What are the best long term investment options in India? The average Indian always tries to find an answer of this question and sometimes he ends up making a big mistake while selecting Best Long Term Investment Option.
Let me share one incident with you. My relative was looking for long term investment option. He got advice from so call financial adviser to invest in penny stocks. He was new to stock market and without understanding consequences of investing in penny stock he invested money in few penny stocks. As an end result, he ends up making huge losses. Lesson learned from this incident is one should be cautious while selecting investment option.
So, if you are planning to make long term investment and don’t want to make any mistake here is list of Top 10 Long Term Investment options in India.
Top 10 Long Term Investment Options in India
Public Provident Fund (PPF)
Public Provident Fund (PPF) is one of best long term investment options in India. PPF account can be opened by Indian resident at any authorized bank or post office.
Key features of PPF scheme
- Annual Deposit amount – Rs.500 to Rs. 1.5 Lakhs per year
- Tenure – 15 years
- Interest rate – Interest rate is announced by the government time to time. (Current rate of interest is 8.1%)
- Withdrawal – Partial withdrawal is allowed after 7 years.
- Tax Benefit – Deposit amount can be claimed under section 80 C. Interest amount will be tax free.
Why Public Provident Fund is Best long term Investment option?
PPF is one of the best investment options for long term as it offers multiple benefits to the investors.
- Tax free returns
- Low risk investment option with good returns
- Useful for building retirement corpus
Sukanya Samriddhi Account
Sukanya Samriddhi Account (SSA) is next in the list of best long term investment options in India. Sukanya Samriddhi Account is launched to take care of education and marriage need of girl child. This account can be opened only on the name of girl child with age less than 10 years.
Key Features of Sukanya Samriddhi Scheme
- Maximum Age limit – 10 years
- Annual Deposit amount – Rs.500 to Rs. 1.5 Lakhs per year
- Tenure – 14 Years
- Interest rate – Interest rate will be declared by the government time to time
- Maturity -21 Years from date of opening account
- Withdrawal – 50% withdrawal is allowed for the higher study after 18 years of age of girl child
Why Sukanya Samriddhi Account is Best long term Investment option?
Sukanya Samriddhi Account offers following benefit to the investor.
- Attractive returns
- Low risk Investment option
- Tax Free returns
- Useful for child education and marriage
National Pension Scheme (NPS)
National Pension Scheme is best retirement scheme for the long term investment. This scheme is regulated by PFRDA. All individual between age group of 18 to 60 years can join NPS.
Key Features of NPS
- Amount of Investment – Minimum 6000 Rs. No limit for maximum investment
- Returns – Depends upon % of investment in equity and debt
- Tax Benefit – Up to Rs 50,000 under section 80CCD(1B) in addition to Rs 1.5 lakh under section 80C.
What benefit NPS offers to the investors?
- High returns compare to traditional option as part of money is invested in equity.
- Choice to select investment option, fund manager and annuity plans.
- Offers multiple tax benefits.
- It is portable account NPS account number remains same incase of change in employment.
Diversified Mutual Fund
Diversified Mutual Fund is next in the list of long term investment option. Mutual fund is best for the investor who is new to stock market and don’t want to risk the money. Mutual funds are managed by professionals.
Good mutual funds generally give very good returns to the investors. In addition to that mutual funds also offer liquidity, diversification and convenience to the investor. You should invest your money in the mutual funds.
Benefit of Mutual Funds
- Professional Management
- Good Returns
Stock Market Investment
Stock Market investment is next best long term investment option. Stock market investment can make you wealthy provided you invest in right stock at right time.
Example – If you have invested in Infosys IPO in the year 1993 you would have got 100 shares by an investment of 9500 Rs. After 6 bonus issues and 1 stock split, you would be holding 25,600 shares of Infosys today. The value of these stocks would be Rs 3 Crore (excluding dividend).
Another example is Stock guru Rakesh Jhunjhunwala. He has made portfolio of 5000 Cr from 50 Rs. Stock market investments gives benefit of liquidity and diversification. Knowledge and expertise are extremely important while making stock market investment.
Why Stock market is best for long term investment?
- Best returns over the long term
- Tax Benefits over long run
Business or Startup
Next best long term investment is startup. Startup companies are like rising sun with huge upside potential and increase in valuation. A Small startup like Alibaba has made Jack Ma richest businessman in China. So, that is the power of startup. A Valuation of startup companies are increasing day by day. A prudent investor should invest in good startup company to make their money work.
Real estate is most popular investment option of India. Long term investment in real estate pays very good returns. However, you need to be careful while making investment in real estate. Real estate investment requires legal expertise and lot of black money. In addition to that location, facilities and age of property plays important role in deciding price of real estate. Don’t be in hurry to make investment in real estate. If required take help from experts.
Gold a yellow shining metal is also in the list of long term investment option. Gold is considered as a hedge against inflation. You should keep gold in your portfolio. However, as a thumb rule it should not exceed 10% of your portfolio value. Best recommended way to invest in gold is through Gold ETF. Gold ETF gives multiple benefits to the investor like –
- No requirement of physical storage
- Easy to buy and sell
- No making charges
- No chance of damage or theft
Fixed deposit as name suggests it gives fixed return to the investor. Fixed deposit is best investment for the conservative investor. Fixed deposit is offered by bank and company. Anyone can invest in the fixed deposit. Fixed deposit offers following benefits.
- Ease of operation withdrawal and availability
- Capital safety
- Reasonable interest rate
Recurring deposit is special type of term deposit offered by bank. Recurring deposit allows you to deposit a fixed amount every month. Recurring deposit earns interest at the rate applicable to the fixed deposit. You can generate very good return over a long term by investing in recurring deposit.
Over to You –
Select your investment option carefully. Make sure investment option selected by you in aligned with your investment objective, your risk profile and age. If you are reaching retirement age it is better to select conservative investment option like fixed deposit or recurring deposit and if you are young you should opt for equity, mutual funds.
Hope this post about Top 10 Best Long term Investment options in India was useful to you. Do share your views in the comment section.