Investment: Popular Investment Options Plans with High Returns 2024 (2024)

How an Investment Works

Investing involves strategically using your money to purchase assets like stocks, bonds, or real estate with the expectation of future gains. These assets can potentially grow in value over time (appreciation) or generate regular income payments (dividends or interest). The goal of investing is to increase your wealth and achieve your long-term financial objectives.

Types of Investment Options in India

Types of investment options include:

1. Low-Risk Investments

Investments with low risk involve minimal or zero levels of risk, providing stable and often guaranteed returns. These options are well-suited for risk-averse investors seeking a secure avenue for earning returns. Low-risk investments include Fixed Deposits, Public Provident Fund (PPF), and Sukanya Samriddhi Yojana, offering a reliable and stable returns.

2. Medium-Risk Investments

Medium-risk investments carry a slightly higher level of risk than low-risk options. They are suitable for investors looking for a balanced portfolio. Medium-risk investments includes Debt Funds, Corporate Bonds, and Government Bonds, offering a balance between risk and reward.

3. High-Risk Investments

High-risk investments are typically market-linked and come with higher levels of risk. Despite the potential for higher returns in the future, these investments involve significant volatility and uncertainty. Suited for investors who can take more risk to earn good return, high-risk investments include Stocks, Mutual Funds, and Unit Linked Insurance Plans (ULIPs).

With many investment plans available, choosing the right one could be challenging. Listed below are a few investment plans that can help grow savings.

Popularinvestment plans in India

If you are wondering where to invest money, here are a few types of investment that you can choose from:

1. Stocks

Stocks represent a share of ownership in a company or an entity. Stocks are one of the best investment avenues for long-term investors to earn generous returns. However, since these are market-linked instruments, there is always the risk of capital loss.

2. Fixed deposit

Fixed deposit is an ideal investment tool for risk-averse investors. An FD bears no effect of the market movements while offering secured returns on your deposit. Even investors with high-risk appetites choose to invest in FD to stabilise their portfolios.

Bajaj Finance, a leading NBFC, offers one of the highest interest rates, up to 8.85% p.a., on its Fixed Deposit. You can also calculate the interest returns with the help of Bajaj FinanceFixed Deposit Calculator.

3. Mutual funds

Mutual funds are investment tools managed by fund managers, which pool people's money and invest in stocks and bonds of different companies to yield returns.You can earn generous returns even when starting with a smaller initial deposit amount.

4. Senior citizen Savings Scheme

Senior citizen Savings Schemeis a long-term saving option for retirees. This option is ideal for those who aim to create a steady and secure income stream post-retirement.

5. Public Provident Fund

PPFis a trusted investment plan in India. Investments start at just Rs. 500 per annum and the principal invested, interest earned, and maturity amount are all exempt from tax. It has a lock-in period of 15 years, with partial withdrawals allowed at various points.

6. National Pension Scheme (NPS)

NPSis one of the profitable government-backed investment options that provide pension alternatives. Your funds are invested in bonds, government securities, stocks, and other investment options. The age of the investor determines the length of the lock-in period, as the scheme does not mature until the investor reaches the age of 60.

7. Real estate

Real estate is one of the fastest-growing sectors in India, which holds excellent prospects. Buying a flat or plot is one of the best tools among India's many investment options. As the property rate is likely to increase every six months, the risk is low and real estate works as an asset that offers high returns over a long-term period.

8. Gold Bonds

Sovereign Gold Bonds are government securities denominated in grams of gold.Reserve Bank issues the bond on behalf of the Government of India as a substitute for holding physical gold. Investors have to pay the issue price, and one can redeem the bonds on maturity.

9. REITS

Depending on your risk appetite, you can choose to invest in either market-linked instruments or those that remains unaffected by the market movements. Market-linked investments yield higher returns, but these are not always the best investment plans as they risk losing your capital. In comparison, investment tools like fixed deposits offer more security of funds. Bajaj Finance is one such financier that provides the dual benefit ofhigh FD ratesand safety of funds.

10. Government bond

A government bond is a type of debt security issued by a government to raise capital for various purposes.Some of the purposes are financing infrastructure projects, paying off existing debt, or funding social programs.
When an investor buys a government bond, they are essentially loaning money to the government. In exchange for this loan, the government promises to pay the investor interest at a specified rate for a fixed period of time, usually ranging from a few months to several years.
At the end of the bond's term, the government repays the principal amount (the amount originally borrowed) to the investor. Government bonds are considered a low-risk investment because they are backed by the full faith and credit of the government. This means that the chances of the government defaulting on its debt obligations are considered extremely low.

11. Direct equity

Also known as owning stocks or shares, it refers to the ownership of a company's assets by purchasing its shares directly from the stock market. When you buy direct equity, you own a portion of the company and have a claim on its assets and earnings.
As a direct equity holder, you have the potential to earn profits through capital appreciation.This signifies an increase in the value of the company's shares over time, and higher dividends. Dividends are a portion of the company's earnings distributed to shareholders.

12. Unit Linked Insurance Plans (ULIPs)

A Unit Linked Insurance Plan (ULIP) is a type of life insurance policy that allows the policyholder to benefit from potential returns on investment, while also providing a life insurance cover. ULIPs are designed to provide the policyholder with the benefits of both investment and insurance in a single plan. The policyholder has the option to choose the investment funds based on their risk appetite and financial goals. ULIPs offer flexibility in terms of investment as the policyholder can switch between different funds based on their financial goals and market conditions. They also provide tax benefits on both the premium paid and the benefits received, subject to certain conditions.

13. National Savings Certificates (NSC)

National Savings Certificates (NSC) is a Savings Scheme offered by the Government of India through the Department of Post. It is a fixed-income investment that allows individuals to invest a lump sum amount and earn interest on it. The scheme comes with a maturity period of five years, and the interest rate is fixed at the time of investment. Currently, the interest rate is 7.7% per annum (as of January 2024).
The investment made in NSC qualifies for a tax deduction up to Rs. 1.5 lakh per financial year, under Section 80C of the Income Tax Act. The interest earned on NSC is also taxable as per the individual's tax slab rate, but no TDS (tax deducted at source) on the interest. The minimum investment amount in NSC is Rs. 100, and there is no upper limit for investment.

14. Sukanya Samriddhi Account

Sukanya Samriddhi Accountis a government-backed Savings Scheme for the girl child, launched under the Beti Bachao Beti Padhao campaign. The scheme is aimed at promoting the welfare of the girl child in India and encouraging parents to save for their daughters' education and marriage expenses. The account can be opened in the name of a girl child who is below the age of 10 years, by her parents or legal guardian. The account can be opened in any post office or authorised bank branch in India. The minimum deposit amount for Sukanya Samriddhi Account is Rs. 250, and the maximum deposit limit is Rs. 1.5 lakh per year.

The account offers an attractive rate of interest, which is currently set at 8.2% per annum (as of January 2024), compounded annually. The interest earned on the account is tax-free and the contributions made to the account are eligible for tax deductions under Section 80C of the Income Tax Act.

15. Kisan Vikas Patra (KVP)

Introduced in 1988 as a small saving certificate scheme, the Kisan Vikas Patra aimed to instill long-term financial discipline. Initially designed for farmers, the scheme has since expanded its eligibility criteria, allowing anyone who qualifies to invest. Kisan Vikas Patra post office scheme guarantees returns. Investors can obtain certificates from any India Post Office branch or select public sector banks.

16. Post Office Time Deposit

Post Office Time Deposit is a fixed-term deposit offered by India Post. It allows individuals to deposit a lump sum amount for a fixed period, ranging from 1 year to 5 years, at a predetermined interest rate. This investment option provides capital protection and a fixed return, making it suitable for risk-averse investors. The flexibility in choosing the deposit tenure caters to investors with different financial goals and time horizons.

Where should you invest your money?

Depending on your risk appetite, you can choose to invest in either market-linked instruments or those that remains unaffected by the market movements. Market-linked investments yield higher returns, but these are not always the best investment plans as they risk losing your capital. In comparison, investment tools like fixed deposits offer more security of funds. Bajaj Finance is one such financier that provides the dual benefit of high FD ratesand safety of funds.

How to start investing

1. Define your goal

Determine what you are saving for (retirement, down payment, etc.) and your desired timeframe.

2. Research

Research different investment options, their risks and potential returns. This can involve reading articles, watching videos, reading balance sheets or consulting a financial advisor.

3. Diversify

Begin with a manageable amount and spread your investments across different asset classes (stocks, bonds, real estate) to mitigate risk.

4. Review

Regularly review your portfolio and adjust your investments as needed to align with your goals and market conditions.

How risk appetite affects your investment choices?

Most investments carry a certain level of volatility, and usually, the returns on an investment are more when the levels of risk are high. Thus, investment decisions are often taken based on investors' risk appetite.

1. Low-risk investments
   Fixed-income instruments include bonds, debentures,fixed depositschemes, and government Savings Schemes.
2. Medium-risk investments
   Debt funds, balanced mutual funds fall in thiscategory.
3. High-risk investments
   Volatile investments include instruments like stocks and equity mutual funds.

Factors for choosing the investment plan?

Factors for choosing an investment plan include:

1. Investment goal

It is essential to identify your investment goals - whether it is long-term wealth building, to fund education or marriage expenses, or for short-term financial goals.

2. Risk tolerance

The level of risk that you are willing to take on, which differs based on your age, financial position, and investment goal, must be factored in.

3. Investment Horizon

It is crucial to determine the length of the investment period, and how it aligns with your financial goals.

4. Tax considerations

Investments can be taxed at different rates, based on the investment duration and type.

5. Investment cost

Fees and charges levied by the investment option, such as brokerage fees, administration fees, exit fees, and fund expenses, must be considered before investing.

Benefits of investment plans

Investment plans offer a multitude of benefits for individuals seeking to grow their wealth and secure their financial future. These plans provide a structured approach to investing, allowing you to achieve your financial goals over time while enjoying various advantages. Here are some of the key benefits of investment plans:

1. Goal-based planning: Investment plans enable you to set specific financial goals, whether it's saving for retirement, buying a home, funding your child's education, or starting a business. By creating a structured plan, you can tailor your investments to meet those goals within a defined timeframe.
2. Wealth creation: Investment plans offer the potential for substantial wealth creation over time. By investing in various assets like stocks, bonds, or mutual funds, you can benefit from market growth and compound interest, significantly increasing your net worth in the long run.
3. Inflation protection: One of the most significant advantages of investment plans is their potential to outpace inflation. Inflation erodes the purchasing power of money over time, but by investing in assets that can grow at a rate higher than inflation, you can protect your savings and maintain their real value.
4. Tax benefits: Certain investment plans, such as Public Provident Fund (PPF), Unit Linked Insurance Plans (ULIPs), Equity Linked Savings Scheme (ELSS), and Sukanya Samriddhi Yojana (SSY), offer tax-saving benefits under sections 80C and 10(10D) of the Income Tax Act. These deductions can significantly reduce your taxable income, thereby lowering your overall tax liability.
5. Regular income: Some investment plans, particularly those that invest in dividend-paying stocks or bonds, can provide a regular income stream. This is especially beneficial for retirees or individuals seeking a steady income source.
6. Expert management: Many investment plans are managed by professional fund managers who have expertise in analysing market trends and selecting investment opportunities. This can be particularly advantageous for individuals who lack the time or knowledge to manage their investments actively.

Why is the Bajaj Finance FD one of the best investment options?

• High-interest rates up to8.85% p.a.
• Highest safety ratings of CRISIL AAA/ STABLE and [ICRA]AAA(Stable).
• Periodic payout options with aNon-Cumulative FD.
• Loan against FD to avoid premature withdrawals.

Investing in a Bajaj Finance FDis now easier than ever. Start your investment journey from the comfort of your home with our end-to-end online investment process.

Conclusion

Investing isn't just about putting money aside; it is about strategically putting it to work with the potential to grow it over time. While there is always a chance of losing money, it remains the primary tool individuals use to save for significant life goals like dream homes or a comfortable retirement.

Calculate your expected investment returns with the help of our investment calculators

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