Top Rated Best Investment Options in India in 2024

In 2024, the diverse financial landscape of India presents a plethora of best investment options. From the stability of savings bank accounts to the volatile nature of equity markets, India offers investment avenues that cater to varying risk appetites.

Whether you’re searching for the best investment options in India, specifically in 2024, or simply exploring all investment options in India, understanding your goals is paramount. Dividing financial objectives into long-term, medium-term, and short-term buckets can pave the way for astute decisions. While good investment options in India might provide substantial returns, the level of risk attached should align with your comfort zone.

As the old saying goes, “Don’t put all your eggs in one basket.” This holds especially true in the Indian investment scenario, where from low to high risks, there’s a fitting option for every investor. So, which investment is best in India for you? Let’s dive deep and find out.

What is an Investment Plan?

An investment plan is a systematic method for allocating money to different assets or asset classes to meet certain financial goals. An organised strategy to make informed decisions about how to deploy capital in a way that matches an investor’s goals, risk tolerance, time horizon, and other personal or financial concerns is at the heart of an investment plan.

What is Investment Horizon?

Your investment horizon is when you expect to hold a specific investment instrument in your portfolio. It is one of the key considerations guiding asset allocation and portfolio management. Investment horizon is commonly measured in years and months but can also be days in case of certain assets like Overnight Mutual Funds. When you reach the investment horizon, you can plan to liquidate the investment and use the proceeds to accomplish your objective. For asset allocation, investors often refer to three types of investment horizon:

• Short-term – This usually means a tenure of less than three years.
• Medium-term – This could mean an investment horizon of three to five years.
• Long-term – Five years and longer is often a time frame referred for long-term investments.

Best Investment Options in India

India boasts a variety of financial instruments, catering to investors with diverse needs and risk profiles. Here are some of the best investment options available in India:

Government Bonds

Risk: Very Low
Return: As per the bond’s coupon rate
Investment and Term: Varies per bond
Benefits: Safe with guaranteed returns.

Post Office Monthly Income Scheme

Risk: Very Low
Return: 6.60% p.a., paid monthly
Investment: INR 4.50 lakh (single) to INR 9 lakh (joint)
Term: 5 years
Note: Interest is taxable.

National Pension Scheme (NPS)

Risk: Low
Return: Market-linked
Investment: Starts at INR 500 for Tier I; no max annual limit
Term: Till retirement (usually 60 years)
Benefits: Tailored for retirement with tax advantages.

Public Provident Fund (PPF)

Risk: Very Low
Return: 7.10% p.a. (can vary)
Investment: INR 500 to 1.5 lakh p.a.
Term: 15 years
Benefits: Guaranteed returns and tax-free.

National Savings Certificate (NSC)

Risk: Very Low
Return: As per the Ministry of Finance
Investment: Starts at INR 1,000; no max limit
Term: 5 years
Benefits: Government-backed and tax benefits under Section 80C.

Gold Exchange-Traded Funds (ETFs)

Goal: Electronic gold investment.
Needs: Demat account.
Returns: Tied to gold’s market performance.
Taxation: Short-term and long-term capital gains.

Real Estate Investment Trusts (REITs)

Goal: Income via real estate.
Needs: Demat account for trading.
Returns: Potential 8% to 14% short-medium term.
Income: Treated as dividend, rental, or interest.

Sovereign Gold Bonds (SGBs)

Goal: Gold investment without physical storage.
Minimum: 1 gram of gold.
Returns: 2.5% semi-annual interest.
Benefits: Tax-free maturity.

Unit-linked Insurance Plans (ULIPs)

Goal: Investment + Insurance.
Minimum: INR 1,500/month.
Flexibility: Post 5-year lock-in.
Benefits: Tax-free upon maturity under Section 10D.

Equity Mutual Funds

Goal: Higher returns with market risk tolerance.
Minimum: INR 1,000.
Types: Various, including growth funds.
Taxation: Short-term and long-term capital gains.

Best Investment Plans for Long Term

PPF (Public Provident Fund)

PPF or PF, as they are commonly known, are the traditional money-making instrument. Most working-class people, especially the ones in the private sector, prefer it because of the tax benefits that it provides and the low risk involved. PPF has a15 year lock-in period. The returns are fixed and have a fixed interest rate. Every year you can invest Rs. 1.5 Lacs, on which you can claim tax benefits under Section 80C of the Income Tax Act. The maturity amount that you receive is also tax-free.

 Mutual funds

Even though mutual funds carry market risk, they are still among the preferred choices for long-term investment. Before investing, you must study and understand the market carefully to avoid risk. To mitigate them further, you can diversify your portfolio between debt and equity funds. Equity funds will yield more returns, and debt funds will ensure lower risk. You can diversify your portfolio as per your risk appetite. Investing in the funds for a longer period reduces the risk factor further as a longer period absorbs the market fluctuations. You can invest your money either in lump sum or SIP.

 NPS (National Pension Scheme)

This investment plan is considered one of the safest because it has the backing of the government of India. People prefer it because of the lower risk and the minimum requirement of the investment amount. Your investment amount will have a locked-in period till the age of 60 or your retirement age. Over the years, the corpus will be accumulated. Once the NPS reaches maturity, you can withdraw 60% in a lump sum and the remaining 40% is used to buy an annuity from which you receive a pension.

Best Investment Plans for the Medium Term

Post Office Time Deposit

The post office time deposit accounts function the same way as the fixed deposits offered by the banks. You invest the amount in a lump sum for a fixed period of time. The maturity tenures for the post office time deposit account are one year, two years, three years, and five years. If you wish, you can increase your tenure by writing an application to the post office. However, tax benefits are only offered for deposits for five years. Any individual or joint account holder can invest in this scheme. The current interest rate from one year to three years is 5.5%. For five years of account tenure, the interest rate is 6.7%.

National Savings Certificate

One of the most famous options offered by post offices is the NSC. These plans come with a lock-in fixed period of 5 years. The amount invested monthly is compounded and given back to the customer at the end of the tenure. The entire amount is exempted from tax under Section 80C of the Income Tax Act, 1961, provided the amount per year does not exceed the limit of INR 1.5 Lacs. Even though post offices operate this plan, nowadays, there are options to open this scheme even through banks. This plan is low-risk and offers a higher rate of interest when compared to fixed deposits.

Bonds

Bonds are debt securities and are treated as company stock. You can purchase them at the stock market as per the SEBI regulations. Bonds can be issued at either a fixed rate of interest or a floating interest rate. While investing, you are required to invest your money in a lump sum. The maturity period of bonds is 10 years, and they offer annual or bi-annual payouts. These payouts are added to your income and get the tax treatment as that of your income slab. The interest rate offered on the bonds is higher than what you get in the fixed deposits. 

Best Investment Options for Short Term

Fixed Deposits (FDs)

The most low-risk and widely used top investment plan is the fixed deposits scheme. These plans collect money and hold it for a predetermined tenure. Based on the tenure, interest is calculated and paid back. Breaking the deposit in the middle might attract penalty charges. Due to this reason, the matured amount might be lower than the calculated amount. Individuals who opt for a safer, low-risk investment plan pick the fixed deposit as their first option. With internet banking, anyone with a savings account can easily open an FD within seconds.

Debt Funds for Short Term

Short-term debt funds ranging from 6 months to 3 years are also among the various financial instruments. Due to the short investment duration of the funds, you need to time the market in order to minimize the risk strategically. However, due to their shorter tenure, these funds offer more liquidity. Instant cash is the main advantage of opting for this scheme. However, careful analysis is needed to pick the best-performing short-term fund.

Why Should You Invest?

Financial planning is needed irrespective of how much you earn. You should save a portion of money from your income every month. While saving is a good option for planning your future, they are not self-sufficient. Keeping money idle in a savings account will not yield good returns. Instead, a portion of the savings money has to be invested in multiplying your funds. You should strike a balance with savings and investments as savings offer you more liquidity.

When should you start Investing in Investment plans?

The ideal time to start investing in investment plans is as soon as you have a stable source of income and have covered basic financial security measures, such as an emergency fund.

Beginning your investments early is advantageous for several reasons. Firstly, it capitalizes on compounding, where your earnings generate further returns. This phenomenon magnifies over time, so the sooner you start, the more you potentially gain. Early investments also grant a longer horizon, allowing you to weather market volatilities and recover from downturns. Moreover, starting young cultivates financial discipline and enables achieving long-term financial goals with ease.

How to Choose an Investment plan?

Choosing an Investment plan can be a daunting task if done without any foresight or plan of action. If you’re clueless as to how to start, here’s a rather simple blueprint of getting on the investment bandwagon.

1. Set Your Goals: Know what you’re investing for, be it retirement, a home, or wealth accumulation.
2. Know Your Risk: Understand how much risk you’re comfortable taking.
3. Explore Options: Learn about various investments like stocks, real estate, or mutual funds.
4. Diversify: Spread your money across different investments to manage risks.
5. Mind the Costs: Be aware of any fees or charges tied to your investments.
6. Stay Updated: Keep an eye on market trends and news.
7. Seek Advice: Consider consulting a financial expert for personalized guidance.
8. Think Long Term: Aim to invest with a future perspective.
9. Start Early: Begin investing as soon as you can and be consistent.

How Risk Appetite Affects your Investment choices?

Risk appetite is one of the most crucial factors in steering your investment choices. It is a known fact that the world of investment, especially the stock market sees more losses than gains. Therefore, choosing your risk level from a monetary standpoint is essential.

If you have a high risk appetite, you are more likely to go towards high paying investments with a greater chance of defaulting or losses. If you are a person with a low risk appetite, you will likely align yourself with lower returning investments, but with a high safety ceiling.

What Documents Are Required to Buy Investment Plans?

The precision of documents to be submitted may vary from institution to institution. But for the most part, the documents that are standard across the arena of investment is:

• Aadhaar card
• Voter ID
• Ration card
• Passport 
• PAN card
• Driving License

Conclusion

The list of investment plans mentioned above is not exhaustive; it will serve as a starting point for your investment journey. Careful research can direct you to better options to make investments. The key idea is to invest money without failure. Remember that you should invest a portion of your income and have some saved over for emergencies.

When you start investing, do not put all your money into one plan. Rather, investing in multiple areas and increasing your portfolio will assure success. While one plan fails to provide better results, other plans might help you out.

Frequently Asked Questions (FAQs)