Investment is a necessity to grow your money for the future. While there are various types of investment options to choose from in India, one should keep in mind their age and their requirements for investment. This includes deciding whether
- To invest long term or short term
- To invest in risky or risk-free investments
- Check liquidity requirements in case of financial emergencies
You need to take into consideration these factors while selecting your investment avenue.
There are 2 buckets of investment options to invest in India in 2021
- Financial Assets that can be further segregated into
- Market linked products like stocks and mutual funds.
- Fixed income products such as Public Provident Fund and Bank Fixed Deposits
- Non Financial Assets that include physical gold and Real Estate
While choosing an investment plan from the various investment options, it is critical to match the risk profile of the investor, that is, you with the related risk of the product
Mutual funds are an investment option where a fund manager manages your account by investing your money in stocks and bonds based on their experience. In an actively traded Mutual Fund, the returns are largely dependent on the ability of the fund manager to generate returns by investing the clients money in equities and bonds.
Gold is another investment option in India in 2021. Possessing gold in the form of jewelry comes with its own risks such as safety as well as high cost including the charges for making gold. Although, nowadays investing in paper gold is a cost effective investment yet a volatile and a risky one.
Investing in gold although is a traditional investment in India. Apart from investing in gold as a jewelry, you can also invest in gold ETFs and sovereign gold bonds.
National Pension System (NPS)
The National Pension System is a long term investment product that is focused on retirement. It is managed by the Pension Fund Regulatory and Development Authority (PFRDA). It is a mixed bag of investment options containing equity, fixed deposit, corporate bonds, liquid funds and government funds among others. The decision of investing of how much to invest in the National Pension Scheme involves analysing your risk appetite for the same.
Public Provident Fund (PPF)
Public Provident Fund (PPF) scheme offered by the Government of India with the aim of providing a secure post-retirement income. PPF has a long tenure of 15 years and interest is huge especially in the later years.
Senior Citizens’ Saving Scheme (SCSS)
SCSS is a 5 year investment option for the people and can be availed by anyone above 60 from a post office or bank. The tenure can be further extended by 3 years once the scheme matures. With an upper limit of Rs. 15 lakh, the interest rate on scss scheme is payable quarterly and is fully taxable.
Fixed deposit is one of the most important investments. A Fixed Deposit investment scheme provides a safe investing option with the least amount of risk and highest form of liquidity. A fixed deposit is an investment of your savings to earn a higher rate of return than a regular savings account.
You need to go through Fixed Deposit schemes of different banks and select the one as per your needs and requirements. Bajaj Finance Fixed Deposit provides one of the highest returns with an interest rate of up to 6.75%.