There are multiple options for investment
on offer today and this may seem a little confusing for some to decide which plan to pick. While investment plans are dependent on the individual’s risk profile and other factors, there are some investment platforms that are a good way for you to start your journey towards accumulating wealth and becoming rich.
1. Mutual Funds
These are considered to be one of the best avenues for investment in our country. Amongst mutual funds, equity mutual funds are in particular extremely popular. In fact, such is the earning potential of equity mutual funds that some of the best performing funds have generated Cumulative Average Growth Returns of about 20 percent in a span of a decade. The point to note is that with such high rewards come high risk as well. 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 good income. Investment in these is very simple, and with the Systematic Investment Plan (SIP)
you can start with as little an amount as INR 500 a month.
If you are unsure about this form of investment, ClearTax experts can guide you and you can choose from our handpicked funds that have been curated into plans that meet every profile.
2. National Pension Scheme
is a Government sponsored scheme that is one of the best modes of investment for those with a very low-risk profile. As it is backed by the Government you don’t stand to lose your investment. Regardless of your contribution, you will receive a certain amount of pension. Apart from this, investing in the NPS qualifies you to additional tax benefits under Section 80CCD (1B); this is on top of the other deductions you may be benefitting from like Section 80C, Section 80CCC and Section 80CCD where you can save up to INR1.5 lakh every year. With NPS, under Section 80CCD (1B), you can contribute an additional INR 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 percent of your salary without you having to do that same.
3. Public Provident Fund
If you are a risk-averse investor, the Public Provident Fund (PPF)
could be the one for you. It is one of the best investments for the common man not only because it is not risky but also because the fund is easy to start even 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 5 years. If you are a salaried person, you may find this a good way to set aside a certain sum every month to invest in PPF. If you require a loan 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 Investment
Real estate is a good investment for those with the money for it. It is, in fact, an excellent idea 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 has become well regulated with ample safety measures in place for buyers and sellers. The fast-paced development and urbanization, the demand for real estate have witnessed a rise like ever before. The availability of easy 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
are simple to engage in; you can also monitor the performance of your stocks in real time. Since this last Budget, there has been an introduction of taxing the long-term capital gains, but despite this change, stocks appear to be tax friendly to investors. For investors who can’t afford to invest a huge 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 like the PPF and the NPS are risk-free, certain others like mutual funds and stock markets are subject to market risk and require that you take decisions backed by counsel. To know more about the best funds and plans to invest in, visit ClearTax.