If I had to ask my parents or someone older about the best investment options in India, they would have three answers from my experience.
While all three are possibly the best investment options in India, there are several more avenues, many of which have always been around but not widely spoken of. And they don’t even require a considerable investment amount, to begin with.
Let’s delve into the details then, shall we?
Unlike what we might have heard some decades ago, India has multiple investment options. There's something for everyone, from mutual funds and stocks to older forms of investing like FD and RD.
Here are some of the best investment options available around you.
Think stocks; the first thing that comes to mind is the stock market. Stocks are tradable documents that give you part-ownership of a company. You buy stocks of Zomato, and you’ll be considered part-owner of the company. You will be entitled to vote in important business matters of the company. You can buy or sell stocks every day on the stock exchanges. Companies that perform well give out dividends to their shareholders as a reward for investing and having faith in them.
Another reason why stocks are one of the best investment options in India is the liquidity the possess. Stocks can be easily converted into cash by selling them in the stock market, and the proceeds go into your bank account. They are a valuable instrument to meet short-term goals, but buying and holding stocks for the long haul, say more than five years, has also proven beneficial with solid and positive returns.
Heard of Harvey Specters' famous “IOU”? Bonds are the IOUs of the real world where borrowers issue bonds to raise money and pay a certain interest rate for the bond's duration and promise to pay back the initial principal amount borrowed after some time.
Different types of bonds offered in India that are considered to be some of the best investment options in India:
Arguably considered as one of the most popular and best investment options in India, mutual funds have been the go-to for all novice and experienced investors. A pool of money is collected from many investors, and the fund manager or AMC invest the money into various asset classes. They are classified into several categories:
They function as a combination of mutual funds and stocks and are hence one of the most underrated best investment options in India. Mutual funds because they invest in a basket of assets, and stocks because you can trade them on the stock exchange. ETFs trade with the help of a Demat account, and you can buy and sell ETF shares as well. They also have popular schemes:
Gold has always been at the top of any list that talks about the best investment options in India. This is simply due to its liquidity and ability to beat inflation. Turbulence often drives up gold prices, although low-price phases are typically short-lived.
Traditionally, people bought physical gold and stored it in banks, selling it when desired. While this method still exists, newer options like gold ETFs and mutual funds have emerged. These methods invest in gold-associated companies, with returns dependent on market conditions. However, storing physical gold can be challenging, and price fluctuations carry the risk of losses.
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There are more than just 4 kinds of investments you can make, but here are the 4 most commonly used ones:
It’s hard to say which investment is best for you without knowing what your needs are, but here are some that would qualify as both good and safe investments, largely because they save you tax and also give you good returns:
For beginners, low-risk investments with multiple benefits are recommended. Tax-saver mutual funds like ELSS provide good returns and discipline through a 3-year lock-in period. Government-backed options like PPF and NPS are also safe and offer tax benefits.
To choose from the best investment options in India:
Ultimately, the best investment option is subjective and depends on your circumstances and preferences.
