Financial planning is a multi-faceted venture where you have to account for security, wealth creation, and overall growth while factoring in long-term as well as short-term goals. With the diversity offered in India, it is quite easy to be confused about which investment opportunities in India are right for you, based you where you stand in life.
Today, you can put your money into options as traditional as land or precious metal, or as modern as bitcoin. However, it would be rather reckless to choose an investment option based solely on its popularity. It is important to understand at least two factors when it comes to investment options – returns and risk. The range of safe investments with high returns in India will alter based on your risk appetite as well as your financial standing.
Why Investing Is Important In India
Indian families are very conscious of creating an umbrella of security for their future - in the householder’s lifetime or for after. However, to find the right assets that will secure long-term financial stability, it is crucial to have some knowledge of the right investment options.
The Indian Economy and Market for Investment
The Indian economy has been on a steady growth path over the last decade, barring the market fluctuations due to standard business cycles. Compared to the rest of the world, which is sitting on a recession cliff, India is a much safer place to invest for long-term returns.
The Indian investment market offers options that give returns based on the individual risk appetite. For those who want assured returns, the returns could be lower, and more secure. For medium risk options, there is a balance of very well performing but slightly risky options, and low performing but very secure options. Then there are the high-risk investments which usually have the highest, but not assured returns. Each person can choose what is the best investment option for their capability to take risks.
Top 5 Investment Options in India
Whether you are looking for safe investment with high returns in India or looking to explore alternatives to choose from to lay a solid financial foundation for your future, here are some of five fundamental investments you should consider.
Fixed Deposits (FD)
FDs are one of the safest investment options as their returns are unimpacted by market volatilities. More importantly, the principal amount is not depreciated. As FDs offer fixed interest rates for different terms, they make a strong addition to your portfolio as you can accrue high returns from various schemes. So, whether the market crashes or economy grows, your return rate is fixed and certain.
Mutual Funds
MFs are market-linked investments, and naturally subject to market risks. However, they are also a relatively safe investment option in India, once you know which funds to opt for and engage in regularly reviewing your plan. A balanced mutual fund is one the best ways to save for a secure future. Another option within mutual funds is debt funds, where investments are put into fixed income securities such as bonds and treasury bills. Since they are government-based, the security factor is considerably high.
One of the ways to put your money into mutual funds is to invest in a Systematic Investment Plan (SIP). Here, a fixed amount goes into the MF investment every month and the returns compound over time.
Provident Funds
In India, provident funds, such as the Employees' Provident Fund (EPF) and Public Provident Fund (PPF), are popular long-term savings schemes backed by the government. These funds are considered a safe investment with high returns in India due to their guaranteed returns, tax benefits, and protection from market volatility. The government's involvement ensures the invested capital is secure, making provident funds an attractive option for risk-averse investors seeking stable growth and financial security over time.
Precious Metals in Physical or Virtual Form
Gold as an investment is synonymous with almost every Indian household. While traditional forms like jewelry and bullion remain popular, the range of options has grown to include virtual investments. Sovereign Gold Bonds (SGBs), Gold Mutual Funds, and Gold ETFs (exchange-traded funds) have emerged as the leading methods for gold investment. You can also invest in silver and other precious metals through the commodities market and make a profit depending upon the market situations.
ULIP
Some of the most basic life insurance plans, such as level term insurance, do not offer any returns and thus, cannot be considered investment. However, the importance of life insurance can seldom be overstated. Hence, if you want investment benefits without compromising on life cover, Unit-linked Insurance Plans are a life insurance policy type to offer you both these aspects, and can thus be considered investment.
Choosing a ULIP plan as an investment can offer you scope to fulfil your dreams while also securing the future of your loved ones. Use an online ULIP calculator to get approximations on returns as well as life cover benefits.
Factors to Consider Before Making an Investment Decision
if you want a better picture of your financial future, it is essential to plan your investment carefully, rather than investing without much thought. Here are three things to consider before you settle on an investment plan.
Risk appetite: If you are a risk averse investor, you may like to stick to options offering guaranteed returns such as fixed deposits or PPF. Assess your risk appetite regularly as it may change through the different phases of life.
Budget: While creating investments is important for wealth creation and building a secure future, it should not come at the cost of a secure present. Assess your financial health and figure out how you may safely start your investment journey. Consistency in savings and investments can bear results even if you begin small.
Returns: The range of investment plans available today offer varying returns. Understand these plans and what they have to offer to avoid any disappointment in the future.
Tips for Successful Investing in India
Here are some easy tips to invest smartly in India.
Define your goals and create a financial plan
Set realistic goals
Build an emergency fund
Start investing early and consistently
Understand investing risks and invest in only what you clearly understand
Keep a diversified portfolio
Track investments and review your portfolio regularly
Choosing the Best Investment Option for You
The smartest investment is that which is safe, gives you good returns, and access to your wealth when you need it. So, the best investment option for India is the one that balances these three factors – your ability to take risks, clarity in wealth planning, and easy liquidity when you need your wealth.
Needless to say, investing for the long term will give a much better return as it helps balance market volatilities and offers better returns.
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