Investment Plans

• Banks and NBFCs provide fixed returns for a particular tenure.

• Interest rate ranges between 6% to 8% p.a., and tenors up to 10 years.

• FDs are also considered as low-risk and are insured up to ₹5 Lakh under Deposit

• They are highly liquid and can be chosen for investing surplus funds without risking capital.

• Equity mutual funds invest more than 65% in the stocks (or equity) of various companies.

• They are handled by experienced fund managers, hence can be accessed by investors lacking firsthand market experience.

• Although they provide high potential benefits, these are also prone to risk and market uncertainty.

• Tools like SIPs (Systematic Investment Plans) offer inexpensive and disciplined investment.

• Tax efficiency and long-term capital appreciation make them popular with young investors.

• Direct equities investment involves the purchase of shares of listed firms from stock exchanges like the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE).

• It has the potential to yield considerable returns in terms of capital appreciation and dividends but involves high risk.

• This involves understanding financial statements, corporate fundamentals, and market timing.

• It tends to be well-suited for active or veteran investors.

• You can diversify by investing across themes and sectors to better manage risk.

• A voluntary retirement scheme governed by the Pension Fund Regulatory and Development Authority (PFRDA).

• Offers exposure to debt and equity, as well as partial tax benefits⁵ of up to ₹2 Lakh.

• Withdrawals at retirement are half-tax-free; annuity is taxable.

• NPS can be appropriate for systematic investors seeking a low-cost, diversified retirement scheme.

• Fixed deposit in the bank with 5-year lock-in and Section 80C tax exemption.

• Provides interest of between 6% and 7.5% p.a., varying with the bank and term.

• Premature withdrawal may be barred, and interest earned may be taxed.

• It could be an appropriate choice for investors who are looking for potential yields with minimum risk exposure

• A small savings scheme has been launched for girl children under the age of ten.

• Provides 8.2% p.a. interest, tax-free and compounded yearly.

• Individuals can make a partial withdrawal for education when their child is 18.

• This initiative ensures forward-looking planning for a girl's education and marriage, yielding substantial long-term benefits.

• For individuals aged 60 years and older.

• Potential gains 8.2% p.a. interest, quarterly.

• Maximum investment is ₹30 lakh, and the maturity period is 5 years.

• Guaranteed by the government, SCSS provides desirable returns and can be used by retirees in preference to seeking periodic income.

• An optional extension of the Employee Provident Fund (EPF) where employees can contribute more than the mandatory 12%.

• VPF contributions get the same interest as EPF, presently 8.25% p.a.

• Withdrawals and maturity values are tax-free⁵ if funds are held for 5+ years.

• It offers a chance for individuals to contribute to their retirement funds while enjoying EEE (Exempt-Exempt-Exempt) tax⁵ benefits.

• ULIPs combines life insurance with market-linked investments in equity or debt.

• ULIPs have a lock-in period of 5 years and allow fund switching according to risk tolerance.

• Part of the premium is used to provide life coverage, and the rest is invested in market funds.

• They provide flexibility in investment method selection and can be more useful for long-term wealth creation with protection.

• These investments invest money in fixed-income instruments such as government bonds, corporate debentures, and treasury bills.

• They provide higher yields than savings accounts and FDs, particularly in declining interest rate environments.

• Various types, such as liquid funds, short-term funds, or gilt funds, are appropriate for different investment horizons and risk appetites.

• Debt funds are tax-efficient if invested for more than 3 years, as they offer indexation benefits.

• They are appropriate for conservative investors seeking stability with moderate returns.

• Hybrid mutual funds combine equity and debt into one portfolio and thus seek to balance future returns and possible risk.

• They can be regarded as more appropriate for moderate investors who want a balanced strategy between aggressive and conservative investments.

• They consist of aggressive hybrid (greater equity), conservative hybrid (greater debt), and dynamic asset allocation funds.

• The equity component enhances returns, and debt protects against volatility.

• They are often used as a starting point for novice investors investing in equity markets.

• Real estate remains a desirable investment for long-term capital growth and rental income.

• However, high initial investment and the need for continuous maintenance and legal expenses are its drawbacks.

• Real Estate Investment Trusts (REITs) solve these issues by offering fractional ownership of commercial property.

• They provide liquidity, regular dividend cash flow, and are priced like stocks.

• REITs provide investors with access to high-quality real estate with low entry barriers and diversification.

• SGBs provide a fresh method of investing in gold, without the inconvenience of storage.

• They are government securities denominated in grams of gold provided by the Reserve Bank of India (RBI).

• Besides gold price appreciation, they earn an annual interest of 2.5%, paid semi-annually.

• They have an 8-year maturity with redemption at an early date after 5 years.

• Capital gains when the SGB matures are tax-free5, thereby making SGBs a suitable substitute for physical gold.

• A fixed income deposit scheme offered by India Post.

• Yields 7.7% p.a. (Q1 FY25) interest paid annually, but on maturity, taxed.

• Tenure is for 5 years and is tax-exempt⁵ as per Section 80C.

• It may be favoured by risk-averse investors who want fixed returns without subjecting themselves to possible market risks.

• ETFs are shares of mutual funds sold like stocks on stock exchanges, offering the advantages of both.

• They track indices (such as Nifty 50 or Sensex) or commodities (such as gold or silver), and provide passive and transparent investing.

• Expense rates are lower than actively managed funds, and thus ETFs are cost-effective.

• They offer liquidity, diversification, and flexibility to enter or exit at any time throughout trading hours.

• It can be more appropriate for investors who want to gain broader market exposure with little active management.

• Recurring Deposits are appropriate for salaried workers who prefer regular savings.

• They allow you to put a fixed amount every month for a specific period, usually between 6 months and 10 years.

• Interest is compounded quarterly and paid at maturity, yielding cumulative returns.

• Recurring Deposits (RDs) are an efficient way to develop the savings habit and construct a short-term goal fund, e.g., for foreign travel or buying gadgets.

• Premature withdrawal is permitted but is subject to a penalty.

• For women and girls available with a lock-in period of 2 years.

• Provides a rate of 7.5% p.a., compounded quarterly and paid at maturity.

• The highest investment cap is ₹2 Lakh per account holder.

• This recently launched scheme allows women to generate short-term savings with assured returns.

• These are investment-cum-insurance plans for a child's future.

• They pay lump sums either at the policy maturity or on the policyholder's early death.

• Premium waivers ensure the plan continues in force even if the insured parent passes away.

• These plans ensure there is no break in funding a child's education and future expenses.

• Long-term contracts that provide retirement income through annuities or deferred benefits.

• You will have the options of lump sums or regular payments after retirement.

• They can have life insurance benefits, subject to the chosen plan.

• Annuities give economic security and peace of mind in the years after retirement.

• A tax-saving mutual fund with a compulsory 3-year lock-in.

• Invests mainly in equities, providing a higher potential for returns with market-related risks.

• Tax deductible up to ₹1.5 Lakh under Section 80C of the Income Tax Act.

• ELSS has the shortest lock-in period among tax-saving schemes, and this makes it a potential choice for aggressive investors.

• A secure savings plan that accrues monthly interest income at 7.4% p.a.

• The maximum investment is ₹9 lakh for a single account and ₹15 lakh for joint accounts.

• The plan has a lock-in period of 5 years, and the principal is repaid at maturity.

• It can be more suitable for conservative investors and retirees who require fixed monthly returns with lower risk.

• POMIS is backed by the Government of India, which gives stability and security.

• Government scheme for workers in unorganised sectors aged 18 to 40.

• Pays a monthly fixed pension of ₹1,000 to ₹5,000 at the age of 60 years.

• The government can provide co-contributions to qualifying low-income subscribers.

• It promotes pension coverage in the informal sector, providing financial protection after retirement.

• Gold has served as a conventional hedge against currency depreciation and inflation in India.

• It is normally bought in the form of jewellery, coins, or bars, especially during wedding and festival seasons.

• They are subjected to price appreciation only, and this is based on international economic conditions.

• It remains a favoured long-term asset for wealth preservation.

• These 7-year bonds carry an interest rate that is reset semi-annually at the prevailing rate of 8.05% p.a.

• Interest is paid every six months and paid directly into the investor's bank account.

• While the interest earned is taxable, government assistance ensures that the capital is protected.

• They are not tradable or transferable, limiting liquidity but ensuring dedicated savings.

• These may be suitable for clients anticipating reasonable returns with interest rate fluctuations.

• Government-backed scheme issued by post offices.

• Investments might double after a certain time at a 7.5% annual interest rate.

• No tax benefit, but premature withdrawal is allowed under specified conditions.

• It is particularly convenient for rural and semi-urban investors seeking secure and long-term investments.

• Bonds are fixed-income instruments in which loans are provided to the issuers (governments/companies) in exchange for regular interest.

• These may be categorised as short-term or long-term investments, each having a varying level of credit risk depending on the issuer.

• Government bonds are quite safe, but corporate bonds may provide higher returns at greater risk.

• Bond markets also enable pre-maturity trading, thereby providing the scope for capital appreciation.

• Bonds diversify a portfolio and provide a certain income, particularly for retirees.

• Treasury Bills (T-Bills) are short-term government securities launched by the Government of India to address short-term liquidity.

• They are bought at a discount and redeemed at their face value, without the payment of normal interest.

• Liquid and safe, they are widely utilised by corporations, banks, and institutions to invest excess funds. Retail investors can invest in them by using the RBI Retail Direct or mutual fund schemes.

• They are a suitable low-risk option for short-term investment of funds.

• InvITs function similarly to mutual funds, but for infrastructure projects like roads, power plants, and telecom towers.

• They earn their revenue from tolls, rents, or service charges and distribute part of their revenue as dividends.

• SEBI-approved and listed on the exchanges, InvITs provide transparency and liquidity.

• They are suitable for income-focused investors who want exposure to the infrastructure market without taking physical property.

• They align growth potential with ongoing income and enable diversification of portfolio exposure.

• Silver ETFs mirror the price of physical silver and are listed on exchanges such as ordinary stocks.

• They enable investors to gain exposure to silver without having to store it physically.

• Refunds are based on international silver prices, which are established by industrial consumption and current market patterns.

• These ETFs provide a means of diversifying investments in commodities and hedging inflation.

• These investment opportunities can be suitable for high to moderate risk investors who want to diversify their investment portfolio.

• Capital guarantee plans combine market-linked returns² with capital protection at maturity.

• They offer life cover and secure the invested amount regardless of market changes.

• Returns may vary based on market performance, but the capital remains safe.

• This category may suit cautious investors seeking limited equity exposure with capital protection.

• These plans usually come with fixed terms and structured payouts.

• This plan provides fixed returns along with life insurance coverage.

• Maturity benefits are specified at the time of investment.

• Payouts can be structured as lump sum or regular income.

• No market risk is involved, which may suit investors with low risk tolerance.

• Tax⁵ benefits may apply under Section 80C and 10(10D)¹ of IT Act.

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  The monthly income plan is a hybrid plan that invests in both equity and debt instruments.

• They aim to offer regular monthly payouts through dividends or interest.

• Returns are not guaranteed and depend on market performance².

• They may suit retirees or individuals looking for a steady monthly income.

• Carries moderate risk and offers partial exposure to equity markets.

• EPF is a long-term retirement scheme for salaried employees in India.

• Both employer and employee contribute a fixed percentage monthly.

• Interest is compounded annually and is generally fixed by the government.

• Withdrawals after a certain tenure are tax-free5, offering EEE benefits⁵.

• Could be appropriate for long-term, low-risk retirement savings.

• These are debt securities issued by companies to raise capital.

• They may offer more potential returns than traditional savings instruments.

• Returns depend on the issuer’s credit rating and market conditions.

• May suit moderate-risk investors seeking a fixed income.

• Interest earned is taxable as per the income slab.

• Company FDs provide fixed interest over a selected tenure.

• They usually offer better rates than traditional bank FDs.

• Risk depends on the company’s financial health and credit rating.

• These are not covered by deposit insurance schemes.

• Can be appropriate for investors who prefer predictable income.

• IPOs allow investors to buy shares when a company is public.

• Investment returns depend on company performance post-listing.

• Allotment is not certain due to oversubscription.

• High potential returns but come with significant market risks².

• Investors interested in equity and with high risk tolerance may consider this plan.

• These bonds offer interest payouts regularly over a fixed tenure.

• They are backed by the Government of India, ensuring capital safety.

• Interest earned is taxable, and bonds are non-transferable.

• They are not tradable in secondary markets, limiting liquidity.

• May be suitable for conservative investors seeking assured income.

• Life insurance policies offer both protection and savings.

• Some plans also include guaranteed maturity benefits and bonuses.

• May be suitable for long-term planners who want financial security for their family.

• ULIP plans provide investment in equity or debt with life cover².

• Returns depend on the plan type guaranteed or market linked.

• SIPs allow individuals to invest fixed amounts in mutual funds at regular intervals.

• They offer flexibility in choosing investment frequency—monthly, quarterly, or weekly.

• SIPs promote disciplined investing without the need to track daily market movements.

• They use rupee cost averaging and compounding to build value over time.

• This method may suit salaried individuals or first-time investors aiming for long-term mutual fund exposure.

Apart from considering the features, benefits, risks, and returns, it is equally important to find the right investment period for your financial goals.

If you target achieving financial goals such as paying for your child's higher education, starting a ⁴new business, etc., the investment period is generally long term. For example, it can be for a term of 10 years, 12 years, etc.

Investments for achieving long-term goals can bear a high risk, as the impact due to short-term volatility will be negated during the long term.

Here are a few long-term investment plans.

• Direct equity

• Equity Mutual Funds

• Gold

• Real Estate

• Small savings schemes, such as PPF (Public Provident Fund), SCSS (Senior Citizen Savings Scheme), Sukanya Samriddhi Yojana, etc., 

• National Pension Scheme

• Unit Linked Insurance Plan (ULIP Plan)

Short-term investment plans are liquidated within 1 to 3 years. However, the investment period can sometimes extend to 5 years based on revised investment decisions.

The short-term investment plans have a lower risk profile, are highly liquid, and provide considerable returns. Some of the common objectives of short-term investment plans are for planning a vacation, receiving returns on idle funds, etc.,

There are various short-term investment options. It would help if you analysed your purpose of investing to choose the best short-term investment plan.

Here are a few short-term investment plans for the different investment tenures.