Have you invested your money to enhance returns? You know that there is plenty of investment option in India that multiply your returns over the years.
Yet what are the best investment options which will give you tremendous returns in a shorter period?
As the economy is crashing down and jobs are declining, only active income cannot generate much money to live a good and healthy lifestyle.
Some of the best investment options available to us are the stock market and investments in mutual funds which gives high returns but quite riskier.
And there some of the safe investments too like Fixed deposits, NPS, PPF, SCSS.
So, In this blog of the best investment options in India, we will answer your all doubts regarding investing according to your age.
What’s in it for me.
- Points to remember before choosing the best investment options in India.
- Investments related to the stock market.
- Investments that are safe and give fixed returns.
- Investment products for retirement planning.
- Investment in Non-financial assets.
- What Really required for choosing the best investment option.?
Points to remember before choosing the best investment options in India.
Know your Risk appetite vs returns profile.
All of us want to get rich in less time, double up money but for this we need sky-high returns in less time or but this can’t be possible in investing.
And also if you want to start investing then first you learn how to save money as a beginner.
Because, you don’t know the basics of choosing the best investment option for you, sometimes rules are needed to know before you break it.
So, You need to know your risk profile whether you want to take the risk or should play safe.
In reality, the returns and risks are directly connected to each other i.e, high return means high risk or low risk means low returns.
let’s look out the example of warren buffet earning by investing who is considered as “God of investing”
Also,as per the sources, Here you can see large bars at the end of his age Why?
Because it’s called as power of compounding(Multiplying of money).
Now all of us know, that
Investing is not in making money but it’s also in keeping money.
Now here is example how you can take risk:-
Simple calculation for risk as follows
(100-Your age)%=allocate money in market-related products, which discussed in brief below. and remaining in other assets that are safe.
For Instance -Your age is 20 years. so By this rule, 80% of saved money should invest in market-based products(related to stock market) and remaining in safe assets.
Therefore reallocate your money as per your needs and invest accordingly in market.
“Bole toh jawani mai risk le sakte hai”
Determine your Goal, duration, and risk.
Whenever we performed any task which is related to daily needs than we remember our goal yet when it comes to investment than a friend’s call may be enough to convince for selection of any mutual fund
If above case is with you than you are on the wrong path of making investments.
Moreover, you need to ask yourself what is the end goal of doing the investment.
You should decide the risk and time horizon of it so that you can invest accordingly.
The goal should be categorized as to whether it is for long term capital gains or short term gains.
The long term includes retirement planning, children’s education, or short terms like buying a house or a car.
You should take risks according to the goal like more for any holiday or vacation planning. and, less risk for retirement planning, children’s education, future emergencies as it is very important for your life.
You can invest or save in mid or small-cap funds for vacation planning as it is riskier.
And for safe investments like retirement or children education invest in debt or large-cap funds.
Golden rule of investing:-
“More risk means more returns and less risk means fewer returns”.
Financial investment products linked to the stock market.
Investing in stocks-A high return investment option.
When we hear the word stocks or share market, one picture which comes in front of our eyes is an up and down of the market or money is always lost, maybe some of you call it gambling.
But it is one of the best investment options for beginners why Let’s figured it outright.
A stock market is a place where shares of the company are offered to the public and the company would raise the fund from its shareholders and will divide their profit in terms of percentage returns to the public.
Eventually, you became the part-time owner of that company as soon as you have share of that company.
We accept that it’s not a cup of tea for everyone but the only good thing here that it has given higher returns than inflation also better than other asset classes.
Also stock market is having the higher volatility rate but also higher returns.
By learning you can start investing in it which will have an edge from other investors who are just looking into safe financial assets.
As per the source, If you have invested ₹1 lakh in 1990 then your money would grow to almost to ₹ 4 crores till now.
Now, you must give your proportion of your money into stocks and earn the benefit from it by growing your money in the long term.
Do you know? as per data mutual funds investments got risen more than 25% over 5 years in our country where gold and real estate were given more importance.
Why mutual funds are one of the best investment options? because as per sources over the period of time it has given more than 10% returns annually.
Therefore this one is the most lucrative and the best investment option for beginners available in India.
Working of mutual funds.
First of all, Mutual funds are the companies that create a pool of money from their investors and invest it in stocks, government bonds, and securities, large-cap companies etc.and charges a small fee in return for doing investing.
The charges are mentioned above termed as Expense ratio(charges that asset management company charges from the investor for managing the funds and operating expenses)
But before investing in it you should know the important terms related to mutual fund it to have better returns.
It is nearly from 0.5% to 1%.and it depends upon the fund management team to provide you the best returns.
Returns in mutual funds depend upon where the investor invests their money like equity mutual funds or debt mutual funds.
According to the source, the average returns are more than 10% and some good ones even give more than 15% also.
Consider a simple calculation, in which annualized returns are 15% and You have invested in it Rs 5000/month.
and could you believe it got grown to almost Rs 66 lakh in 20 years.
Average past returns in year 1,3,and 5 years of equity mutual funds are 15%,15%,and 20% respectively
and also in debt mutual funds in 1,3 and 5 years are 7.8%,8.7%, and 9.57% respectively.
Investment areas of mutual fund.
Mutual funds based upon its type also invests in debt and government bonds to reduce the risk on the investor’s shoulder.
And definitely it’s your choice to take the high risk by investing in equity or lower by investing in debt mutual funds.
However, there are also industry-specific mutual funds but they have high risk and volatility rates (sudden up and down in the market in a shorter period).
Investment products that are safe and give fixed returns.
Some of the investors want to play very much safe and sees saving accounts as the best investment options for the long term.
One of the reasons is its liquidity is on the higher side and can withdraw money any time.
But in terms of returns and long tenure it’s not a good idea to invest in it.
As per data returns in it is -3% Which is not even adjusting the inflation rate of 5-6% every year.
If you have invested Rs 5000/month and after 10 years it will be around 7 lakh but you have already invested 6 lakh.
Therefore, it gives poor returns and even it can’t beat the yearly inflation rate.
Fixed deposits–A safe investment option.
Many of us may be familiar with this term or maybe the best investment category of all time for us.
Because it is a safe choice, its volatility rate is lower and provides fixed returns.
In this each depositor makes recurring deposits in the bank earns a fixed interest rate decided by the bank and is the same all through the tenure.
Currently, as per the source, the average returns in a Fixed deposit are 6-8%.
and tax is charged by the government according to your income slab.
You have invested in a fixed deposit of Rs 5000/month and earns 7.5% returns. so your outcome after 10 years is almost around 9 lakhs.
The withdrawal amount is given after deducting tax on it according to your slab.
Investment products for retirement planning.
National pension scheme
Many of the investors are looking for retirement-related financial products and want to earn their return after retirement.
So NPS consists of tier-1 and tier-2 accounts from which you can choose-out where you want to invest which purely depends on your risk profile.
It invests your money in equities, debt bonds, fixed deposits, etc to provide diversification.
Currently, as per records, NPS is giving return from 8 to 11% depending upon your risk profile.
Public Provident Fund–The tax free investment option.
Public provident fund (PPF) is one of the safest and provides tax-free returns to investors.
It is suitable for investors who are looking to invest for a long duration of more than 15 years.
One of the key features is you can open accounts in it as low as ₹500 per month and start to invest from today.
also, it is a tax-free investment option so it becomes one of the best investment options for many retail investors.
You can invest in its maximum up to 1.5 lakh per year. While minimum you can start with Rs 500.
Along with it As per records you are able to make up to Rs 42.5 lakh with 8% returns annually.
Senior citizen saving scheme
This scheme is one of the favorite schemes for many retirees whose age is above 60 because it is considered as one of the safest and tax-free schemes.
This scheme comes with a lock-in period of 5 years and can be extended to 3 years further.
Moreover, it provides 7-9% returns as per the data interest rate per year.
In addition, you can make investments up to 15 lakhs( in multiply of Rs 1000) only. with more than one account.
One of the lucrative things of this scheme is that it’s tax-free and provides fixed and safe returns for the long term.
Investment in Non-financial assets.
Gold as investment
Many of you might have invested in this once in a life and know the basic scenario of investing in gold.
Especially having it also becomes the sign of richness in the society due to which many of us want to add it up in our investment portfolios.
Moreover as per data Gold is giving good returns of 8-10% annually .and also given more than 15% return this year.
Despite its shine, it is having concerns like safety, cleaning it, making charges (even costs more than 25% of the gold price), storing it. and way more.
One of the alternatives of physical gold is gold ETF’s like you can buy virtual gold from the government in terms of sovereign gold bonds.
and you can get the same returns as physical gold with an extra return of 2.5% over it per annum.
You have bought the gold bond in 2020 and want to sell it off in 2026.
So the end price of your gold will be the gold price in 2026 + 2.5% returns over it per annum.
So Its very much beneficial to switching to gold bonds from investment point of view.
Investments in the Real estate–A recurring revenue investment option.
This kind of financial investment we all are being familiar with and also it involves a lot of upfronts amount which got blocked.
Moreover, you need to consider it as long term investment as it performs well in long tenure.
and the interest earned by it maybe rise or go down as it involves a lot of legal actions, government policies, etc.
But you can earn passive income from it by giving it to rent and recover your expenses.
In contrast, many investors invest in this asset because you can generate recurring revenue from this.
However, like other class real estate is highly illiquid and difficult to sell off in emergency situations.
Besides that currently, as per records, it is giving only 8-11% returns.
So I think there is no need to invest in it as per investment point of view and above financial assets are better for investment.
What Really required for choosing the best investment option.
The best way to invest your money is to first understand all financial assets available for you as per your financial goal and dive into them.
You should not block all of your money into one asset but diversify your money in asset allocation.
Even so, If you want best returns than keep the investment horizon for the long term as it gives a better compounding effect.
Furthermore, as an investor, you need to change your asset allocation as per your age or at a different age, different assets are the best investment options.
Finally, you need to take risks according to you and create wealth with the time value of money.
You can invest your money in equity-linked saving schemes, PPF schemes and also do health and life insurance and show it to the government as an investment.
Depending upon your risk appetite, you can invest in
3.Mutual funds and the stock market.
1.National Pension Scheme (NPS)
2.Public provident fund(PPF)
3.Senior citizen schemes.
Stock market is highly volatile market and there is always up and down in it but at earlier stages of your life you can take more risk but you should know its basics and risk appetite of yourself.
yes,sure you can invest in stocks by borrowing money from anyone or family member but the tax is charged on net gain you earned in a year and also you should have proper knowledge about stocks.
You can invest in these gold bonds through your bank.also these are sold by the Stock holding corporation of India Limited(SHCIL) or RBI’s website where you can get additional gifts in terms of cashback.