5 Best and Safe Investment Options In India | Top Saving Schemes

First, let me explain why one should invest. There are 2 ways to make money – Work for money or let your money work for you. For example, If you put Rs. 100000 into a box and open it after 5 years, you will get the same Rs. 100000.

On the other hand,  if you choose to invest the same amount in Fixed Deposit, you will get around Rs. 133000 back after 5 years because your money was working for you. So one of the major reasons for investing is to grow wealth over time.

“Someone is sitting in the shade today because someone planted a tree a long time ago.” – Warren Buffett

Different people have different financial needs or goals like saving for retirement, higher education, or tax optimization. This is why there are so many investment options out there to meet different needs.

But with so many investment options today, it becomes really difficult to choose the right one. There is nothing like that you can call “best”. Best for one might not be best for another and vice versa.

best investment plans in india

So I am listing 5 safe and trending investment options in India meeting different objectives. Choose one or more suiting your financial goals –

1. Mutual Funds

Do you have enough time and skills to manage your own portfolio?

Do you have a great knowledge of the stock market?

“Mutual Funds” comes into play when your answer to the above question is “NO” but you still want to invest for great returns. A mutual fund is a common fund collected from interested investors and invested in stocks, bonds, etc by expert professionals who have sound knowledge of the market. They invest money on the behalf of investors and the profit made is shared among all the investors. A minor fee is charged for managing your investment

So, depending upon where your money experts are investing and the risk involved, mutual funds can be of different types – Equity Funds, Debt Funds, Balanced Funds and Liquid funds, etc. The people with a higher risk appetite can go for equity funds where a minimum of 65% fund is invested in equity and equity-related securities. More the risk involved, more the money you can make/lose.

On the other hand, Debt/Income funds are suitable for those who want to build up wealth with moderate risk.

You can pay all the money you want to invest in one go (Lump sum) or choose an amount to pay per month(SIP-systematic investment plan). The good thing about mutual funds is that one can start with as low as 500 Rupees per month.

There are several other benefits of investing in Mutual Funds over other investment options. For example, you don’t have minimum investment years like FD (unless it’s close ended ELSS scheme), so you can withdraw your money at regular intervals. If you invest in ELSS(Equity Linked Savings Scheme) then returns will be tax-free.

2. Public Provident Fund(PPF)

PPF is one of the best investment options which offers good interest rates and tax-free returns. Being an initiative of the Indian Govt. , it’s a safe instrument for putting money in. Any 18+ Years old Indian resident can open a PPF account by visiting an authorized Bank Branch or post office.

Some banks are also offering online PPF account opening services. The current PPF interest rate is fixed at 7.8% P.A. which is pretty higher than the fixed deposit or bank interest rate. The PPF interest rate is decided by the central government and keeps changing periodically.

Once you have opened a PPF account, you can deposit from Rs. 500 to Rs. 150000 every year and the interest earned will be compounded yearly. To keep the account active you must deposit at least Rs. 500 every year. The money will be locked in for 15 years, although you will be allowed to withdraw the partial amount from the 7th year with certain conditions. Withdrawal and Interest remain tax-free.

PPF is a safe, tax-free, and attractive investment option for those who are planning to invest for children’s education, marriage, retirement, or other long-term goals.

3. National Saving Certificate (NSC)

There are two types(NSC Issue VII and NSC Issue IX) of National Saving Certificate provided at Post offices and if you want to invest in NSC then you must visit a Post office with the required documents. Rs. 100 is the minimum you can start with and there is no upper limit you can put your money into NSC.

The interest rate is decided and announced by the Indian government and the Current interest rate is kept at 7.9% compounded annually.

Depending upon the type of certificate, the maturity period can vary from 5 years to 10 years. The investment made in these certificates comes under 80C of the IT Act and is eligible for tax benefits. Premature withdrawal is only possible in special cases. National Saving Certificates are for those who prefer safety over returns.

4. Sukanya Samriddhi Yojana(SSY)

If you are a parent/guardian of a girl child(10 years or less), you can open a Sukanya Samriddhi Account on her behalf of her by visiting any post office or authorized bank branch. The birth certificate of the girl child is the major document you need to open Sukanya Smariddhi Account.

The maturity period of the account is 21 years although 50% of the deposited amount can be withdrawn once a girl reaches the age of 18.

The maximum amount one can deposit in a SS Account is Rs. 150000. The interest rate of 8.6% per annum makes it an attractive investment for both the taxpayer’s parents and the girls in India. SS accounts get tax benefits under section 80C of the IT Act. The interest rate keeps changing and is announced by the Finance minister in the month of April every year.

The SSY scheme can be a great investment option over a long period and it makes sure you are not affected by the rising cost of education or wedding expenses. The interest rate in the Sukanya Samriddhi Account is the highest among all the saving schemes offered by Govt.

5. Fixed Deposit(FD)

As its name suggests, Fixed Deposit is a fixed amount, one deposit in a bank for a fixed period of time say 1 year or 5 years, etc, and gets a better interest rate than savings accounts. The main objective of a Fixed Deposit account is to earn a higher interest rate on extra money. The interest rate depends upon the Tenure of deposit, the institution where you park your money, and other factors.

The tenure period can be from 7 days to 10 years and the interest rate can be as high as 9% a year.

Usually, new banks offer high interest on FD accounts to increase their customer base. Most banks today allow online FD account opening as well as withdrawal directly to your bank account. The interest earned on an FD account is fully taxable.

You can also withdraw your money before maturity but in that case, you get a lesser interest rate than what was fixed to be given at the end of maturity of the account.

Final Note – I want to conclude with the final note that doesn’t go after returns too aggressively otherwise you might end up getting your fingers burnt. Choosing the right investment product is very important. Don’t put all the eggs in one basket but Diversify. Try to include both safe as well as aggressive investment products in your portfolio to make it ideal for meeting your financial future needs. All the best.

Disclaimer – I am not a certified financial expert. Please consult with your financial advisor before you make an investment decision.

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