11 Best investment options in India 2020

11 Best investment options in India 2020

Best Investment Options in India.  Investment is done to get a return on your money. There are always many ways to invest your money. We all find a way to invest our money.

The main goal of any investment to get high interest rate on your money invested.

When we invest money, we ask these questions

How much return we get for our money?

How much risk associated with that investment?  

The liquidity of money is also very important while investing your money. Liquidity means how easily you can get your money back whenever you need money.

There is a direct relation between the risk and the return on your investment.

Higher the risk higher the return.

With the investment, there is some risk associated with it. We divide our investment list into three categories based on the risk associated with each investment.

1. Low risk

2 Moderate risk

3 High risk

In Low-risk categories no matter what happens you will always get your money back. In no risk categories, you will get a fixed interest rate which is decided by the government of India.

Investment options in Low risk catagories are

Fix deposit

Recurring deposit

Public Provident Fund (PPF)

National Pension System (NPS)

With the moderate-risk investment, your risk is market risk. Your money is invested in the stock market. In moderate-risk investments, your money is diversified.

  • Bond
  • Equity Linked Savings Scheme (ELSS)
  • Mutual fund
  • Gold
  • ETF

In high-risk investment options you can get high returns. In high-risk investment options, you have to learn to invest. In these categories you are responsible for your every decision.

Direct Equity

Real estate

Best investment options in India

1. Fixed deposit

You can open a fixed deposit account with your savings bank. Fix deposit is a risk-free investment. You will get a fixed amount of interest in FD. The interest rate is decided by RBI. The interest rate of the Fix deposit can also vary with the banks.

You can also open FD account with Post office. Post office usually give higher return than banks.

Interest rate of Fixed deposit with banks varies from 5- 7 % per year.

Fix deposit is a short-term investment plan. The interest rate with the fixed deposit is low so it is difficult for FD to beat inflation.

Risk               – Low (Safe with banks)

Liquidity       – High

Tax benefits – You have to pay taxes on earnings

Return           – low return

2. Recurring deposit

With a Recurring deposit, you can save a fixed amount of money every month. You will get an interest in your money saved.

Recurring deposit is the best way to automate your savings. Which is the best part of any investment.

Interest rate can varies form 5-7%. You can also open RD account with post office for higher return.

  • Risk               – Low (Safe with banks)
  • Liquidity       – High
  • Tax benefits – You have to pay taxes on earnings
  • Return           – low return 

Difference between FD and RD is that in FD you have to put lumpsum amount of money at one time but in RD you can deposit a fix amount of money every month.

RD is best for you if you are a salaried employee.

3. Public provident fund (PPF)

PPF is a long-term Risk free investment plan. You can invest maximun of 1.5 lakh in PPF per year.

A PPF account has a lock-in period of 15 years, you can not withdrow you fund completely before 15 years. You can withrow some amont of money after 5 years. You can also extend your investment for 5 year inverval after completion.

You can get Tax rebate under section 80C.

  • Risk               – Low
  • Liquidity       – Very low
  • Tax benefits – Tax-free
  • Return            –Low

4. National Pension Scheme (NPS )

NPS is the best investment for your retirement. Interest rate is also high in NPS.

Anyone between 18-65 years can invest in NPS.

Lock-in period is till retirement. So the liquidity is very low. But it is for your retirement then it is ok. You can partially withdraw in case of emergency.

NPS is best for you tax saving if you are investing for long term.

Return is also high in NPS. In NPS you have option to put 75% of money  in equity.

  • Risk               – Low
  • Liquidity       – Very low
  • Tax benefits – Tax-free
  • Return           – high

Moderate risk investment

5. Bond

Bond is simply a loan given to company or government. In return they pays you interest rate. 

Company and government issue bond to fund new projects.

Bonds are less riskier than stocks. Bond gives fix rate of return on investment.

6. Mutual fund

Through mutual funds, you can invest in the stock market. It is safe to invest in Mutual funds if you do not know anything about the stock market.

A mutual fund is managed by a fund manager. They are qualified individuals who have knowledge about the market.

  • Risk               – moderate
  • Liquidity       –  high
  • Tax benefits – You have to pay long term capital gain tax
  • Return            –High

7. Equity-linked saving scheme (ELSS)

ELSS is a tax-saving equity mutual fund investment. The Lock-in period of ELSS is 3 years minimum.

You can get a tax deduction up to 1.5 lakh under the section of 80C.

Your money is invested 100% in equity so return you will get is high in ELSS.

  • Risk               – moderate
  • Liquidity       – low (min. 3 years lock-in period)
  • Tax benefits – Tax-free
  • Return            –high

8. Exchange-traded fund (ETF)

ETF is an investment fund traded on the stock market. You can invest in ETF through any online broker.

ETF is a new opportunity for investors. It is less risky than mutual fund. Charges of ETF is also less than any mutual fund.

9. Gold

Investment in gold has changed very much in these days. Now gold investment is not just buying ornaments and jwelry.

Gold investment is considered as a safe investment.

Today you can invest in gold in many different ways

  1. Through gold ETF
  2. Gold mutual fund
  3. eGold

High-risk investments

Risk in investment is all about knowledge.

To get high return in any riskier investment you need courage and patience.

10. Stocks

Stocks are riskier due to their volatile nature. Everyday market fluctuation makes the stock market risker.it is also riskier because people try to predict the market every time.

Stock market gives great return if you invest in stock market for long term.

You can invest in stocks through the Demat account. There are several online brokers through which you can invest in the market.

Some of the top online stock broker are

  1. Zerodha
  2. Upstox
  3. 5paisa
  4. Angel Broking

Brokerage charges of these broker is free if you buy delivery. And if you are investor then it is best to buy stocks in delivery.

11. Real estate

Real estate investment is an evergreen investment. Everyone wants to have their own homes. There is never any downfall in real estate investment.

The only risk associated with real estate is its requirement of high capital investment. the principal amount is very high, if something goes wrong then it is very difficult to recover.

Shubham Pal

A student and an investor. Shubham has a passion for investing in the stock market. He loves to talk about investing, money, and the stock market. He is a follower of Warren Buffett. He loves to read personal finance and investing books.

Leave a Reply