Today individuals have become more aware of the merit of smart investing, especially when it comes to building a corpus that beats inflation. As they try to generate wealth to meet their financial goals, it’s crucial that they navigate through the features and limitations of different investment options available in the market. Doing this will allow them to pick an investment avenue that aligns with their goals and risk appetite.
On that note, let’s check out the best investment plans in India in 2023 to give you the required jump start.
Top investment options in 2023
Take a look at these investment options to pick an investment instrument that matches your needs and requirements.
- Senior Citizen Savings Scheme or SCSS
Senior Citizens’ Saving Scheme, or SCSS, is essentially a risk-free tax-saving option that is directed at senior citizens. SCSS is among the best investment options for those looking to plan their retirement. It allows individuals to open a single or a joint account and offers regular income on maturity. Notably, it allows premature withdrawals and also extends the nomination facility. SCSS is accessible via banks and posts offices in India.
- National Pension Scheme or NPS
National Pension Scheme is a government-backed investment instrument that offers investors guaranteed pensions. Under this scheme, the contribution is invested in bonds, securities, equities, and other alternatives per the investor’s preference.
NPS accompanies the lowest fund management charges and also allows partial withdrawals. In case of NPS tier-I accounts, the accumulated interest are exempted from taxes. Additionally, 40% of the proceeds are also exempted from tax on lump sum payments. However, in case of regular payouts are taxed as regular income. This makes it crucial to know the NPS tax benefit of tier 1 or tier 2 in advance based on one’s account type.
- Post Office Monthly Income Scheme Or POMIS
This investment option is a government-backed scheme that helps save money on a monthly basis. It is regulated by the India Post Office Department and extends the facility of single or joint life accounts with 2-3 individuals. Even a minor who is above 10 can open a Pomis account. Notably, if monthly interest is not claimed, no interest is accrued on the accumulated interest amount. The internet earned is taxable, and there’s no tax rebate on maturity.
- Public Provident Fund Or PPF
PPO is among the best investment options in India. The government-backed scheme guarantees returns and is suitable for those with low-risk appetites. PPO also allows individuals to avail of loans after 3 years of contributions until the 6th year. Individuals can withdraw their funds from the PPO account after the 6th year.
- Bank Fixed Deposits
Fixed Deposits and counted among the safest investment options today and helps generate consistent returns over time, with interests paid monthly, quarterly, half-yearly, or yearly. Individuals can avail of the overdraft facility against their FD account. Individuals can open an FD for a flexible tenure and earn cumulative or non-cumulative interest on the same based on their choice of account type. Individuals can use an FD calculator to understand how the fixed deposit tenure and interest rate impact principal deposits. The tool can also help compare the expected maturity amount from FD with cumulative and non-cumulative interest components.
- Direct Equity
In equity investments, individuals buy market-linked units or stocks or a company that’s listed on the stock exchange. Typically, equities carry a high risk-reward aspect. In other words, compared to traditional investment options, equities are capable of generating higher returns. However, being a market-linked investment instrument, they are exposed to market volatility. Individuals with a higher risk appetite can benefit from investing in equities. To invest in a company stock, individuals need to open a Demat account. Individuals must analyze the market factors to decide the most suited entry and exit time from an equity investment.
- Mutual Funds
Mutual Funds are a popular investment option that allows individuals to park money into market-linked instruments such as equities, debt, and money market funds. Based on one’s financial goals and risk appetite, individuals can adjust the ratio of debt and equity in their mutual fund. The returns on the invested sum are also as per market movement. Unlike equities, mutual funds allow one to hold a diversified portfolio which is looked after by professional fund managers. The Equity Linked Savings Schemes mutual funds extend tax benefits under Section 80C of the Income Tax Act.
- Gold ETF
Gold Exchange Traded Funds or ETFs are among the best investment tools that are known to generate high returns. The instrument is known to trade units of gold bullions or stocks in paper or DEMAT, tracking the market price changes in domestic gold. Gold ETFs have high liquidity, which means they can be easily traded on the stock exchange. They can be used as security to avail of loans. However, they are market-linked. Hence individuals should analyze the market movements and their risk-taking capability before investing in gold ETFs.
- Unit Linked Insurance Plan or ULIP
Unit Linked Insurance Plan offers investors with dual benefits of investment and insurance. A part of the ULIP premium is used for insurance coverage, whereas the remaining part is invested in shares, bonds, securities, etc. ULIPs are long-term investment tools with a lock-in period of 5 years and offer the flexibility to switch between funds. It extends tax benefits on both premiums and maturity proceeds.
Essentially, cryptos are digitally encrypted money stored on a blockchain or digital ledger. They don’t require any third-party entity like banks to complete transactions. Notably, cryptocurrencies are taxed at 30%, and the crypto market is highly volatile with a high-risk reward aspect. Since there is no regulatory body involved, it is crucial that investors learn more about cryptocurrency and digital asset norms to ensure safe transactions. Besides these, you can consider other investment instruments such as real estate, real estate investment trust funds, and government bonds. Regardless of which investment tool you choose, make sure to pick one that matches your risk appetite and can help you ace your financial goals.