A middle-class family in India will face several financial challenges at different stages in life. It can affect their well-being and future money goals. Therefore, making a financial plan and investing in the right products becomes extremely important. Different investment instruments in India can help middle-class families secure, save and increase their wealth for the future. Evaluating the needs, comparing the different options, and choosing the best option will secure their future and help them accomplish their financial goals.
 

Here is a detail about some of the commonly preferred investment options for a middle-class family in India.
 

Top Investment Options In India For A Middle-Class Family

While different and apt investment options in India exist, choosing between them becomes an arduous task. However, the process becomes simpler if the family analyses their current financial condition and future financial goals. By doing this, they can understand their financial requirements. Then, based on these requirements and affordability, they can analyze and choose between the different investment options.
 

• Investment options for risk-averse individuals - The choice of the investment plan will predominantly be based on risk appetite. If the middle-class family is conservative, considering the family's financial obligations, choosing a safe investment plan becomes crucial. Here are a few investment options in India.
  
  
  • Public Provident Fund - A middle-class investor can invest between ₹500 and ₹1,50,000 annually towards the PPF account. The investment plan has a lock-in period of 15 years and an assured annual interest that can help accumulate the required funds during the long term. Moreover, it is a secure investment option, and the annual investment amount qualifies for the tax* deduction benefit under Section 80C of the Income Tax* Act 1961.
    
    
  • Bank deposit schemes - Fixed deposits and recurring deposits are common bank deposit schemes. A fixed deposit scheme is for an individual who can invest a lump sum for a pre-defined term. The fund will earn a fixed interest. The invested fund and the interest earned will be the maturity benefit. In a recurring deposit scheme, the individual can invest a specific amount monthly and accumulate the fund and the corresponding interest amount for the maturity benefit.
    
    
  • RBI bonds - The Reserve Bank Of India issues bonds with an annual interest rate of 7.75%. It can be purchased from them using the Demat format and linked to the Bond Ledger Account. The investment is for 7 years, and the investor will receive a certificate as proof of investment.
    
    
  • Post Office Schemes - Post office savings and investment schemes are considered extremely safe for a long-term investment. The Post Office Monthly Income Scheme, Senior Citizens Savings Scheme, National Savings Certificate, etc., are some of the most commonly chosen investment options that can yield the required returns for a middle-class family in India.
  
  
• Investment options for individuals with moderate risk tolerance - Some investors prefer top investment options in India with apt risk tolerance considering their ambition to grow wealth while managing family financial obligations. Here are a few commonly chosen options:
  
  
  • Debt mutual funds - These financial instruments invest in government bonds, treasury bills, corporate bonds, and other money market instruments. These options provide a steady return while ensuring capital preservation. They can earn compounded returns when the funds are invested for the long term and are considered a safer option than risky equity investments.
    
    
  • National Pension Scheme - It is one of the top investment options in India for retirement. The returns are linked to markets and are based on investment across bonds, equities, etc. Investors can choose the exposure of equity investment based on their risk appetite.
    
    
• Investment options for individuals having risky tolerance - Some individuals with risky tolerance prefer investment options in India that provide more returns.
  
  
• Equity investment - Investing in equities is the apt way to earn more returns. It can appreciate your capital to a great extent if the right investment choices are made at the right time. Several factors determine a good equity investment; hence, a good knowledge of the equity investment options is required to excel in such investment plans.
• Equity mutual funds - If investors need to gain adequate knowledge about equity investment options and factors that govern them, they can prefer equity mutual funds. The Asset Management Company will manage the investment and provide the required returns timely.

 

Unit Linked Insurance Plan(ULIP plan)
 

The ULIP is a comprehensive life insurance plan that provides a life cover for the entire policy tenure.

• Features of a ULIP plan
  
  
  • It provides a death benefit for the family in the event of the policyholder's unexpected death.
  • It provides the option to invest in the financial market and choose between equity, debt, and hybrid fund options. Therefore, investors can choose the best option based on their risk appetite.
  • It allows the policyholder to switch between the fund options during the policy term to protect the investment fund.
  • It has a lock-in period of 5 years and thus encourages long-term investment.
     
• Benefits of a ULIP plan
  
• Insurance providers offer online ULIP plans to help purchase the product and manage the investment throughout the policy tenure.
• Investments made in a ULIP policy and its payout benefits will qualify for a tax* deduction and exemption under Section 80C and Section 10(10D) of the Income Tax* Act, 1961, subject to certain terms and conditions.

 

Conclusion


 

Financial security is an important concern for every middle-class family in India. Uncertain global economic conditions always threaten a family's financial stability at any time. Therefore, investing in the right financial instruments will help secure their family and also help them live in peace. All investment options in India are becoming increasingly affordable, with various flexible features to encourage middle-class families to invest in and live better. Analysing the financial requirements, analyzing the different options, choosing the apt option, and staying invested can help satisfy the financial needs and enhance capital appreciation.





L&C/Advt/2022/Dec/3049