Choosing the best investment option can be overwhelming for many since there are a host of high-yielding schemes in the market. The most important criterion while choosing an investment plan should be the number of returns it offers. Since the user is investing his/her hard-earned money, his/her only concern should be if he/she is enjoying a guaranteed high return or not. There are mainly two types of investment in the market- low risk and high risk involved. The low-risk ones are more secure and stable compared to high-risk ones. High-risk ones are linked to the market and exposed to its fluctuations.
Though high-risk investments mean the returns will be of a substantial amount, there is a chance that users will suffer huge losses too.
Below are the five best investments options that can give you higher returns while involving little to no risk –
- Fixed Deposits
Fixed deposits are one of the safest and best investment options in India that assure high returns at the time of maturity. Fixed deposits are offered by most NBFCs and financial institutions in India. They have assured returns and a tenor period between 1-5 years. The investor can take out a loan against their fixed deposit as collateral. Here are some of the best ways to avail of a loan against a fixed deposit. Some NBFCs also offer a multi deposit facility with a single cheque. Users can also apply for FD online.
There are two types of fixed deposits- cumulative and non-cumulative. In a cumulative fixed deposit, the interest is calculated quarterly or annually and paid along with the principal sum at the end of the maturity period. The interest is high since the amount is on lockdown for the whole maturity period. Non-cumulative fixed deposit is calculated monthly, quarterly or annually and paid accordingly. It’s ideal for those who wish to have a regular source of income. Its interest rate is also lower than that of cumulative fixed deposits.
It is vital to choose the correct fixed deposit scheme according to one’s own financial plan. Choose which FD is best for you as per your financial plans and goals.
- Senior Citizens Saving Scheme(SCSS)
An appropriate investment option for senior citizens besides fixed deposits can be SCSS. Normally the tenor is for 5 years but can be extended for 3 years. It is an effective investment option for senior citizens as it offers a regular income to meet their daily requirements. The maximum amount that can be invested is Rs 15 Lakh, and there is no limit as to the minimum amount. The returns rate is 8.7%. This scheme has tax benefits under section 80C of the Income Tax Act.
- Employee Provident Fund
The fund for EPF is deducted from the employee’s monthly salary, and the same amount is contributed by the employer also. This is also a retirement oriented investment plan in that the EPF is deducted every month from the employee’s salary throughout his/her career. The whole amount on maturity is exempted from paying tax under section 80C of the Income Tax Act. EPF rates may be revised every month by the government.
- National Pension Scheme
NPS or national pension scheme is a long term retirement investment plan for employees from the public, private and unorganized sectors. This initiative is under the Pension Fund Regulatory and Development Authority (PFRDA) and the central government. The user needs to invest only a meager amount of Rs 500 to Rs. 1,000 monthly in this scheme throughout their careers. After retirement, the investors can take out 40% out of the total amount and enjoy the remaining amount as a monthly pension. This scheme is flexible. It also has tax concessions under section 80C, 80CCC, and 80CCD. It is a fitting scheme for mainly private-sector employees for life post-retirement.
- Unit Linked Insurance Plan(ULIP)
ULIP is a combination of both insurance and investment. The insurance company invests part of the premium in equity, balance or debt funds and the rest as an insurance cover for the investor. This fund can be used to build up savings or to fulfill long term goals like child education, wedding or retirement planning. The plan comes with a lock-in period of 5 years. Since a part of the investments is linked to the market, it has higher returns though subjected to market risks.
Investment is a serious business. Careful research is important before deciding on any particular plan. There is no hard and fast rule in investing. But while choosing a specific plan, some factors need to be considered- the goal in mind with which someone is investing, whether it’s long term or short term. The age of the investor also matters before choosing an investment plan. Young people have a longer time to plan for retirement while middle-aged people have comparatively less time. These investment plans are for those who have just started working. So choose and invest accordingly.