Top 7 Investment Options in India with High Returns

The Covid 19 lockdown was a learning experience for each one of us. And one of the valuable lessons that must have struck many was the need to Save and Invest for a rainy day. A lot many individuals were faced with a growing financial concern due to the Corona lockdown. It turned out to be a period for individuals to relook and realign their financial goals to sail out of this global crisis.

Depending on one’s goals, tenure and risk appetite, we can list out on the best investment options available to the Indian investor. As we are aware, the risk and return tangent would vary from individual to individual. Similarly, the long and short term needs will vary on the basis of age, responsibilities and lifestyle. Keeping all these variables in view, let us evaluate the investment options in no particular order, and you as an investor can fill in your trolley. As we also need to keep in mind that a diversified portfolio is another strategy that one must adopt.

Following are the best Investment Options in India for 2020

1.Fixed Deposits -

For the majority, the most reliable and traditional investment option has been the Fixed Deposits. One can invest in both Banking as well as non-banking financing companies. The rates of interest vary amongst them depending on the tenure for which the deposit has been created.

It is one of the least risky, flexible investments with assured returns. However, there have been a few exceptions where depositors have had to bear the brunt as in the case of PMC and Yes Bank fiasco.

The current average interest rate for FDs is around 7% offered by banks though there is a slight variation when it comes to Non-Banking Finance companies or the cooperative banks that provide as much as 7.85%

2. Mutual Funds - 

For those who wish to reap the benefits of the stock market but are hesitant to trade themselves, Mutual Funds are the solution. One can obtain detailed information on the performance of various schemes, including the latest NAVs and fund comparisons before investing. As a beginner, investing in SIPs would be a good option. For the risk-averse and the steady income investors, the option of debt funds would be a better bet.

However, the equity schemes are the most popular amongst the mutual fund schemes. Though categorised as high risk, these schemes also have a high return potential in the long run. They are ideal for investors in their prime earning stage, looking to build a portfolio that gives them superior returns over the long-term. Typically an equity fund or diversified equity fund as it is commonly called invests over a range of sectors to distribute the risk.

3. Public Provident Fund - 

A secured tax saving scheme initiated by the GOI. The PPF can be opened at a Bank or Post Office. Being a Government-backed scheme, the principal and interest amounts in your PPF account are guaranteed and safe. Contributions to the account of up to Rs 1.5 lakh per annum and interest earned on the savings are both tax-free.

4. Gold - 

Among the plethora of Investment options Gold is a favourite amongst the masses due to its high liquidity and inflation-beating capacity. Moreover, Indians have a penchant for gold jewellery and is a means to tide over financial exigencies. Apart from jewellery, one has the option of picking up gold coins or bars that are hallmarked as per BIS standards.

In the current scenario, a number of Gold Mines have temporarily shut down their business due to the pandemic which escalates into a positive impact on gold prices - a low supply begets a high demand. For 2020, gold has already given a return of 16% till date, and now Covid-19 impact word is the equity market is unsteady, which will further drive up gold prices.

The ideal way to Invest in gold would be to opt for a gold-backed ETF or Gold Sovereign Bonds of the Government of India. Under Gold Sovereign Bonds, investors will get regular income in the form of interest apart from the value appreciation in the price of the bond. Further, the capital gains on the sale of Gold Sovereign Bond held till maturity is also exempt from income tax. 

5. Equity -

Directly dealing in Equity trading is an excellent long term investment plan for most investors. Today the investor has the convenience of trading from his mobile. All it takes is to open a Demat and trading account with any of the brokers. Equity though risky, provides you with higher returns in comparison to other forms of investment. One must be well versed with the share market to invest in equity. Apart from the capital gains that one earns on trading, there is the dividend income that the investor can earn. One can also invest in IPOs that are launched in the market.

The pandemic has seen the stocks on the bourses take a downturn by 25 to 30%. However, traders are optimistic that the market will recover soon. 

Real Estate -

Real estate investment generates assured returns to the investor in the form of rent and capital appreciation. This dual benefit makes it one of the sought after investment by many. The only drawback on this is that it is a highly capital intensive investment option. Depending on the location and the demand, the rents or the property prices keep varying. Moreover, this sector always witnesses an appreciation in value. This is a good long term investment, but one should take sufficient care and make a thorough study of the property before investing. Proper documentation and legal title deeds for the property is essential.

ULIPs- 

Unit Linked Insurance Plan (ULIP) is a perfect blend of insurance along with investment. The instrument provides wealth creation along with life cover from the insurance company where a portion of your investment is directed towards life insurance, and rest is put into a fund that is based on equity or debt or both in line with your long-term goals. The dual benefit of insurance and return makes it a sought after investment option in India. Though the mandatory lock-in period of 5 years is a deterrent.

There are more investment options in India that one can opt for depending on your risk appetite. However, it is always beneficial that your investment strategy involves a diversification as that would provide you with liquidity and flexibility. In case you are still in doubt on your choice of investments, it is always beneficial to get a personal financial advisor on board.