With the evolution of India’s financial market, investors can now choose from a wide variety of short-term investment plans and long-term investment options. To help you decide which of these investment alternatives is ideally suited to your unique needs, check out details of the various types of investments available in India....Read More
: In Unit Linked Policies, the investment Risk in the investment portfolio is borne by the policyholder.
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Following are the types of investment available in India:
Let’s discuss the types of investments available in detail below:
Investments in equity markets or stocks provide avenue for wealth creation over a long period of time. It takes a great deal of research and prudence to understand the different types of investment opportunities and identify the right stocks to invest in. You also need to time your entry and exit prudently, and it involves continuous monitoring of investments. Capital appreciation happens over long period of time and is dependent upon market volatility.
Depending on the types of investors in India, stock investments can bring good returns on the basis of risk-appetite. The good news is that in the long run, some of the stocks has been shown to deliver greater inflation-adjusted returns when compared with many other classes of assets.
Among the many investment types in India, Certificate of Deposit is a money market instrument which is issued against the funds deposited by an investor. It is invested with the bank in a dematerialized form for a certain period of time. Certificate of Deposit is issued by Federal Deposit Insurance Corporation (FDIC) and regulated by the Reserve Bank of India (RBI).
Investment tips for Certificate of Deposit
Bonds are a type of debt investment that have gained popularity in India. Bond investors lend money to the issuer of the instrument. In the return, the bond issuer i.e. borrower pays interest to the investor at a pre-defined coupon rate till the maturity of the bond. Once the bond matures, the investor receives the original investment back. While most Bonds in India feature a fixed coupon rate, other types of bonds like floating rate bonds and zero-coupon bonds have grown in popularity over the years.
Tips for investing in bonds in India
Investing in real estate involves purchasing residential or commercial properties to allow your capital to appreciate or to generate regular rental income. With such investment types, you get to enjoy a steady stream of income in the form of rent. Another option is to make real estate investments without actually purchasing the property. This can be done by purchasing units of Real Estate Investment Trusts (REITs). REITs in India typically invest in commercial properties and investors earn based on the rental income received from these properties.
Investment in Real Estate Tips
Fixed Deposits, which are offered by banks and non-banking financial organisations (NBFCs), are an excellent option to grow your funds while maintaining the highest level of safety. Among the different types of investments in India, this remain a popular choice since it allows you to deposit a lump sum cash with your lender and choose a tenor that suits your needs. Following the conclusion of the pre-determined tenor, your deposit begins collecting interest at the interest rate you locked in for the duration of your deposit.
Investment tips for Fixed Deposits
Mutual funds (MFs) invest in market-linked instruments such as stocks, bonds, or a mix of both equity and debt instruments. The different types of investors in India can choose between equity funds, debt funds, and balanced funds depending on your financial goals and requirements. Furthermore, you can also invest small amounts periodically in MFs using a Systematic Investment Plan (SIP).
Investment tips for Mutual Funds
Considered to be one of the safest option among the different types of investment in India, Public Provident Fund (PPF) is an instrument backed by the government. You can invest in PPF by opening an account with any bank or post office. While opening the account, the minimum investment amount is as low as Rs.100 in some of the banks (can vary for every bank). Thereafter, the annual limits for PPF deposits range from a minimum of Rs.500 to a maximum of Rs.1.5 lakh. These investment types come with a lock-in period of 15 years and are eligible for tax deductions under section 80C of the Income Tax Act, 1961.
Investment Tips for PPF
The National Pension System (NPS) is another investment plan backed by the government of India. It falls under the types of investments in India that focuses on saving for the long term, making it the perfect addition to your retirement investment plan. NPS investments can be diversified across 4 key asset classes – Equities, Government Bonds, Corporate Bonds and alternative investment funds (AIFs). As per current rules NPS investments are eligible for superannuation after the investor attains the age of 60 years. However, NPS investors can continue their investments up to the age of 75 years without superannuation.
Investment Tips for PPF
Unit Linked Insurance Plans (ULIPs) are among types of investments in India that come with tax benefits as well. It is an instrument that offers you the advantage of investment combined with insurance. The premium you pay to remain invested is divided into two portions. One part goes towards providing you a protective life cover, while the other is invested in market-linked instruments or funds. ULIPs also provide deductions under Income Tax Act 1961 as per prevailing tax laws, since the premium paid is deductible, and the maturity benefits and long-term capital gains are tax-free.
Investment Tips for ULIPs
Senior Citizens’ Savings Scheme (SCSS) is one of the types of investments backed by the Government of India. Indian residents over 60 years of age can open an SCSS account and invest in this scheme for a block of 5 years. Thereafter, the investment can be extended by another 3 years, if needed. You can deposit up to Rs.15 lakh in your SCSS account in multiples of Rs.1,000 only. Deposits up to Rs.1 lakh can be made in cash. However, deposits over Rs.1 lakh need to be made using a demand draft or cheque. Investments in SCSS also qualify for deduction under section 80C, up to a limit of Rs.1.5 lakh.
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Investment Tips for SCSS
If you are a beginner to investing your money, you may find it challenging to choose from the different types of investments in India. In such a scenario, some sound financial advice may be just what you need to help identify suitable investment types for you.
With this comprehensive guide to getting started with different types of investments in India, you can begin the process of charting out your financial plan. By investing your earnings prudently in varying investment types, you can ensure that your hard-earned money is parked in instruments that help you meet your short-term and long-term financial goals.
Investment planning or financial planning is also a great way to plan for retirement, so you can finally exit the rat race and take some time to do what you have always wanted to do in your golden years, whether it’s something as simple as learning a new skill or something as grand as traveling the world.
With Max Life, you can fulfill your investment and retirement goals by investing in plans such as the Max Life Forever Young Pension Plan, Saral Pension Plan, Guaranteed Lifetime Income Plan and more. Besides this, you can also opt for financial security and wealth creation with the Smart Wealth Plan to meet your specific financial requirements.
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Please consult your financial advisor before investing
An investment is an asset that is created with a view to grow money with time. The wealth created making investment can be used for fulfilling various objectives or goals like retirement planning, planning for child education, purchase of other tangible assets, loan repayment etc. You will find different types of investments in India best-suited for particular financial goals.
Before you invest your hard-earned money in any of the investment types in India mentioned above, you should keep the following points in mind:
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