The sooner the better. In terms of investments, it is an idiom we should all adhere to.
True enough, it is highly unappealing to venture into something that can only be realized years from when you started. Given that millennials most likely prefer immediate satisfaction and the manifestation of results.
However, it is undeniable that it is the easiest and smartest method to augment your wealth at your age, and business experts support yours.
Why you should invest early
If you are still perplexed, several reasons will persuade you and help you see investing in a new light.
For the most part, investments that offer higher returns are more volatile. Being young means not shouldering massive responsibilities; hence, being allowed to take higher risks. You have the opportunity to take higher risks, and the time to recover it ever goes south.
If you do it right, giving your money time to grow will yield higher returns. You gain much more compound interest when you start investing early. What’s more, you get to be mindful of your spending habits.
The overall investment goal is to achieve a comfortable quality of life, especially during retirement years. An improved financial situation is just what we desire in our later years.
To help guide you on your first step in investing, here are:
15 of the best investments in India.
1. Unit Linked Insurance Plan (ULIP)
In essence, ULIP is life insurance and market-linked investment combined. ULIP is on the list for best investments in India precisely because its dual feature helps you maximize your money.
The duality of ULIP provides you with the opportunity to invest in various kinds of funds - for example, cash fund, debt fund, equity fund, balanced fund, etc. In addition to providing you with guaranteed life cover.
To acquire a unit-linked insurance plan, you are required to prepare a payment for a premium. The premium amount can be paid through a lump-sum payment or periodic payment - your choice, monthly or annually, quarterly, etc.
A fraction of the premium is apportioned for your life insurance, and the rest goes to investments for the funds. After which, the money you have invested is converted into units with a designated unit value called Net Asset Value (NAV).
By the time of maturity, you can have the maturity benefit of receiving the total value of your units. As per terms and conditions, as a lump sum or monthly installments.
Another benefit derived from ULIP is fund switching - you are given autonomy to switch funds whenever you want. This plan also allows partial withdrawals without liquidating your total assets (deductions in the form of units).
Effectively, enjoy faster approvals and lower interest rates when applying for a loan. As per Income Tax Act section 80C, tax benefits up to 1.5 Lakh and exemption from taxation as per section 10(10D).
It is clear why ULIP is regarded as one of the best investments in India for millennials. Examples of the best ULIP in India are Aegon Life iMaximise Secure Plan, Aviva Life Bond, Bajaj Allianz Future Gain, Bajaj Goal Assure, etc.
2. Public Provident Fund (PPF)
PPF is regarded among the best investments in India because of its two key features; long-term investment and completely tax-free, which is why it attracts both millennials and older investors.
Much more, PPF’s interest rate is around 7.9% and is assessed by the government. The minimum investment span for a PPF is 15 years (maturity period). However, after the five years lock-in period, you are allowed to extend your tenure.
Additionally, you are only required to pay a maximum of Rs 1.5 lakh annually. After three years, you can already take out loans, and after seven years, you must be able to withdraw your funds, which is the best part partially.
You can already invest in PPF even with a minimum of Rs. 500 and a maximum of Rs. 1,50,000 a year (lump sum or 12-month installment).
PPF accounts can be opened in numerous banks in India - for example, State Bank of India, State Bank of Patiala, ICICI Bank, State Bank of Travancore, State Bank of Hyderabad, Union Bank of India, IDBI Bank, and many others.
Although it does not yield immediate results, it offers stability for a long period. In that sense, this is one of the best investments in India you must look into.
3. National Pension Scheme (NPS)
Slowly building for an adequate retirement corpus is a crucial decision we must make in our life. To supplement and guarantee carefree and financially secured retirement years.
This is what makes NPS one of the best investments in India. NPS is the perfect combination of fixed deposits, corporate bonds, equity, government bonds, and liquid funds.
The Pension Funds Regulatory Development Authority (PFRDA) is the one that administers and supervises the NPS. It is well supported by the Indian government and the pension scheme offered to all Indian citizens. Hence, NPS is open to all Indians (18-65 years old) interested in opening a retirement saving account regardless if one is a government employee, self-employed, corporate employee, etc.
It has two basic stages; NPS Accumulation Stage and NPS Annuity Phase (Pension). The accumulation stage is basically when you augment your NPS corpus through investing in certain amounts years before your retirement.
The amount you invest will depend on your risk tolerance and appetite. Always remember, the more you accumulate - both time and amount of investment, the more investment returns it would yield; hence, a greater amount of pension income.
The pension stage refers to when you retire, and you can withdraw a fraction of the NPS corpus you have accumulated over the years. The remaining corpus you will receive annually.
In addition, you get to access its additional tax-saving benefit of as much as Rs 50,000 and a Rs 1.5 lakh limit per year under Income Tax Act Section 80C.
4. Direct Equity Investments
Mutual Funds can have more restrictions when investing. If you want to speculate your investments, Direct Equity is the best investment in India you can substitute.
These equities are primarily related to acquiring and trading stocks. The higher you risk, the better the hope for a higher return is. Risk is the name of the game. If you want to be safe from it, better take mutual funds.
What makes Direct Equities advantageous than mutual funds is you, the investor, have full control of your stock selections. You will be able to buy and sell at any time of trading progress.
Entry or exit from single stock is possible. The downsides of Direct Equities are just the unavailability to exit loads and no tax deductions. However, you are still guaranteed better systematic investment, with higher liquidity of your equities.
The first step to making the best investments in India is choosing good companies to negotiate your investments (ICICI Securities, Edelweiss Financial Services, Axis Bank). Keep in touch with stock exchange happenings in India Ltd (NSE) and Bombay Stock Exchange Ltd (BSE). This type of investment will require you to research all about stock movements. You need timing in buying or trading assets. Get smart to become a big investor.
5. Equity-linked Investments Scheme (ELSS)
ELSS is fundamentally a type of mutual fund scheme wherein it generally targets to invest in and tracks the performance of equity markets (equity and other equity-linked instruments) to produce tremendous results. This is regarded as one of the best investments in India because of its high returns and other benefits.
Its eligibility for tax deduction following Income Tax Act 80C separates it from other mutual fund schemes.
Although highly volatile and risky, ELSS yields higher returns than conventional tax savings instruments. It also offers the shortest lock-in duration with only three years.
ELSS has a diverse investment portfolio comprising the different asset categories - large, mid, and small-cap equity stocks. This offers the chance to pick various equity stocks that will broaden your investment portfolio. Most importantly, alleviate market risk.
The investment portfolios are also handed to, supervised, and regulated by professionals who are experts and knowledgeable in terms of market performance. This ensures that your investment is overseeded well and is in reliable hands.
You can either utilize online platforms to invest in ELSS - for example, Paisabazaar.com or proceed straight to Asset Management Companies. Otherwise, you can also try the traditional filling a form and submitting it personally to a branch or perhaps hiring a broker to manage it for you.
Canara Robeco Equity Tax Saver, Axis Long Term Equity, Mirae Asset Tax Saver, and Invesco India Tax Plan are some of the ELSS funds you must consider.
6. Fixed Deposit
If you want to invest a lump sum, one of the best investments in India for that is Fixed Deposits. This is a financial investment offered by banks and Non-Banking Financial Companies (NBFCs).
As an investor, this is your safe avenue for depositing large amounts of money with higher interest rates than a normal bank and with the tenor of your convenience and choice. When you have chosen your pre-decided tenor, your lump-sum deposits start to grow with interest throughout your selected duration. All your deposits go locked in and safe from market fluctuations and rate changes as this is fixed.
Encouraging you to make savings is one of the pros of investing in Fixed Deposits (FDs). Your dedication to saving will give you tax benefits. Tax-saver FDs are covered by section 80C of the Income Tax Act, 1961: Exempt-Tax-Exempt category. You can claim a deduction of a maximum of Rs. 1,50,000 (for amounts invested) from taxable interests. FD transactions are also flexible, and since FD is a liquid asset, emergency cash is not a problem.
The con is about its penalties whenever you make premature withdrawals. However, this would not hurt you much.
You can open an FD account in banks or the post office. Many premier banks in India offer this financial investment (State Bank of India FD, Bajaj Finance, Axis Bank). Most of these would provide interest for 3-5% for general citizens and 3.4 -6.1% for senior citizens with a tenure ranging from 7 days to 10 years.
7. Gold as an investment
Gold investments in India are the preferable type of investment throughout the country. It entails high liquidity and inflation. Beating capacity, gold makes you a very rich investor.
This has strong selling points to recover from depreciation and boost its price during market turbulences. Gold investments involve easy conversion to money.
Buyers, investors, and traders already grew in numbers as gold's price remained steady and largely profitable, seeing gold increase valued at the cost of Rs 52,000.
Gold has the advantage of diversifying your portfolio as an investor because gold moves opposite to rupees and stocks. You also can have the luxury of the most desired commodity with great long-term tax benefits.
For instance, gold funds are considered a non-equity in taxes. This allows you, the investor, to claim capital gains. Being mindful of cons (storage issues, gold jewelry) can help you invest right in the gold business.
You can acquire gold investment traditionally (coins, bullions, artifacts, physical gold) and with Gold ETFs (exchange-traded funds) or mutual funds. ETFs are less hassle with storing bars but still equivalent to physical gold. Gold mutual funds include silver, platinum, and other metals.
You must find a good gold investing company to help you secure your investment (ex. Axis Gold Fund, Aditya Birla Sun Life Gold Fund, HDFC Gold Fund).
8. Index Fund
This is one of the easiest and best investments in India. Index fund keeps track of a certain market index (stock or bond). A market index refers to a presumed portfolio of securities that represents a section of the market.
Such as S&P 500 embodies 500 of the biggest companies in the United States, and Dow Jones Industrial Average represents 30 prominent U.S. companies. The most popular index funds in S&P are Vanguard, iShares Core, and SPDR.
This kind of investment entails less risk since it consists of several or hundred investments and stocks, making its performance unlikely to be affected by the collapse of a small number of companies.
You get to invest in bond index funds or stock index funds - two of the main investment strategies. Investing in index funds is effectively less costly than, say, managed funds, and you pay fewer taxes.
Simplified, you need to follow only three steps when you want to buy an index fund.
First, you must choose an index. The most in-demand index is S&P 500, but there are surely many others. For example, Dow Jones Industrial Average, Russell 2000, Nasdaq Composite, S&P SmallCap 600, MSCI Emerging Markets, MSCI EAFE, and more.
Second, pick the best fund for your chosen index. If you ever picked S&P 500, chances are, you could be picking from several choices that keep track of the same index.
To select the right index fund, there are factors that you need to consider. The index fund closely and sharply keeps track of the index, the index fund costs, and the limitations and restrictions that might hinder you from investing.
Lastly, it is to buy the index fund shares. You can easily make an account by directly approaching the mutual fund company that provides the fund. Otherwise, you can opt to create a brokerage account.
9. Passive Investment
Passive investment became highly favored in the past years. It can now be easily picked as one of the best investments in India.
In short, the buy-and-hold mindset. This is a long-term investment strategy that intends to maximize returns by avoiding recurrent buying and selling. This could be in exchange-traded funds (ETF), index funds, or direct equity.
The overall game plan of passive investment is not to outplay the market but rather to track and match its performance. Typically obtained through investing in a relatively inexpensive and diverse index fund then holding it with the belief that it will ultimately yield positive results over time.
Of course, this type of investment has major risks. Since it tracks the entirety of the market, the price for index funds will fall once the cost of the stock market or bonds falls.
In contrast, passive investment produces way fewer fees and taxes due to limiting one’s buying and selling securities and offers diversification and simplicity in its method.
10. Residential Real Estate
Real Estate is one of the best investments in India you can have. Safeguarding your money by buying properties is a better option than other deposits with potential robbery or scam. At present, India grew Rs. Sixty-five thousand crores (USD 9.30 billion) from its Rs. Twelve thousand crores (USD 1.72 billion) in 2019 had benefited from post-COVID-19 as investors shifted their attention from China to India.
In addition, lakh units in India's major cities like Mumbai, Pune, Thane, and Bangalore are expected to grow. Affordable housing and other real estate investments would also give a tremendous potential appreciation (value) increase.
Although real estate would require much maintenance and financial liability and give significant inefficiencies, this is still considered a worthwhile risk given the higher returns you get as a real estate investor.
These kinds of investments in India are always amendable, can be financed, and survive in inefficient markets. Exponential rates in property values can get you rich quicker and give significant savings on your taxes.
If you want to invest in residential real estate in India, prepare a good starting money of Rs 30 - 80 lakh. Many property agents could assist you (ex. DLF Ltd, India Realtors, Metropedia - Real Estate Agents Brokers).
Choose the perfect vicinity and type of real estate that suits your budget and targeted profits. You also have to pay for transaction costs. It would be helpful to hire a real estate attorney to protect your interests. Buying housing properties in India might be tedious. Yet, you are guaranteed to have astounding results.
11. Commercial Real Estate
Another best investment in India is commercial real estate properties. These real estates are focused on office, retail, industrial, hotels, and other special-purpose units.
This is a wider range for your investment. India crossed 700 million sq. ft in 2019 and is still expected to boom its business by manufacturing and IT companies demand co-working spaces.
The positive reason for you having commercial properties is its extreme income potential. Buying or selling can get you a higher annual return of 6% and 12% than residential's 1-4%. Commercial hotspots like Bengaluru, Pune, and Mumbai could even give you higher rates. The lease is flexible and triples its net.
This would also be more open to the public that gives you professional relationships as an investor. Yet, you must overcome things such as tedious time dedication, bigger investment, higher risks, and more to make yourself comfortable in the real estate business.
Companies like Sunteck Realty Ltd., Omaxe Ltd., and NBCC India Ltd. are a few you can research that are readily available for you to invest in. An average cost for acquiring commercial spaces is at a minimum of Rs.10,000- Rs 14,000 per sq. ft.
Although, it is safer always to consult an expert when you plan to start investing.
12. Post Office Recurring Deposit
Recurring deposits are a widely used saving scheme and are classified among the best investments in India. Post offices do not only distribute mails from or to customers but also offer financial services.
The Government of India backs the post office savings scheme along with nine others. Post Office Recurring Deposit is a mid-term savings scheme where potential investors like you can put in your investments up to a maximum of 5 years.
This is a good option to secure your investment and gain steady profit. Post Office RD has fixed interest rates that could help investors compound interests quarterly by around 5.8% - seemingly to generate earnings frequently.
A quick advantage to know about this investment is that there are no limits to further acquisitions. You can deposit as much money as you wish to safeguard in the Post Office. Minors can also apply for accounts but with parental custody.
Get higher interest rates with only simple documentation and little to no penalties. The only con is that you cannot withdraw anytime as you wish, which is not that bad to keep your savings secured and profitable.
How to open a Post Office? Simple, just be an Indian national over 18 years old and deposit as low as Rs.10 per month.
13. Bonds
To give a simple comparison, stockholders own stocks while bondholders lend money to borrowers. Bonds function quite similarly to loans.
Borrowers borrow money for a specified period. Bond investments grow through prearranged interest rates. Determined by the terms and conditions, the interest rate can be paid periodically or during the maturity period.
Bond investments are also considered a low-risk investments. Since the Indian government mainly issues it. This ensures secure investment and safe transactions. Although, private institutions do give them as well, depending on their fiscal deficits and other needs.
Common types of bonds offered in India are; Central Government Bonds, State Government Bonds, Municipal and Local Authority Bonds, Public Sector Bonds, and Corporate Bonds.
You are open to subscribe to bonds online, done through a broker, or investing in bonds through utilizing a demat account.
Investing in bonds is very simple, easily acquired, and is relatively low in risk. This is why it is listed among the best investments in India.
14. Retirement Fund
Enjoy retirement by setting up an investment for your future!
Retirement funds are better invested than saved and could further support your financial independence. Investing your money into mutual funds grows into equities and stocks that could be accumulated to a better retirement corpus that can easily take care of your post-retirement finances.
Most retirement funds investing in India require only a minimum of around Rs. 1,000 per month, which is less costly for you to invest.
Investing in your retirement funds gives you so many advantages. This includes having a saving habit, gaining more funds from compounding in investments, flexible investment plans, and safeguarding personal and loved one's interests.
Death benefits are guaranteed in case of an unfortunate and untimely demise. The only cons you will have to acknowledge are that you have no definite access or control to how your money is invested and sudden company bankruptcies.
However, having no worries financially on your sunset days is still a great motivation to invest your retirement funds.
If you want to consider investing your retirement money, then this is the best investment in India just for you.
All you have to do is look for companies (SIPs) that serve retirement mutual funding (ex. HDFC Retirement Savings Fund, ICICI Prudential Balanced Advantage, SBI small cap).
These companies could give you a 20 - 60% return in a year and a high 50-70% income. You just have to calculate your risks as an investor for better gains and avoid coming up short on your future financial capability.
15. Franchising
Franchising is the kind of investment that can greatly impact how it operates and performs, unlike passive investments, investing in bonds, or owning stocks.
The idea of a franchise is a marketing strategy adopted by big companies and brands to intensify their reach and expand their local footprint. It is a partnership between a well-reputed business (franchisor) granting investors (franchisees) license to conduct business under the parent company’s name.
This means the franchisors allow the franchisees to utilize the same products/services, method, approach, trademarks, etc.
The partnership is ruled by the Franchise Agreement (FA). Inscribed in the legal document are the essential parts of the franchisor and franchisee relationship. Wherein consists; complete details about the franchisor and franchisee, license grant, comprehensive information about the franchise location, proprietary marks that the franchisee can use, operational and quality standards, etc.
There are hundreds of franchise business opportunities in India. However, you should focus on India’s three most prominent franchise sectors: Food Service, Retail, and Health & Wellness.
If you do it right, franchising can provide you with higher investment returns. There is a lower risk in franchising, especially if you partnerartner with companies with an outstanding market presence and competitive edge.
You are put at ease even for a beginner since business experts support you. Most franchisors offer operational, management, and customer service training to get you used to the business environment and share their knowledge and expertise about the business.
India has one of the biggest franchise markets worldwide partner and is expected to expand at exponential rates over the years. If you consider the size of the country’s franchising industry and its dynamic features, surely it is one of the best investments in India you must try.
Back to Blog
