Every investor aims to invest money in the best plan to get maximum returns with minimum risk involved in it. However, the environment for investment is a deciding factor for receiving higher contributions. Also, if you get a chance to choose an investment plan according to your suitability and not out of compulsion, isn’t it great? To help you out, we have collected 10 famous types of investment in India with which you can achieve your future financial goals.
1. Stocks or Direct Equity
Stock markets provide new avenues for wealth creation for a long duration. It is one of the most prominent options among other types of investments in India. You can have a regular source of income in the form of dividends and can receive gains from capital increments as well.
Special Features:
- If investors buy stocks for a longer term, they can become a part of the ownership of that company
- Direct equity offers greater rewards in the future
- It offers higher investment returns than any other investment option.
2. Real Estate
Real Estate is one of the fastest-growing investment sectors in India since it holds great prospects in other fields of investment. For example, manufacturing, retailing, housing, hospitality, etc. Investment in real estate offers you income in the form of rent. However, utility expenses, taxation, and annual maintenance are additional charges involved in it.
Special Features:
- It involves lower risk as rates of property increase within 6 years
- It can grant you high asset value if you are aware of land acquisition laws in India
- It can lower the volatility of other investment choices, improve your portfolio and provide higher returns
- If you sell the property at the right time, your investment turns into liquid money easily
3. RBI Bonds
RBI bonds offer interesting benefits to investors as it is a sustainable and trustworthy investment. It has a tenure of 7 years in addition to offering an interest rate of 7.75 per annum. You can furnish these bonds in Demat mode only and the money gets credited into the Bond Ledger Account (BLA) of the investor. It offers interest as a regular form of income and re-investing the interest could be a cumulative option for investors.
Special Features:
- A bond issuer has to pay back the principal amount to the investor at the time of bond maturity
- An investor can invest in bonds through debt mutual funds and he/she receives interest payment in the cumulative or non-cumulative form
- There is no maximum limit available on the amount of investment for an individual investor
- After issuing ₹ 1000 as proof of investment, you get the certificate of holding
4. Initial Public Offerings (IPO)
Initial Public Offering comes into the picture when a new company invites the public to buy its shares before the company gets listed on exchanges. It could be a long-term investment with low risk and hence it could be one of the most risk-free types of investment in India. However, the amount of profit earned by investors depends upon the trust value of that company in the market.
Special Features:
- The company offers stocks alternative to the investor in order to earn money
- It does not charge interest to investors and no need to repay the capital amount
- The company allows its owners and early investors to sell their stakes in the market with flexible rules and regulations so that they will earn money
5. Gold
Gold has traditionally been one of the most popular and prioritized types of investment in India. You can use Gold as a hedge to protect your portfolio against risks in the market. It is a relatively liquid asset that can offer you inflation-beating returns. You can buy it in different forms like biscuits, coins, bars, etc. on auspicious occasions.
Special Features:
- You can buy units of gold by opening a Demat account from the agencies registered with SEBI (Security Exchange Board of India)
- You can invest in gold funds that some of the banks in India offer
- You can use the investment in gold as a security for secured loans and have the instant transactions
- You have the advantage to sell and buy it whenever you prefer
6. Bank Fixed Deposits (FD)
Fixed deposits in banks are exceptionally well-known as a fixed-pay venture choice. It offers fixed returns after the tenure of investment. Various banks offer different types of tenure for investments in fixed deposits. It can be from a minimum of 7 days to a maximum of 10 years. Banks pay profits to investors from month to month or on a quarterly basis, according to their rules.
Special Features:
- The returns from the fixed deposits remain immune from fluctuation in the market
- Facilities such as overdrafts at banks renew fixed deposits of investors
- It’s a safe investment tool that offers high investment returns on a surplus fund
- Financial stability to a portfolio
7. Unit-linked Insurance Plans
Unit-linked insurance plans (ULIP) can offer dual benefits of investment and insurance to investors. It provides premiums for insurance coverage as well as for investments in market-lined tools like shares, bonds, etc. The plans offer a lock-in period from 3 years to 5 years. It includes premium allocation charges, fund management charges, and administrative charges in addition to mortality charges.
Special Features:
- The investment in ULIP gives investors tax-free maturity
- It is the most flexible option for investment as investor enjoys wide bandwidth for investing money and granting safe insurance for the future
- Investors receive tax exemptions.
- It’s a long-term investment and grants maximum returns
8. Mutual Funds
Mutual funds are one of the ideal types of investment in India since it is a market-linked investment alternative for the majority population. You can invest money in various financial instruments such as equity, debt, stocks, etc. An investor gets returns as per the market performance of the fund.
Special Features:
- Mutual funds offer a diversified portfolio for investors for attaining their investment objective
- Investors receive extra benefits like exemption from wealth tax
- It is the most transparent investment and helps investors to make other informed decisions like fixing regular income sources, insurance, etc
9. Public Provident Fund (PPF)
Public Provident Fund is the safest among other types of investment in India as government backs PPF investment instruments. It avails investment through any bank account or post office account. The minimum amount of investment to open a bank account is as low as ₹ 100 for some banks and offers a lock-in period of 15 years.
Special Features:
- It facilitates the online transfer of money through bank accounts for a convenient and efficient contribution from regular customers
- A PPF fund matures in a span of 15 years
- Investors can withdraw the partial amount after 5 years of account opening
- Investment in PPF and interest earned through PPF, both are tax-free
10 Senior Citizen Savings Scheme (SCSS)
Senior Citizen Savings Scheme is a risk-free investment option in India for senior citizens above 60 years of age. It offers a regular income option for senior citizens in addition to a good interest rate that is 8.6 per annum. SCSS is available across the whole country in any post office and bank. The tenure of the scheme is flexible.
Special Features:
- The nomination facility is accessible for investors at the time of opening a bank account
- The maximum limit up to which one can invest in the scheme is ₹ 15 Lakh
- In case of any emergency, you can withdraw money and premature the fund
The investment could be a tricky business for newcomers due to a lack of awareness and complications involved in it. But there are some of the best investment options available in the financial market and some of them are explained above. We really hope you enjoyed reading our blog on types of investment in India and it might help you to decide where to make your next investment.
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