Navigating the Top 17 Best Investment Plans in India in 2024




Amidst the ever-evolving realm of personal finance, selecting appropriate investment alternatives is paramount in developing a resilient financial portfolio. Here is a curated list of India’s 17 most advantageous investment plans as of 2024, representing a range of risk profiles, time horizons, and financial goals.

1. Unit Linked Insurance Plan (ULIP)

Period: 5 years

Investors: Those seeking wealth creation and life cover

Risks: Medium-to-High

Returns: 10-24% p.a.

Limit: Rs. 1000—No Limit

Tax Benefits: Available under Section 80C and Section 10 of the IT Act, 1961

2. Capital Guarantee Plans

Period: 5 years

Investors: Ideal for low-risk tolerance individuals

Risks: Low-to-Medium

Returns: 5 – 18% p.a.

Limit: Rs. 1000—No Limit

Tax Benefits: Available under Section 80C and Section 10 of the IT Act, 1961

3. Pension Plans

Period: 5 years

Investors: Risk-averse individuals with a long-term horizon

Risks: Medium-to-High

Returns: 12 – 22% p.a.

Limit: Rs. 1000—No Limit

Tax Benefits: Available under Section 80C and Section 10 of the IT Act, 1961

4. Child Plans

Period: 5 years

Investors: Those saving for their child’s future

Risks: Medium-to-High

Returns: 14 – 22% p.a.

Limit: Rs. 1000—No Limit

Tax Benefits: Available under Section 80C and Section 10 of the IT Act, 1961

5. Senior Citizen Savings Scheme (SCSS)

Period: 5 years (extendable by 3 years)

Investors: Senior Citizens (>60 years) OR Superannuation/Retired Defence Personnel (55-60 years)

Risks: Nil

Returns: 8.2% p.a.

Limit: Rs. 1000– Rs. 30 lakhs

Tax Benefits: Available under Section 80C of the IT Act, 1961

6. National Pension Scheme (NPS)

Period: Up to 60-70 years (extendable by 5 years)

Investors: All Resident Citizens/ NRIs/ OCIs/ PIOs (18-70 years)

Risks: Low-to-High (Market-linked)

Returns: Tier I: Rs. 500 – No Limit, Tier II: Rs. 250 – No Limit

Tax Benefits: Available under Section 80 CCD (1), Section 80 CCD(2), and Section 80 CCD(1B) of the IT Act, 1961

7. Post Office Monthly Income Scheme (POMIS)

Period: 5 years

Investors: Indian Citizens

Risks: Nil-to-Low

Returns: 7.4% p.a.

Limit: Single Life: Rs. 1000– Rs. 9 lakhs, Joint Life: Rs. 1000—Rs. 15 lakhs

Tax Benefits: Nil

8. Public Provident Fund (PPF)

Period: 15 years (extendable by 5 years)

Investors: Indian Citizens with long-term goals

Risks: Nil

Returns: 7.1% p.a.

Limit: Rs. 500– Rs 1.5 lakhs yearly

Tax Benefits: Available under Section 80C and Section 10 of the IT Act, 1961

9. RBI Saving Bonds

Period: 6 years

Investors: Indian Citizens (Not available to NRIs)

Risks: Nil

Returns: 8.00% p.a.

Limit: Rs. 1000—No Limit

Tax Benefits: Income earned is taxable under the IT Act of 1961. Exempted from Wealth Tax under Wealth Tax, 1957

10. Bank Fixed Deposits

Period: 7 days to 10 years

Investors: Risk-averse individuals

Risks: Nil

Returns: 4-9% p.a.

Limit: Rs. 500– Rs. 5 Crores

Tax Benefits: Deductions available under Section 80C only for Tax-Saver FDs

11. Initial Public Offerings (IPO)

Period: As per your investment profile

Investors: Requires a Demat-cum-trading account

Risks: Moderate-to-High

Returns: 8-15% (depending on IPO performance)

Limit: Decided by the investor

Taxation: Taxable for LTCG (Long-Term Capital Gains) and STCG (Short-Term Capital Gains)

12. Stock Market Trading

Period: As per your investment profile

Investors: Individuals balancing risk and return

Risks: Very High

Returns: 7-20% (depending on asset performance)

Limit: Decided by the investor

Taxation: Taxable for LTCG and STCG gains

13. Mutual Funds

Period: For ELSS Scheme: Minimum 3 years

Investors: Those with medium-to-high risk appetite

Risks: Medium-to-High

Returns: 8-20% p.a.

Limit: Rs. 500—No Limit

Tax Benefits: Exemptions for ELSS scheme under Section 80C of the IT Act, 1961

14. Gold

Period: As per your investment profile

Investors: Anyone

Risks: Low-to-Medium

Returns: 8-18%

Limit: Decided by the investor

Taxation: Taxable for LTCG and STCG gains

15. Real Estate

Period: As per your investment profile

Investors: Anyone

Risks: Medium

Returns: 6-12% p.a.

Limit: Decided by the investor

Taxation: Taxable for LTCG and STCG gains

16. Real Estate Investment Trusts (REITs)

Period: As per your investment profile

Investors: Anyone

Risks: Medium-to-High

Returns: 10-15% p.a.

Limit: For REITs: Rs. 10,000

Taxation: Taxable as per rules specified for REITs

17. Cryptocurrencies

Period: Not applicable

Investors: Anyone

Risks: High risk & High returns

Returns: Not applicable (Market-driven)

Taxation: Profits earned are taxable at a rate of 30% p.a.

Note: The investment landscape is subject to market changes, and individuals should conduct thorough research or consult a financial advisor before making investment decisions.

Conclusion

For sustained financial success, it is crucial to conclude that investment portfolio diversification is predicated on a person’s risk tolerance, financial goals, and investment time horizon. It is essential to remain updated on market trends consistently and periodically reevaluate your portfolio to ensure it aligns with your progressive financial goals.

Low-Risk Investment Plans

A diminished likelihood of substantial monetary detriment distinguishes low-risk investment plans. Conservative investors, who place a premium on capital preservation instead of aggressive returns, may find these options more suitable. The following are examples:

Bank Fixed Deposits: These refer to deposits established with financial institutions for an advance interest rate for a specified period. Predictable interest rates and principal amounts contribute to the minimal level of risk.

Senior Citizen Savings Scheme (SCSS): SCSS provides a fixed interest rate and safeguards the principal amount, catering exclusively to the needs of senior citizens. It is an option with moderate returns and low risk.

Post Office Monthly Income Scheme (POMIS): POMIS, A principal amount returned at maturity, offers a fixed monthly income. Low risk makes this investment appropriate for risk-averse individuals searching for consistent returns.

Medium-Risk Investment Plans

The prospective returns and level of risk of medium-risk investment plans are balanced. Although they provide a degree of stability, these options offer moderate potential for growth. Instances consist of:

Mutual Funds: Mutual funds aggregate numerous investors’ capital by investing in a diversified portfolio of equities, bonds, or other securities. Based on the fund’s asset allocation, the risk level is moderate.

Real Estate: The purchase of tangible properties constitutes a real estate investment. The market may be susceptible to fluctuations, posing a moderate risk despite the potential for high returns.

National Pension Scheme (NPS): An NPS is a retirement savings scheme aiming to diversify investments across various asset classes. As returns are market-correlated, the risk is moderate.

High-Risk Investment Plans

Investing at high risk entails the possibility of substantial financial gain and a greater probability of suffering significant losses. Individuals at ease with volatility and pursuing high returns may find these options applicable. Examples consist of:

Cryptocurrencies: Bitcoin and Ethereum, among other cryptocurrencies, are highly volatile and susceptible to significant price fluctuations. As with the potential for high returns, there is an associated high degree of risk.

Stock Market Trading: Trading individual equities entails a substantial risk due to the volatile nature of the market. Although returns can be considerable, losses can also be significant.

Start-up Investments: As these enterprises may operate under-proven business models, investing in startups entails substantial risk. Yet, profitable investments have the potential to generate significant returns.

Risk management requires that investors diversify their portfolios and match their investment decisions with risk tolerance. Seeking the advice of a financial advisor can yield customised recommendations tailored to one’s unique financial goals and situation.

FAQs

What factors determine the risk level of an investment?

Aspects, including market volatility, the possibility of financial loss, and the asset’s characteristics, impact an investment’s risk level. Generally, low-risk investments prioritise capital preservation, whereas high-risk options may provide greater returns but entail more significant uncertainty.

How can investors choose a suitable investment based on their risk tolerance?

To determine their risk tolerance, investors ought to consider their financial objectives, time horizon, and level of familiarity with market volatility. Optimal investments for individuals with low-risk inclinations include fixed deposits and senior citizen schemes. Conversely, those with a tendency towards moderate to high risk may consider real estate, mutual funds, or even cryptocurrencies.

Why is diversification important in managing investment risk?

Diversification is the process of scattering investments across various asset classes to mitigate the adverse effects that underperforming assets may have on the overall portfolio. This approach reduces risk and increases the likelihood of achieving consistent returns. An adequately diversified portfolio generally comprises a combination of low-, medium-, and high-risk investments based on the individual’s financial goals.




Recent Articles

Related Stories