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Top Investment Options In India

Updated On Aug 02, 2021

Many times, you spend so much time analysing the investment options that you end up not investing at all. And when it finally needs to be invested, it might be done for all the wrong reasons. However, in order to make your hard-earned money earn for you and become a passive source of income it is important that you invest it wisely.

The most important reason for investment is the goal for which you need to invest. For example, an investment for retirement is differently planned than one for wealth accumulation or child education or buying a house. Once the purpose for investment is decided, choosing the product becomes rather easy.

The Top 5 Investment Options In India 

Following are the top 5 investment options in India which you can consider for investing your hard earned money:

1. Unit linked Insurance plan (ULIPs)

Unit linked insurance plans (ULIPs) offered by life insurance companies are excellent insurance-cum-investment plans which serve the dual purpose of providing a life cover and also an opportunity for wealth creation over the long-term. The premium paid toward a ULIP is invested in the market, thus, allowing the investor to earn market-linked returns and at the same time there is a fixed sum assured in the event of death. Policyholders can choose to invest in equities or debt funds as per his own risk appetite. Aggressive investors with high risk taking capacity can opt for equity funds and conservative investors can invest primarily in debt funds or even a combination of the two. One can also move from one fund to another as and when desired.

2. PPF (Public Provident Fund)

PPF offered by the Government of India is one of the safest and oldest investment options and can be opened at any nationalised or private banks and even at the post offices. PPF account can be opened with a minimum amount of Rs. 500 and investments upto Rs. 1.5 lakh are exempt from tax each year. The interest rate offered on PPF accounts are compounded annually and this rate is revised each year by the government. PPF investments enjoy the triple Exempt-Exempt-Exempt or EEE benefit and the entire corpus of PPF is exempt from tax on maturity as PPF, like ULIPs. However, one of the biggest disadvantages of PPF is that the lock-in period is 15 years, though partial withdrawals are permitted from 6th year.

3. Direct Equity

Equity investments are purchasing shares of a company directly thus indicating part ownership in that company. Direct equity investments have the potential to generate huge returns but these investments carry potentially higher risks as direct equity investments can be extremely volatile. Since the returns are marked to the market, i.e. it rises and falls with the market performance, this type of investment is volatile and best suited for people with higher risk appetite or some proficiency in investing.

4. Equity Mutual Funds

The mutual fund industry has grown manifold in the last two decades. Equity mutual fund schemes are very popular investment choices amongst investors who want to invest in equities as these funds invest in equity stocks of various companies. As per Securities and Exchange Board of India (SEBI) guidelines any scheme to qualify as an equity scheme must invest minimum 65% of its total corpus in equities and related instruments. Equity mutual funds can be managed actively or passively depending upon the scheme. The minimum investment in a mutual fund scheme can be as low as Rs 500.

5. National Pension Scheme

NPS is a voluntary long term retirement scheme which is managed by the Pension Regulatory and Development Authority (PFRDA). Investments in NPS can be made in funds in various asset classes such as equities, real estate, G-secs, etc. depending upon the risk appetite of the investor. Investments made up to Rs. 1,50,000  lakh are exempt from tax under Section 80C. Additionally, investments of Rs. 50,000 are exempt from tax under Section 80CCD thus taking the overall exemption to Rs. 2,00,000.  Premature withdrawals from NPS are not permitted and withdrawals are partially taxable on maturity. NPS is a good long-term investment for retirement planning.


The return generated by any investment is directly proportional to the amount of risk associated with such investments. The choice of investment should match your risk bearing capability. A conservative investor would not be comfortable investing the majority of his surplus in high risk investment options. Certain types of investments such as PPF, ULIPs etc. are extremely tax-efficient. However, investments in such instruments should be a part of your overall financial planning and not the entire financial planning in it.

Also read: Reasons To Buy Term Insurance From Your First Salary

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.             

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