Top 7 Investment Options in 2018

When it comes to making investments, most people look out for investment options that offer high returns but are relatively low-risk. However, it is important to remember that the level of risk that you are willing to take is tied to the returns that you will receive. Thus, you need to assess your appetite for risk and invest in financial avenues accordingly. Listed below are a few popular financial options that you can consider investing in this year.

  • Public Provident Fund: Public Provident Fund (PPF) is a safe investment option for risk-averse individuals. The minimum and maximum investment limits are Rs.500 and Rs.1,50,000 per annum, respectively. One of the key benefits of opening a PPF account is that you can also claim tax benefits up to Rs.1,50,000 lakh. PPF accounts can be opened for a duration of 15 years. However, account holders can take loans and make withdrawals from their PPF account balance during the 15-year tenure.

  • Life Insurance: A life insurance policy should be a part of your financial portfolio, regardless of what your age is. In addition to protecting your dependents from financial problems in case of an unfortunate eventuality, certain life insurance products also serve as a savings/investment option. Thus, if you are looking to receive guaranteed returns through a life insurance policy, it is best to purchase an endowment policy or a money-back policy. If you are, however, looking to get market-linked returns through a life insurance product, you should consider investing in a unit-linked insurance plan (ULIP). Under ULIPs, a part of the premium that is paid by the policyholder is invested in mutual funds, bonds, stocks, etc., thus, helping the policyholder receive market-linked returns. If you are looking to save for your retirement, you should consider purchasing an annuity policy, through which you will be able to receive annuity payments during your retirement years.  

  • Bank Fixed Deposits: Fixed deposits, which are offered by banks and non-banking financial institutions (NBFCs), are one of the safest investment options. Individuals who open fixed deposits can invest a lump sum for periods ranging from 7 days to a few years. The interest rate paid to the account holder varies from bank to bank. Fixed deposits are a popular savings tool among individuals since they are risk-free and offer a higher rate of return than a regular savings bank account.

  • Real Estate: Among Indians, real estate has been a popular investment option since several decades. Real estate can be a good investment avenue for individuals who would like to invest in a long-term financial avenue, given that real estate does not offer much liquidity unlike other investment options. Real estate can consist of buildings/property or land. With real estate, you can earn returns through capital appreciation or through rental income. However, when it comes to making real estate investments, there are certain factors that you should pay attention to before making the investment such as the location of the property, past appreciation of the property/land, etc.

  • Gold: Purchasing gold ornaments has been another popular investment option for many in India. However, when you purchase gold in the traditional form, i.e. gold jewellery and ornaments, you also pay for the making charge of the item. Making charges can range anywhere between 6% and 14% of the total cost of the gold ornament that you are purchasing. Thus, if you are looking to invest in gold, it is advisable to purchase gold ETFs instead of traditional gold jewellery and ornaments. Gold ETF transactions happen on a stock exchange like the National Stock  Exchange (NSE) or Bombay Stock Exchange (BSE).

  • Mutual Funds: If you are looking to create a significant corpus, it is necessary to diversify your asset and investment options. Thus, in addition to investing in safe and low-risk avenues, you should also consider investing in mutual funds. You can invest in either equity mutual funds, debt mutual funds, or hybrid mutual funds, as per your appetite for risk. While equity mutual funds offer higher returns, debt mutual funds are a better investment option for individuals looking for steady returns.

  • National Savings Certificate: National Savings Certificate (NSC) is one of the safest investment options available. You can purchase a National Savings Certificate from any post office located in India for a 5-year maturity period or a 10-year maturity period. The minimum investment amount to purchase an NSC is Rs.100, while there is no maximum limit. Deposits made to purchase an NSC also qualify for tax benefits under Section 80C of the Income Tax Act, 1961. NSCs (as on September 2018) earn an interest of 7.6% on an annual basis. NSCs are an ideal option for individuals who would like to make small/medium-sized investments and those who would like to receive tax benefits. This option is also ideal for individuals who are risk-averse.  

There are a number of investment/savings options that are available to individuals nowadays. However, before you opt for a particular investment option, it is necessary to assess your appetite for risk, investment objectives, the corpus that you wish to save, and how much you are willing to invest. Given how important it is to choose the right financial avenues to invest in, you can also consider contacting a financial advisor who will help you choose appropriate investment options based on your needs.

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Amazing post about mutual funds Keeps sharing. The mutual fund is a pool of savings contributed by multiple investors. The common fund so created is invested in one or many asset classes like equity, debt, liquid assets etc. It is called a ‘mutual’ fund because all risks, rewards, gains or losses pertaining to, or arising from, the investments made out of this savings pool are shared by all investors in proportion to their contributions.
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