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Top 5 Investment Options in India

Published On Mar 04, 2021, Updated On Apr 22, 2021

Unfortunately, a "high-return, low-risk" mix does not exist in an investment product. Risk and returns are essentially directly linked, and they go hand-in-hand, i.e., the higher the returns, the higher the risk, and likewise. Before investing, you have to balance your risk profile with the related risks of the product when choosing an investment avenue

Also Read:- 10 Popular Term Insurance Plans in India

Top 5 Investment Options in India

By making investments in the right financial products, you not only attain your financial goals but also create a financial cover for the future that secures your life. Given below are some of the top investment options that help achieve your financial needs:

1. Unit Liked Insurance Plans (ULIPs)

ULIPs are known to be one of the best choices for investment. The ULIP policies offer the dual benefits of savings and insurance. It is also tax-free. ULIP plans come along with 3 - 5 years of the lock-in period. Under ULIP, a percentage of the premium is used for insurance coverage, while the remaining premium is deposited in securities linked to the market, like bonds, shares, etc. ULIP allows the investor to invest according to the appetite for risk.

2. Mutual Funds

They are the perfect investment portfolio that generates high returns over the long term. It's a market-based investment option where the money is invested in different financial instruments including shares, debt, bonds, money market funds, and more. The returns are generated according to the fund's market performance. While the risk exposure is higher for mutual fund investments, the returns are much higher compared to the other best investment opportunities on the market.

3. Public Provident Fund (PPF)

Of all investment options, this is one of the most stable long-term investment opportunities. It is tax-free. It is possible to open a PPF account at a bank or post office. The money invested is locked up for 15 years. Besides, you can receive compounded interest on the accrued money. You can also extend the investment tenure for another five years in addition to the 15 years lock-in period. You can take a loan against the balance amount in the PPF in case you need money

4. Fixed Deposits

FD promises guaranteed returns over the lifetime of the fund. The interest is payable yearly/quarterly/monthly, according to the bank rules. FDs offer cumulative as well as non-cumulative investment choices. In the non-cumulative option, the interest is payable yearly/quarterly/monthly and principal amount on maturity, alternatively, the interest will be reinvested and will be paid at maturity in a cumulative option.

5. Direct Equity

Direct equity is regarded as one of the best investing choices. Although most investors perceive direct equity to be a high-risk investment, the returns generated by direct equity funds are higher than any other market-based investment option. It is wise to consider some factors when it comes to investing in direct equity such as choosing the right stock, the entry and exit time into the market. 

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Bottom Line 

The basic rule of making a prudent investment is to have proper knowledge and understanding of the various types of investment opportunities available in the market. The intent of the investment can differ for most investors, dependent on the financial goal and the level of risk, etc. Thus, to ensure your investment appreciates, you need to invest in smart investment options that can yield profitable returns in the long-term.

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