Saturday, May 28, 2022

India’s Ten Best Investment Options in 2021

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For some, investments are a way of life; while it is a mandatory exercise intended to save taxes for others. When you save money in a hurry, you tend to make mistakes. If, however, you want to make the most of your hard-earned capital, knowing the top-10 places to park money can work wonders in fulfilling your dreams.

Here are the top-10 investment plans in India you can invest in 2021.

1. FD Scheme

FD or fixed deposit schemes are a time-tested investment plan that has been in vogue ever since people started investing. In India, three types of financial institutions offer FD schemes – scheduled commercial banks, non-banking financial companies, and housing finance companies. Generally, housing finance companies offer the best FD rates of up to 6.95%.

2. Stock Investments

If you can take risks to earn higher returns than the best FD rates, stock investing can reap rich dividends. To invest directly in equities, you need to open a Demat and trading account. However, if you sell your investments before three years from the investment date, you have to pay short-term capital gains tax.

3. Mutual Funds – Equity

Mutual fund houses put investors’ money in high-quality stocks or indices to generate high returns. You may invest in sectoral or thematic mutual funds that track high-value companies in a sector, and you gain as the stocks grow. You can also invest in the index or exchange-traded funds that track the specific index. If you can pick the right mutual fund at the right time, you can get higher rates than the best FD rates.

4. Mutual Funds – Debt

Although debt mutual funds are similar to equity mutual funds in nature, they invest in government and corporate bonds, commercial papers, treasury bills, etc. Usually, the instruments in which debt mutual funds invest have a fixed maturity period, and hence, they mostly provide stable returns like an FD scheme.

5. Public Provident Fund

PPF carries a sovereign guarantee and pays relatively higher interest rates than an FD scheme. However, you cannot close the account before fifteen years, and every year you have to pay a minimum amount to keep the account active. Additionally, you cannot invest more than INR 1.5 lacs in a financial year.

6. Post Office Monthly Income Scheme

The Post Office MIS is a preferred investment option for Indian citizens, as it gives monthly interest to the account holder. However, you can invest in an MIS scheme for no more than five years at one go and, at present, the interest rate is much lower than a high-yield FD scheme offered by housing finance companies like PNB Housing.

7. Senior Citizens’ Savings Scheme and Pradhan Mantri Vaya Vandana Yojana

SCSS and PMVVY are both investment schemes for senior citizens. While SCSS has a fixed term of five years, PMVVY has a fixed term of ten years. In both schemes, you can invest INR 15 lacs. SCSS pays the interest every quarter, whereas PMVVY pays interest every month, quarter, half-yearly, or annually. But, neither SCSS nor PMVVY offers the kind of liquidity that an FD scheme offers.

8. Gold

Gold is a favored investment option for Indian citizens. You may invest in physical gold or gold-based mutual funds. In either case, your money grows as the gold prices increase. 

9. Real Estate

If the money you wish to invest is high, you may choose real estate. The best way is to buy a property in your own name and sell it for a profit. However, unlike an FD scheme, there is no guarantee that the property value will go up when you wish to sell. Hence, it is wise to analyze the market trend before investing. 

10. National Pension Scheme

National Pension Scheme is a retirement-focused fund that has a lock-in period of ten years. It is managed by mutual fund houses and has a limitation on withdrawals. 

Conclusion

If you are looking for a fully liquid and high-yield investment option, an FD scheme can suit you well. However, as an intelligent investor, you must try to diversify your investments across various financial instruments to avail the maximum benefits. 

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