Which Investment Plan Gives You the Best Returns?
Updated On Apr 22, 2021
Table of Contents
- Investment Plans that Give the Best Returns
- High-Risk Investment
- Moderate Risk
- Bottom Line
Investment planning is related to many factors that indicate how much return you will receive, how safe your investments would be, and what the benefits are. First of all, you need to understand the investment scope and priorities that will further help you choose from the best investment plans. It is recommended that you go through all the available financial instruments carefully before finalising any investment decision and then making the correct choice. Consider the risk involved and the return you are intending to go for, given by the investment strategy.
Also Read:- Top 5 Investment Options in India
Investment Plans that Give the Best Returns
Here are some of the investment plans based on the risk that gives the best returns
Low Investment Risk
1. Public Provident Fund
It is possible to open the scheme at post offices and banks and the tenure of the scheme is 15 years. It is appropriate for people to extend the length of the scheme by another 5 years. Individuals have to make a minimum contribution of INR 500 and a maximum contribution of INR 1.5 lakhs on an annual basis.
2. Fixed Deposits
FDs assure income from interest and repayment of principal at deposited rates, irrespective of any adjustment in the bank rate of the deposit. Investments into tax-saving FDs can save taxes under Section 80C. The interest gained is however taxable according to the depositor's tax slab. Tax savings FDs have a 5-year lock-in period.
3. Post-Office Savings Scheme
Under this savings scheme, the risks are very minimal and most of the schemes have assured returns. The process of opening accounts for any saving schemes in the post office is easy and quick.
4. National Savings Certificate
As the scheme is supported by the Government of India, assured returns and tax advantages are offered. The scheme's tenure is 5 years and people could invest in this scheme at post offices. The scheme's interest rates (around 8% compounded annually) are determined by the Government of India quarterly
Here are some of the investment plans based on the high-risk that gives the best returns:
1. Unit Linked Insurance Plan (ULIP)
ULIP blends ‘life insurance and market-related investment’. A part of the premium is to insure your life and the rest is invested in stocks, shares, markets, etc. ULIPs have a 5-year lock-in period and are entitled to tax deduction under Section 80C. Insurers also offer different fund options to accommodate different risk choices.
2. Debt/Equity Mutual Fund
Debt-funds invest in ‘fixed income instruments’ including corporate bonds/debt, money market instruments, and government securities. They are less volatile than equity, have limited risk, and generate higher returns than bank FDs. Equity mutual funds contribute at least 65% of their corpus in equity. These funds enable investors to profit from the high growth of equities and have the shortest lock-in period compared to other investment options, besides, qualifying under section 80C of the IT Act for a tax deduction.
3. Direct Equity
It gives investors greater flexibility to invest in shares/stocks of companies and involves high risk; however, it is a high-reward/returns investment choice.
Here are some of the investment plans based on the moderate risk that give the best returns:
1. Monthly Income Plans (MIPs)
MIPs are primarily debt-oriented. More than 70 percent of the contributions go to debt funds. The balance of the investment is invested in stocks. This money usually accrues after the payment of the premium for a few years and provide a regular monthly payout option.
2. Hybrid-Debt Oriented Funds
The primary objective is to generate income/capital appreciation by investing mainly in money market instruments, debt securities, and moderate exposure to equities
Arbitrage Funds: An arbitration fund is a form of mutual fund which appeal to investors who want to take advantage of volatile markets, however, without taking much risk.
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Before investing in any plans be sure that you do proper research and select an investment portfolio that provides sustainable long-term returns, capital growth, and tax-saving advantages. It is also important to understand the risk involved with the investment.