions of Section 80C of The Income Tax Act, 1961.
Unit-linked Insurance Plans (ULIPs)
Unit-linked Insurance Plans (ULIPs) are investment products that offer you with a life cover and help you grow your money. The life cover secures your loved ones in case of an unfortunate event. The returns provided by ULIPs enable you to meet your long-term financial goals. With ULIPs, you may choose to invest in equity, debt or balanced funds, depending on your requirements and risk appetite. ULIPs offer tax benefits as per the provisions of Section 80C and 10(10D) of The Income Tax Act, 1961.
Equity Mutual funds
Equity mutual funds are managed by professional fund managers. They invest your money primarily in stocks of other companies that are listed on the stock market. Equity mutual funds are subject to market fluctuations but can be a good investment option for long-term financial goals.
Stocks represent ownership in a company. They can be purchased through a stock exchange and offer the potential for high returns over the long term. However, they are also subject to market volatility and carry a higher risk than other investment options. Hence, it is important to conduct thorough research and analysis before investing in individual stocks.
Gold is a commonly known investment option in India. Not only does it have cultural relevance, but it also makes for a key financial asset. It can offer a safety net against inflation and carries low risk. Gold also provides various methods of investment. You can invest in gold jewellery, coins, sovereign gold bonds and gold Exchange-Traded Funds (ETFs).
Real Estate Investment Trust (REIT)
Real Estate Investment Trusts (REITs) are a way to invest in real estate without purchasing or managing property directly. A REIT owns and manages income-generating real estate properties, such as apartments, commercial buildings, or hotels. They are traded on stock exchanges like shares. They can offer long-term growth of money and dividend income.
Post Office Monthly Income Scheme (POMIS)
The Post Office Monthly Income Scheme (POMIS) is a fixed-income scheme that allows you to invest a lump sum amount and receive guaranteed monthly payouts. This scheme offers a fixed interest rate. It is considered a safe investment option as it is backed by the Indian government. The maximum investment limit is ₹ 9 lakh for an individual account and ₹ 15 lakh for a joint account. POMIS is a good option if you are looking for a regular income stream without the risk of market volatility.
Fixed Deposits (FDs)
A Fixed Deposit (FD) is a popular investment option in India that provides a fixed rate of interest over a fixed tenure. FDs are offered by banks and Non-Banking Financial Institutions (NBFCs). FDs are a low-risk investment option and are suitable if you are looking to earn a steady and guaranteed return on your savings. In India, it provides deduction of up to ₹ 1.5 lakh per annum as per the provisions of Section 80C of The Income Tax Act, 1961.
The Indian government issues government bonds to fund various developmental activities. These bonds are fixed-income securities that offer a fixed rate of interest. Government bonds are among one the safest investment options in India since they are backed by the government's guarantee.
Sovereign Gold Bonds (SGBs)
Sovereign Gold Bonds (SGBs) are government-backed investment options that allow you to invest in gold without the hassle of storing physical gold. SGBs are issued by the Reserve Bank of India (RBI) and are denominated in grams of gold.
Apart from the investment options explained above, there are multiple options available in India to invest your money as per your requirements. You can assess your risk appetite and choose between market-linked investment options such as stocks, mutual funds, ETFs, and others. You can also opt for relatively low-risk investment instruments, such as fixed deposits, government bonds, PPF, and others. It is important to note that low-risk investment options may provide lower returns when compared to high-risk investment options.
To choose where to invest your money, you need to assess your risk appetite and investment objectives and then select options that align with your requirements.
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*Tax benefits are subject to conditions under Sections 80C, 80D, 10(10D), 115BAC and other provisions of the Income Tax Act, 1961. Goods and Services tax and Cesses, if any will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for more details.