Choosing the best investment options can be difficult. Before deciding on one, you must consider a variety of factors ranging from investment objectives to associated risks. Some investments are made to meet specific goals, such as a home purchase, while others are made to provide a secure retirement.
Top Long-Term Investment Plans in India
Here are some of the apt long-term investment strategies to consider.
- Fixed deposits
Banking institutions offer fixed deposits (FD), which are among the safest long-term investment options. Their returns do not fluctuate in response to global events, as many other schemes do. You can integrate them into your portfolio to create a balance of more and less-risk investments. The bank FD’s interest rate can range between 5% to 8.5%. One may avail of tax benefits depending upon tenure.
Other features:
- FD interest is paid monthly, quarterly, semi-annually, or yearly.
- You may be able to get a loan against your FD, depending on the amount and term.
- They provide guaranteed1 returns, and there is no risk of losing your principal.
- FD interest is paid monthly, quarterly, semi-annually, or yearly.
- ULIP plans
A ULIP is a type of plan that provides investment and insurance benefits. Under this scheme, a portion of your investment is devoted to insurance, while a significant proportion is invested in various asset classes such as bonds, stocks, and so on. Moreover, investing in ULIP also comes with a tax* benefit.
Other features:
- ULIP plans have a three to five-year lock-in period.
- You have the option of selecting an asset class based on your risk tolerance.
- The insurer permits you to switch funds during the policy period in order to protect yourself from market fluctuations.
- ULIP plans have a three to five-year lock-in period.
- Real estate investment
Real estate investment falls under the category of generational wealth and is one of the aptlong-term investment plans with more returns. Under this, you can invest in empty plots, flats, commercial spaces, and residential properties. The best part about investing in such assets is that, in addition to capital appreciation, you can earn passive income in the form of rent.
Other features:
- The value of real estate assets typically increases every six months.
- Your property's worth does not fall in response to negative market news.
- You can mortgage them to secure a high-value loan at a lower interest rate.
- The value of real estate assets typically increases every six months.
- Mutual funds
Mutual funds are a type of investment scheme in which funds are pooled from various investors with a common goal and invested in specific securities. Professional fund managers manage this type of long-time investment plan. Mutual fund investments are broadly classified as equity-oriented funds, debt funds, and balanced funds.
Other features:
- Your investment is spread across various asset classes and stocks.
- Their returns have the potential to outperform inflation.
- It provides better liquidity. Once you submit your redemption request, the amount will be credited to your account within one to three days.
- Your investment is spread across various asset classes and stocks.
- National Pension Scheme (NPS)
NPS, which is backed by the government, is another more-return long-term investment. This investment option aims to secure your retirement, and your funds are invested in government securities, bonds, equities, and so on. NPS gives you the option of going auto or active. The former automatically invests your funds in various asset classes. In the latter, you are free to select assets based on your preferences.
Other features:
- Partial withdrawal of funds is allowed in the case of an emergency.
- The investment is locked in until you reach the age of 60.
- The interest income from NPS is tax*-free.
- Partial withdrawal of funds is allowed in the case of an emergency.
- Initial Public Offerings (IPOs)
When a company wants to raise funds from the public or list on the stock market, it goes through an IPO. IPOs are issued to clear existing debts, business expansion, and a few more. When you subscribe to an IPO and the stock is listed, the price of the stock fluctuates in response to market conditions and global events.
Other features:
- IPOs enable you to invest in more-quality companies at a less cost.
- The day the share is listed, the price usually skyrockets, allowing you to profit from listing gains.
- IPOs enable you to invest in more-quality companies at a less cost.
- Public Provident Fund (PPF)
PPFs are another apt long-term investment strategy in India. You can open your PPF account at a post office or a bank. The amount you invest in this scheme has a 15-year lock-in period, and partial withdrawal is allowed only after six years. The amount you contribute to your PPF is tax* deductible under Section 80C.
Other features:
- You can begin contributing to PPF with as little as ₹500.
- The returns they provide are unaffected by market volatility.
- The interest paid on them is compounded annually.
- The current interest rate on PPF is 7.10%.
- You can begin contributing to PPF with as little as ₹500.
- REITs
REITs are a relatively new concept in India. A real estate investment trust (REIT) manages a portfolio of more-value real estate assets. Companies in this scheme lease property and earn interest income on it, which is then distributed to investors.
REITs function similarly to real estate in that you benefit from capital appreciation as well as passive income (dividend in this case). However, the primary distinction between REIT and real estate is that the former is owned by a group of investors, whereas the latter is owned solely by you or jointly with a close relative.
Other features:
- REITs provide liquidity benefits.
- They have the potential to outperform inflation with their returns.
- They provide transparency because they are regulated by the Securities Exchange Board of India (Sebi).
- REITs provide liquidity benefits.
- Senior Citizen Saving Scheme (SCSS)
SCSS are long-term investment plans with tax* advantages. This plan is available to senior citizens over the age of 60. The scheme's goal is to assist the elderly in dealing with various post-retirement financial crises by providing regular income. SCSS can be invested through a post office or a bank, and the returns are 8.6%.
Other features:
- The maximum investment amount is fixed at ₹15 lakhs.
- The investment term is five years, but it can be extended for another three years.
- In the event of an emergency, premature withdrawal is permissible.
- The maximum investment amount is fixed at ₹15 lakhs.
- Bonds
Bonds are another risk-free investment option. They are essentially debt instruments issued by the government or large corporations to accomplish specific objectives. Investing in them allows you to earn adjustable or fixed-rate interest. In India, the most common types of bonds are inflation-linked bonds, perpetual bonds, sovereign gold bonds, and zero-coupon bonds.
Conclusion
Long-term investment opportunities abound in India. However, the decision to select the best among them should be based solely on your future goals and risk tolerance.
L&C/Advt/2023/Jan/0062
