26 Best Investment Options In India For 2020

Best Investment Options India

 

I saved my first 10,000 Rs. in 2001 once I was a pupil and labored part-time, taking part in as a DJ at marriage ceremony capabilities. I invested in a Fixed Deposit as a result of my father stated that FD is the most secure funding possibility.

I noticed that FD hardly supplies any return once I noticed my FD worth not rising after 3 years. The 10,000 Rs. that I had invested had elevated to simply 12,000 Rs. But I used to be anticipating my funding to develop to no less than Rs. 18,000 in 3 years.

I began taking a look at different choices that may present 2-3x returns in a couple of years. I found multi-level advertising schemes, chit funds, foreign currency trading, betting, inventory buying and selling and protected investments like PPF, Post workplace financial savings schemes and recurring deposits.

I received fascinated by shares as I may study analyzing enterprise and economics. I began investing in shares after I received my first company job. I made the widespread mistake of investing in shares with out correct data and ended up dropping 30% of my cash inside a 12 months of investing.

After this loss, I mirrored on my private monetary targets. I additionally learn plenty of books on investing and realized that concentrating on unrealistic returns is silly. Also, placing all my cash in a single funding was additionally not sensible. Then on, I began diversifying my investments throughout totally different devices with a goal return of 15% every year.

Before you begin investing, take a while to research your private monetary targets – your goal corpus, money stream wants, time horizon and danger urge for food. Once you might be clear about your targets, you may design your funding portfolio accordingly.

I’ve defined in my course CashCow- the best way to use 3 variables to design a balanced portfolio that may give greater than 15% annual return.

The 3 variables are :

  • Existing investing expertise
  • Return potential of funding asset
  • Associated danger

You can be a part of this course totally free by clicking on this hyperlink.

Now, allow us to perceive a couple of funding fundamentals earlier than leaping into funding choice.

How to Double your Investment

There are not any fast wealthy schemes that may double your cash in a single day. It can occur solely in goals, however there’s a straightforward method to estimate the period of time taken in your cash to get doubled.

The method is the Rule of 72.

The estimated time interval to double = 72/ fee of return.

For instance, if you wish to calculate, in how a lot time will Rs. 10,000 grow to be Rs. 20,000 offered that you simply make investments at an rate of interest of 8%.

Then the reply can be, 72/8= 9 years.

If you put money into one thing that provides 24% returns?

72/24 = 3 years solely to double your funding

If somebody guarantees to double your cash in 2 years, then he’s supplying you with 36% returns, which is unrealistic. Most doubtless it’s a rip-off.

Table of Contents

Stock Investment

Stock funding is likely one of the most engaging Investment Options as a consequence of its excessive return potential. Stock investments carry increased danger, and therefore are additionally able to producing excessive returns.

You can count on an annual return of 15% – 18%, if you recognize the artwork of investing in the precise shares on the proper time. I’d advocate you to begin with a small funding in shares with an intent to study earlier than making massive investments.

Demat account is obligatory to begin investing within the inventory market. I’d advocate you to open an account with Upstox if you happen to don’t have any Demat account.

Special Offer on Upstox (Limited time) 

Upstox is likely one of the fastest-growing low cost brokers that provides zero brokerage on supply and saves upto 90% on buying and selling as in comparison with different service suppliers.

  • FREE Demat & Trading Account
  • Zero brokerage on supply
  • Flat Rs 20/commerce on buying and selling (no extra % base brokerage)
  • Up to 20X margin

Special hyperlink to Open FREE Upstox Account

PRO TIP – Start early, hold longer time horizon and don’t withdraw principal or curiosity.

Here is the listing of the 26 greatest funding plans in India 2020

Best Investment Options for a Salaried Person

#1. Public Provident Fund (PPF)

PPF

Apart out of your common pension contribution, an funding in PPF account can save a number of tax as all of the deposits made are deductible underneath part 80C.

Further, the amassed principal and curiosity are exempt from tax on the time of withdrawal.

What We Like
  • More rate of interest than financial institution mounted deposit
  • Returns are tax free
  • Time taken to double funding = 9 years
Concerns
  • The PPF account cannot be closed earlier than 15 years.
  • Partial withdrawal is feasible solely after completion of 6 years.

You would additionally prefer to learn – greatest tax saving choices underneath 80 C in India

#2. National Pension System (NPS)

National Pension System (NPS)

NPS scheme is transportable throughout jobs and areas. The additional benefit is the returns from fairness and debt investments.

All your contributions as much as Rs. 1.5 Lac to Tier I capital are exempted underneath part 80C. Plus you may declare a further as much as Rs. 50,000 of tax advantages.

So right here it can save you Rs. 2 Lacs of tax.

What We Like
  • Approx return per 12 months = 8% to 10%
  • Years taken to double the funding = 7.2 to 9 years
Concerns
  • You can’t withdraw earlier than 60 years of age.
  • Thereafter, you may withdraw solely 60% which is tax-free and the remainder 40% of the corpus is stored to obtain an everyday pension.

#3. Equity Linked Savings Scheme (ELSS)

You get a better return of 15% to 18% whereas investing in ELSS. Investment in ELSS funds have a lesser lock-in interval of three years and any earnings over Rs. 1 Lac are taxable.

What We Like
  • Approx return per 12 months = 15% to 18%
  • Years taken to double the funding = 4 to 4.8 years
Concerns
  • Treated as LTCG and earnings over Rs. 1 Lakh is taxed at 10%.

#4. Tax Savings Fixed Deposit

If you wish to have a protected funding possibility with out investing in equities then decide tax saving mounted deposit of any financial institution or publish workplace.

The rates of interest fluctuate from financial institution to financial institution and are within the vary of 6% to eight.5%.

What We Like
  • Approx return per 12 months = 7.6%
  • Years taken to double the funding = 9.47 years
Concerns
  • Interest earned in taxable.
  • Lock-in interval of 5 years.

Check out – How to begin intraday inventory buying and selling in India

#5. Unit Linked Insurance Plans (ULIPs)

Investments in ULIPs provides you wealth creation possibility together with life cowl. Premium paid are eligible for deduction underneath part 80C. Plus the returns on maturity are exempt underneath part 10(10D).

The returns fluctuate relying on the mixture of fairness, debt or hybrid funds.

What We Like
  • Returns are tax exempted
  • Returns might be excessive if market performs properly
Concerns
  • Lots of charges and prices (2% to 4%) like premium allocation cost, mortality prices, fund administration prices coverage administration prices.
  • A excessive share of administration prices (1.35% every year).

Read Carefully: Why We Don’t Recommend “Insurance Policy” as an Investment Option.

Please word that funding and insurance coverage are separate belongings with totally different targets.

Investments are targeted on producing returns and thus carry a better danger. Whereas insurance coverage is for defense of life and belongings in case of loss and dying.

Therefore, each ought to be thought-about individually and to not be mixed.

I’ve written a information on greatest methods to avoid wasting revenue tax in India

Best Investment Options with High Returns

#6. Direct Equity Investment

All the fairness investments carry increased dangers and therefore are additionally able to producing very excessive returns. Opt for fairness funding possibility in case you are snug dropping as a lot as 50% of the capital.

The final 1-year return of NSE is 12.40% and within the final 2 12 months generated a 26.5% returns. Likewise, shares of blue-chip corporations have delivered large returns within the close to previous.

What We Like
  • Approx return per 12 months = 18%
  • Years taken to double the funding = 4 years
Concerns
  • High-Risk issue.

To put money into fairness, you want a Demat account. You can learn the complete critiques of my favourite Demat accounts

  • Upstox Demat Account Review
  • 5Paisa Demat Account Review
  • Zerodha Demat Account Review

#7. Mutual Funds

Mutual funds are the most secure and probably the most handy manner of investing within the markets if you shouldn’t have the time and experience.

The fairness mutual funds have generated persistently increased returns. With funds like L&T India Value, Mirae Asset India and ICICI Prudential Blue Chip delivering 3 years return within the vary of 14% to 18%.

The funding in mutual funds is usually a lump sum or month-to-month SIP for an quantity as little as Rs. 500.

What We Like
  • Approx return per 12 months = 16%
  • Years taken to double the funding = 4.5 years
Concerns
  • High-Risk issue.
  • Affected by actions in NSE/ BSE
  • Fund homes cost expense ratio (1.05%).

#8. Commercial Real Estate

Commercial actual property supplies rental revenue and capital appreciation. The increased appreciation is because of demand for workplace house and progress of company atmosphere.

But the situation, constructing high quality, market house hire and the demand-supply performs a significant factor in deciding returns.

An excellent funding in workplace and store areas not solely fetches increased returns but in addition helps in diversification of funding belongings.

What We Like
  • Approx return per 12 months = 12%
  • Years taken to double the funding = 6 years
Concerns
  • Selling actual property takes time.
  • Differs from property to property primarily based on location.

#9. Initial Public Offer (IPO)

The greatest a part of investing in IPO is that the cash will get blocked just for 7 to fifteen days. Prudent funding in a superb firm popping out with IPO can fetch returns as excessive as 20-25% over a time period.

What We Like
  • Approx return per 12 months = 20%
  • Years taken to double the funding = 3.6 years
Concerns
  • Very excessive danger.
  • Subject to market actions

Best Investment Plan for 1 Year

#10. Fixed Deposit

FDs are the most secure and safe Investment Options offered by banks and publish workplaces which earn increased rates of interest than a financial savings account.

Any extra quantity which you aren’t going to make use of for a sure time period might be safely put into a set deposit.

Bank vs. Post Office Fixed Deposits

Particulars Bank FD Post Office FD
Interest Rates 5.75% to eight% 6.6% to 7.4%
Time to double funding 9 years 9.7 years
Tenure 7 days to 10 years 1 to five years
Min deposit quantity Vary from financial institution to financial institution Rs. 200
Tax profit On 5-year tax saver On 5-year tax saver

#11. Recurring Deposit

Like mounted deposit, RD to earns a better rate of interest than a financial savings account.

RD allow you to make investments any quantity which might be as small as Rs. 5 monthly and is the best choice for selling the behavior of financial savings.

What We Like
  • Approx return per 12 months = 7%
  • Years taken to double the funding = 10.3 years

Also Read : Best Bank In India – 16 Best Savings Bank Accounts With Highest Interest In India 2020

#12. Liquid Mutual Fund

The possibility carries the least quantity of danger and is for individuals who’ve idle cash for brief time period.

The mutual fund invests your cash within the extremely liquid quick time period devices just like the financial institution’s CD, T-bills and industrial papers usually with a maturity interval of lower than 91 days.

What We Like
  • Approx return per 12 months = 5%-6.5%
  • Years taken to double the funding = 11 years
Concerns
  • Lower returns when in comparison with FD

#13. Ultra Short Term Debt MF Plans

Unlike, liquid MF the cash is invested in bonds and different devices with maturity greater than 91 days and fewer than 1 12 months.

Ultra ST debt MF does carry rate of interest danger, will not be so liquid and therefore provides you increased returns.

What We Like
  • Approx return per 12 months = 7%-9%
  • Years taken to double the funding = 8 to 10.3 years

26 Best Investment Options In India For 2020

Best Investment Plan for 3 Years

#14. Savings Account with Sweep in Facility

The sweep in possibility allows you to get pleasure from flexibility in managing your financial savings and in addition get pleasure from increased returns from a set deposit.

Here, any extra cash mendacity in your financial savings account, above a selected threshold degree will get mechanically transformed into a set deposit and vice versa.

What We Like
  • Approx return per 12 months = 6.5%-7.5%
  • Years taken to double the funding = 9.6 years

#15. Short Term Debt MF

Is a superb possibility for producing steady returns with modest danger.

The funds are locked for as much as 3 years and there’s a 1% penalty for untimely redemption. Still you may count on returns a bit increased than the mounted deposit in a variety of 8-10%.

What We Like
  • Approx return per 12 months = 8%-10%
  • Years taken to double the funding = 7.2 years
Concerns
  • Premature redemption attracts penalty.

#16. Equity Linked Savings Scheme (ELSS)

There are quite a few advantages if you put money into ELSS like tax financial savings, increased returns (15% to 18%), possibility to speculate month-to-month (SIP) and might be began with as little as investing Rs. 500.

What We Like
  • Approx return per 12 months = 15%-18%
  • Years taken to double the funding = 4 to 4.8 years
Concerns
  • Lock-in interval of three years.
  • Gains are handled as LTCG and any beneficial properties over Rs. 1 Lakhs is taxed at 10%.

#17. Fixed Deposit

Returns on a 3-year FDs fluctuate from financial institution to financial institution, normally in a variety of 6.5% to eight%. Also there are not any related tax advantages on this funding possibility.

What We Like
  • Approx return per 12 months = 7%
  • Years taken to double the funding = 10.3 years
Concerns
  • Returns fluctuate, some banks supply lesser returns for 3 years FD.

#18. Recurring Deposit (RD)

The returns generated are virtually the identical as a set deposit for a 3 12 months interval.

What We Like
  • Approx return per 12 months = 7%
  • Years taken to double the funding = 10.3 years

Best Investment Plan for five Years

#19. Direct Equity and Equity-Oriented Mutual Funds

Equity is the best choice for individuals searching for progress and constructing wealth. The returns on particular person shares are excessive (>20%) for essentially sturdy and rising corporations over an extended time period.

For instance, Eicher Motors generated a 5-year CAGR of 28.77%.

Nevertheless, the massive returns entail excessive danger, the place a foul decide can erode greater than 70% of the cash. The greatest manner is investing by means of mutual funds.

Still, you may put money into index funds and count on 18-25% returns.

If you don’t have demat account, then select one from the listing of greatest demat and buying and selling accounts in India.

What We Like
  • Approx return per 12 months = 16 to 18%
  • Years taken to double the funding = 4 to 4.5 years
Concerns
  • High-risk, excessive return funding.

I’ve written an entire information on the best way to Start Investing in Share Markets in India (even with 10,000 funding)

#20. Gold

Over the years, funding in gold has given constant returns of round 10% beating inflation and offering diversification. A greater technique to put money into Gold is thru a gold mutual fund, Gold ETF and gold bonds.

You may also put money into Sovereign Gold Bond Scheme regulated by authorities and RBI. You will personal gold in ‘certificate’ format. The worth of the bonds is assessed in multiples of the gold gram. The preliminary minimal funding is 1 gram of gold.

You would earn 2.5% curiosity every year on quantity invested. The Lock-in interval is 8 years.

What We Like
  • Approx return per 12 months = 10%
  • Years taken to double the funding = 7.2 years
Concerns
  • No tax advantages.

#21. Real Estate – Residential

The funding in residential actual property generates common rental revenue and appreciation. All with modest quantity of danger as in comparison with fairness investments.

The progress in residential actual property investments is because of people searching for a greater city housing wants and authorities housing initiatives.

You profit by proudly owning an asset, including diversification to your funding portfolio and even saving on taxes (exemption advantages by means of housing loans & depreciation).

What We Like
  • Approx return per 12 months = 11%
  • Years taken to double the funding = 6.5 years
Concerns
  • Difficult to promote property shortly in case of pressing cash want.
  • Returns depend upon property, location and different infrastructure developments in close by areas.
  • High political involvement.
  • A small change in authorities coverage might make an enormous distinction within the valuation of property.

#22. National Savings Certificate (NSC)

Is a low danger, mounted revenue instrument and might be simply opened at any publish workplace. National Savings Certificate comes with two mounted maturity durations of 5 years and 10 years.

You are free to speculate any quantity, however investments as much as Rs. 1.5 Lac helps you in tax deductions. The curiosity earned over the time period will not be tax-free.

The earnings are 7.6% p.a. NSCs might be pledged with banks for taking loans.

What We Like
  • Approx return per 12 months = 7.6%
  • Years taken to double the funding = 9.47 years
Concerns
  • Less returns.

#23. Tax Saving FD

The possibility provides full capital safety with extra curiosity revenue for five years at an identical fee to five years FD.

However, there is no such thing as a untimely withdrawal (allowed solely in case of dying) and the curiosity earned is taxable.

What We Like
  • Approx return per 12 months = 7.6%
  • Years taken to double the funding = 9.47 years
Concerns
  • No untimely withdrawal.
  • Can not pledge for taking loans.

#24. Bonds

Long time period debt investments can generate regular returns over inflation. Bond investments carry rate of interest danger.

The bond investments are for individuals searching for principal safety, regular revenue or tax financial savings. Investments within the bond might be finished by means of AAA rated bonds by PSU, Govt. and Corporate NCDs.

What We Like
  • Approx return per 12 months = 7% to 10%
  • Years taken to double the funding = 7.2 years
Concerns
  • Interest fee danger.
  • Interest earned is taxable.

Best Investment Plan for Monthly Income

#25. Monthly Income Scheme of the Post Office

MIS funding possibility greatest for producing desired month-to-month money flows.

For instance, if you happen to make investments Rs. 4.5 Lacs (individually) for five years at this time fee of seven.7% p.a.Then you get a month-to-month revenue of Rs. 2,888 monthly.

You can begin by investing Rs. 1500 and the utmost funding might be Rs. 4.5 Lacs (individually) or Rs. 9 Lacs (collectively).

What We Like
  • Approx return per 12 months = 7.7%
  • Years taken to double the funding = 9.35 years
Concerns
  • Investment quantity restricted.

(*26*)#26. Monthly Income Scheme of Mutual Fund

Particulars MIS – Post Office MIS – Mutual Fund
Interest Rates Fixed 7.7% Market motion
Time to double 9.35 years N A
TDS applicability No TDS TDS utilized
Investments N A. 20:80
Equity: Debt
Investment Limit Rs. 4.5 Lacs – Individual
Rs. 9 Lacs – Jointly
No restrict

Basic Things to Keep in Mind Before Investing

#1. Goals & Expected Returns

There is a goal for which you wish to make investments, which might be something from making a retirement corpus, for the wedding of youngsters, shopping for a home, trip or luxurious automobile.

Knowing your targets helps you propose realistically and retains you dedicated in your funding observe.

Further, when you recognize your targets, choosing Investment Options turns into simple. In the sense, you recognize the returns given by every possibility and the type of funding it’s essential to decide to be able to obtain your targets.

#2. Investment Period

Returns or incomes will not be attainable in a single day. You have to search for matching time interval the place your cash can develop sufficiently to fulfil your required objective.

#3. Risk Factor

Even after realizing targets you shouldn’t make investments rapidly in belongings giving highest returns inside the lowest time interval. Your funding resolution ought to rely in your danger components and risk-taking talents. Both components differ from individual to individual.

For instance, a person recent at a luxurious job wouldn’t thoughts dropping Rs. 25,000 on fairness. Whereas the identical quantity is enough for an previous particular person to fulfill his month-to-month bills and the quantity must be preserved.

A salaried particular person might have totally different monetary wants than that of the enterprise particular person. Hence, they’ve totally different risk-taking talents and so they face totally different danger components.

Grow Wealth With Power of Compounding

We have heard the phrase compounding proper from our faculty days. But only a few have successfully used the facility for long run wealth creation. You is likely to be stunned if you happen to let the magic work over a time period.

Compounding is simply- incomes curiosity on the principal, reinvesting all of the earnings after which getting not solely curiosity on principal but in addition curiosity on curiosity from subsequent 12 months onwards.

In a manner, compounding, helps you construct a big corpus over a time period even with a small preliminary funding.

But for the magic to occur, you require two issues. One is beginning early and the opposite is carry on reinvesting over a time interval, say 10 years to twenty years.

The extra you let that occur the extra you amass wealth.

Let us see how26 Best Investment Options In India For 2020

Suppose at present you make investments 1 Lac at a compound fee of 8% and stored reinvesting all of the earnings. Then after 10 years, the cash will grow to be Rs. 2.15 Lacs,  then flip into Rs. 4.66 Lacs after 20 years, after which Rs. 10.06 Lacs in 30 years.

In the preliminary interval, you see that the earnings will not be as a lot however within the later years, the earnings will increase exponentially. Which is because of the compounding impact.

Starting early permits extra time for the magic, i.e. compounding to occur. Let us see three eventualities.

The objective is to build up a corpus of wealth by the age of 60 years. Investment quantity Rs. 1 Lac yearly and assuming that the compound rate of interest is 8%.

Scenario 1
Investing yearly from age 20 to 40 

Rs. 2.13 Crores corpus at 60 years

Scenario 2
Investing yearly from age 30 to 50 

Rs. 0.99 Crores corpus at 60 years

Scenario 3
Investing yearly from age 40 to 60 

Rs. 0.46 Crores corpus at 60 years

26 Best Investment Options In India For 2020

You can see that the outcomes are strikingly totally different even when the funding is for 20 12 months interval in every state of affairs.

You construct a corpus of Rs. 2.13 Crores simply by beginning early on the age of 20 years as in comparison with Rs. 46 Lacs when beginning late on the age of 40 years.

This is since you get an additional time interval of 20 years for the cash to get compounded.

In this fashion, compounding amplifies the expansion and maximizes the incomes potential of your cash.

Final Words

I’ve defined all of the several types of funding plans accessible in India. Lack of information concerning Investment Options shouldn’t be an obstacle for you anymore to begin investing. There are many profitable Investment Options, so don’t put all of your eggs in a single basket.

Frame your funding targets, outline your danger capability and chalk out an funding plan greatest suited to your wants. Best can be to place your plan on paper or an excel sheet.

Take management and keep dedicated to your monetary targets. And belief me, you’ll acquire the facility to alter your fortunes by utilizing the facility of compounding!

If you could have any queries, let me know within the feedback.

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