IntroductionAs there are multiple options for investment on offer today, it may seem a little confusing to choose the right plan. While investment plans are dependent on the individual’s risk profile, time horizon and other factors, some investment platforms offer excellent options for you to start your journey towards wealth accumulation and growing rich.
1. Mutual FundsThey are considered to be one of the best sought after avenues for investment in our country. Amongst mutual funds, equity mutual funds are in particular the top-rated. Such is the earning potential of equity mutual funds. Some of the best performing funds have generated Cumulative Average Growth Returns of up to 20% in a decade. The point to note is that with such high rewards comes high risks as well. Also, it is advised that you consult financial experts before making any decisions. There are many types of portfolios and styles of investing, but with mutual funds, you can access the best of all and generate an excellent income. Investing in these funds is pretty straightforward. Also, you can start with as little an amount as Rs.500 a month. If you are still unsure, then the in-house experts at ClearTax are here to guide you. You can choose from our handpicked funds to meet every profile. If you are unsure of this, then in-house experts at ClearTax are here to guide you. You can choose from our handpicked funds to meet every profile.
2. National Pension SchemeThe NPS is a government-sponsored scheme most suitable for individuals looking for investments with a low-risk profile. With the government backing it, you are less likely to lose on your finances. Regardless of your contribution, you will receive a certain amount as a pension. Also, investing in the NPS qualifies you for additional tax benefits under Section 80CCD (1B). This deduction is over and above regular deductions under Section 80C, Section 80CCC and Section 80CCD where you can save up to Rs.1.5 lakh every year. With NPS, under Section 80CCD (1B), you can avail an additional deduction for investment up to Rs.50,000. Furthermore, under Section 80CCD(2), if you are in the high tax bracket, you can have your salary structured such that your employer contributes 10% of your salary without you having to do the same.
3. Public Provident FundIf you are a risk-averse investor, the Public Provident Fund (PPF) could be the one for you. PPF is one of the popular Section 80C options for the common man because it is not risky. Also, the scheme is easy to start for those who are not internet savvy. You can open this account in a bank or even in a post office. This fund is very similar to a bank Recurring Deposit (RD) but has a tenure of 15 years with the option to extend it further by five years. If you are a salaried person, you may find this an excellent way to set aside a certain sum every month to invest in PPF. If you require a loan, then you can avail one on your PPF and even make an early withdrawal after the 7th year of opening the account. One of the most attractive features of a PPF account is that the interest that you earn on this fund is free from taxation.
4. Real Estate InvestmentReal estate is a good investment option for those who have abundant money in hand. It is an excellent option for long-term investment. The Real Estate Regulation and Development Act (RERA), which came into practice in 2016, has further boosted this market. The industry is well regulated with safety measures in place for buyers and sellers. The fast-paced development and urbanisation, the demand for real estate have witnessed a rise like never before. The availability of accessible home loans has removed the barriers to affordability and allows buyers to save a significant amount of income tax annually until the payment of the home loan.
5. Stock Market Investment
Stock investments are simple to engage in; you can also monitor the performance of your stocks in real-time. Though there has been an introduction of taxing long-term capital gains, shares have proven to be tax-friendly to investors. For investors who can’t afford to invest a considerable amount, stock markets provide the advantage of various small, mid and large-cap stocks such that you can invest in all of them by creating a balanced portfolio. You can adjust your portfolio depending on how much risk you are willing to take. This way, your small contributions can help you participate in generating an income.
The investment avenues listed here have been shortlisted based on market research; while some of the schemes such as the PPF and the NPS are risk-free, some others like mutual funds and stock markets are subject to market risk and require that you make decisions backed by counsel. To know more about the best funds and plans to invest in, visit ClearTax.