An investment plan is one of the simplest and easiest ways to build wealth over time. At various stages of life, an individual needs funds. Be it education, marriage, or retirement, funds are a necessary part of one’s life. And the best way to grow wealth while you sit back is by making investments.
Due to the number of investment plans available in India, people always have questions about which plan will suit them best. This is why most people are always looking for the best investment plan which can multiply their money with high returns and low risk.
Why are investments necessary?
Investments are necessary for a number of reasons. Below are some of the benefits of investing in an investment plan.
Investment plans are a sure way to grow your wealth over a period of time. You can select the investment plan that gives you maximum benefits and generate wealth.
Family security is one of the major benefits of investment plans. It provides financial aid to the family if anything happens to the working member of the family.
These investment plans can be bought at any period of time. This allows you to buy an investment at a later stage of life. This way, even after retiring, you can be financially independent.
Standard of living:
Investing can improve or sustain your standard of living. They can come to your aid during difficult times. If any losses occur in the family that can affect your standard of living, the investment made can become a useful source of income for the family.
Investment plans not only help you grow wealth and evade risks but also help you save taxes. According to Section 80C and 10(10D) of the Income Tax Act, you can exempt premiums and payouts from tax.
Investment plans and their benefits
The financial market of India has evolved over the years, and with that, several types of short-term and long-term investment plans have been found. Given below are some of the investment plans in India.
Also called shares or equities, stocks are a great platform for generating wealth over a long period of time. You need to find the right stocks to invest in for maximum benefits. So, doing a thorough research and understanding the stock market is necessary.
You need to constantly monitor your investments and time your entry and exit perfectly. The returns you get through stocks depend on the types of investors in India. In the long run, stocks have been shown to provide good returns compared to other asset classes.
2. Fixed Deposit:
Fixed deposits are offered by banks and non-banking financial organizations (NBFCs). It is an ideal investment plan for those who want a risk-free investment. A fixed deposit is not affected by the changes in the market and offers you secured returns on your deposit.
Depending on the bank, fixed deposits offer cumulative and non-cumulative investment options. Fixed deposits can either be made online or by visiting any branch of the bank you choose for investing.
3. Mutual funds:
Mutual funds are one of the ideal investment plans that offer you high returns over the long run. Mutual funds invest money in various financial instruments like stocks, equity, debt, money market funds, and much more. You get returns based on the performance of the fund in the market.
Although the risks in mutual funds are high, they offer huge returns compared to other investment plans in the market. Mutual funds can be beneficial for you, too, because they exempt you from the wealth tax.
4. Real Estate:
Real Estate is one of the fastest-growing investment platforms in India. It has prospects in different areas like housing, retail, commercial, hospitality, and much more.
The risk involved in real estate investment is low because the rate of the property only increases over time. An investment in real estate can be considered an asset, which is one of the best investment options with high returns over a long-term period.
5. Public Provident Fund (PPF):
A trusted investment plan in India, Public Provident Funds is a government-sponsored scheme that is popular among individuals who wish to earn high but stable returns. It is ideal for people who wish for a risk-free investment option.
You can also diversify your financial and investment portfolio by undertaking the public provident fund regime. At times when your business is facing a crisis, PPF can give you stable returns on your investment.
6. Senior-citizen Savings Scheme:
Senior Citizens Savings Scheme is a risk-free investment option for senior citizens over 60 years of age. It is a preferred investment option by most senior citizens because it offers them a steady and secure income.
The tenure for the SCSS is 5 years, but it can also be extended for 3 years. The maximum amount that you can deposit in SCSS is Rs. 15 lakhs. The Senior Citizens Savings Scheme offers a high-interest rate of 7.4 percent per annum.
Bonds are a type of debt investment plan where bond investors lend money to the bond issuers (borrowers). In return, the bond issuer pays interest to the investor till the maturity of the bond. The investor can receive the original investment back once the investment matures.
Bond investments can be made directly or through a Debt Mutual Fund. Most bonds in India have a fixed coupon rate. But there are other types of bonds like floating rate bonds and zero coupon bonds too.