Investor Education
Best Investment Plans with High Returns in India 2024
Best Investment Plans for 2024
Every household needs to plan their regular savings & investment needs for meeting their long as well as short-term financial goals. Investing in the right products can help generate wealth over the long term.
In India, there are many investment options available for investors to park their savings. Each investment option comes with different risk-return characteristics and is suitable for different kinds of investors as per their requirements. In this article, we talk about 10 of the most popular investment options available in our country. You could consider the ones which are suitable for meeting financial goals as per your risk profile, investment horizon & financial goals.
Let's have a look:
1. Fixed Deposits
Fixed deposit is a term deposit offered by banks, post offices & other financial institutions for a specific period. These deposits are one of the most popular avenues for investments among Indian citizens for their simplicity & decent returns. They offer a fixed rate of interest which varies across investment tenures & offering institutions.
They are offered for investment tenures of 7 days to 10 years. The interest rates are in the range of 2.25%-7% for different tenures. Under this scheme, the investors need to make a lump-sum investment at the time of opening the account which is paid back at maturity. Interest can be paid periodically during the tenure or at maturity, as per the option chosen by the investor.
Top 5 Fixed Deposits To Invest In 2024| Company Name | Max. FD Rates (P. A.) |
|---|---|
| Shriram Transport Finance Ltd Fixed Deposit | 9.10% |
| Mahindra Finance Ltd Fixed Deposit | 7.50% |
| SBI Bank Fixed Deposit Rates | 7.25% |
| Axis Bank Fixed Deposit Rates | 8.01% |
| ICICI Bank Fixed Deposit Rates | 7.50% |
Read More: Best Investment Plan for 5 years
2. Recurring Deposit
Recurring Deposit is another popular investment option among Indian citizens for their regular savings needs. As the name suggests, this deposit scheme allows investors to make regular investments during the tenure instead of a lump-sum deposit. The deposits are generally monthly and interest is paid out at the maturity along with the principal amount.
Just like FDs, RDs are offered by banks, post offices, NBFCs & other financial institutions. Recurring Deposits are generally available for investment tenures between 6 months to 10 years. The interest rates are somewhat similar to that of Fixed Deposits which vary across institutions & different investment tenures.
Read More: Aditya Birla Investment Plans
3. Mutual Funds
Mutual Funds are investments that pool money from several investors to invest in different market securities as per the investment objective of the fund. They provide the advantages of professional management, lower costs, diversification, lower minimum investment requirements, & other benefits. They also offer a disciplined investment approach by investments through SIP (Systematic Investment Plan) which allows investors to make investments over fixed periodic intervals.
Mutual funds are mainly classified into 3 different categories. These include:
These funds invest in equity & equity-related securities of companies to generate capital appreciation for investors. These funds have the potential to offer the highest returns among mutual fund schemes. At the same time, risks are also higher in equity funds. Investors can expect returns of around 12-14% for long-term investments from diversified portfolios of equity mutual funds.
| S.No | Fund Name | 5-yr Return | Total Investment 1000/Month | Total Return |
|---|---|---|---|---|
| 1 | Parag Pareikh Flexi Cap Fund | 18.43% | ₹60,000 | ₹98,870 |
| 2 | Mirae Asset Tax Savings Fund | 15.56% | ₹60,000 | ₹91,109 |
| 3 | Canara Robeco Emerging Equities Fund | 13.58% | ₹60,000 | ₹86,184 |
| 4 | Tata Small Cap Fund direct growth | 22.5% | ₹60,000 | ₹1,11,291 |
| 5 | Nippon India Small Fund Direct-Growth | 23.03% | ₹60,000 | ₹1,14,622 |
Debt Mutual Funds are those mutual funds which invest in debt securities like bonds, papers & money market instruments issued by corporations & government bodies. These funds generally carry lower risks than equity mutual funds. The expected returns from these schemes are in the range of 3%-7% annually depending upon investment tenure & fund’s portfolio.
| S.No | Fund Name | 5-yr Return | Total Investment 1000/Month | Total Return |
|---|---|---|---|---|
| 1 | Sundaram Low Duration Fund | 5% | ₹60,000 | ₹68,289 |
| 2 | ICICI Prudential Floating Interest Fund Growth | 7.3% | ₹60,000 | ₹72,590 |
| 3 | SBI Dynamic Bond Fund Growth | 7.3% | ₹60,000 | ₹72,590 |
| 4 | ICICI Prudential Savings Fund Growth | 6.7% | ₹60,000 | ₹71,436 |
| 5 | SBI Credit Risk Fund Growth | 6.8% | ₹60,000 | ₹71,627 |
| S.No | Fund Name | 5-yr Return% | Total Investment 1000/Month | Total Return |
|---|---|---|---|---|
| 1 | Quant Absolute Fund | 19.02% | ₹60,000 | ₹1,01,087 |
| 2 | ICICI Pru Equity and Debt Fund | 14.56% | ₹60,000 | ₹88,580 |
| 3 | HDFC Balanced Advantage Fund | 13.13% | ₹60,000 | ₹85,110 |
| 4 | Kotak Equity Hybrid Growth | 12.68% | ₹60,000 | ₹83,127 |
| 5 | Mirae Asset Hybrid Equity Growth | 12.19% | ₹60,000 | ₹82,921 |
Hybrid Mutual Funds, as the name implies are those funds which invest in a combination of equity & debt securities. These funds offer the advantages of lower volatility than pure equity funds and higher returns than pure debt funds. Investors can expect returns of around 8-10% annually for long-term investments.
As per SEBI Classification, there are 7 different categories of hybrid mutual funds each having different risk-return characteristics.
4. Direct Equity
Investments in stock markets have the potential to offer the highest returns among the investment products in India. As the return potential is higher, overall risks are also higher in equity investments.
Direct equity investment requires the knowledge of financial markets & different sectors for picking good stocks to comprise in the portfolio. If one has an understanding of financial markets and the required time to conduct research & analysis on different stocks, then equity investments can prove to be highly rewarding over the long term.
Equity investments are recommended for investors who have a high-risk appetite along with a long investment horizon.
Read More: SBI Investment Plan for 2024
5. Public Provident Fund (PPF)
Public Provident Fund is a long-tenure investment scheme offered by the Government of India. PPF accounts can be opened across branches of Indian post offices and various commercial banks. This 15-year-long investment scheme is a great avenue for investors who want to earn good returns offered with the highest level of safety. The risks are very low because of the sovereign guarantee by the central government on the investment. The scheme allows lump-sum as well as monthly deposits into the account. It currently (last quarter of 2020) offers an interest rate of 7.1% p.a. which is subject to quarterly revisions by the government.
The other facilities offered under the PPF scheme include tax benefits, partial withdrawal facility, loan facility & much more.
Read More: Aditya Birla Investment Plans: A Comprehensive Guide
6. National Pension Scheme (NPS)
National Pension Scheme is a type of pension scheme launched by the Government of India to provide a systematic architecture to meet the regular pension & retirement needs of citizens in India.
The investors need to make monthly contributions into the account till their retirement which is also the maturity of the scheme. The contributions are invested in marketable securities to generate capital appreciation for investors. Account-holders also have the option to choose the asset allocation for their contributions, otherwise, an auto-choice allocation option based on lifecycle stages is applicable by default.
The risks are higher in case allocation is higher in equity and lower in case of more allocation to corporate or government bonds. At maturity, the account holders can make a lump-sum withdrawal of 60% of the accumulated corpus, and the rest 40% needs to be used for purchasing an annuity scheme that will provide regular pensions to the individual.
The NPS schemes have generated annual returns in the range of 8-10% since their inception.
7. RBI Floating Rate Bonds
RBI Floating Rate Bonds are the savings bonds launched by the Government of India. These bonds have a fixed maturity tenure of 7 years. However, investors aged 60 years & above have the facility to make premature withdrawals depending upon their age subject to applicable penalties.
The investors can invest with as low as Rs.1,000 and there are no upper limits for investment, which makes it accessible across a wide population in our country.
Currently, the interest rate offered on floating rate bonds is 7.15% which is subject to semi-annual revisions by the Government of India. The interest rates are paid semi-annually for the due period.
Also Read: RBI Floating Rate Savings Bond: Eligibility, Interest Rate, Investment Limit, Tenure
8. Post Office Savings Schemes
Post Office Saving Schemes are the schemes offered by the IndiaPost- a government-backed postal services entity. These schemes are available in all the branches across the country. They are very popular especially among investors with a low-risk profile for their high safety to meet the financial needs & requirements. There are 9 different types of savings schemes offered by post offices that are suitable to meet the varied needs of investors. Each one has different investment characteristics and can be opted to meet different kinds of financial goals.
The savings schemes include Public Provident Fund (PPF), National Savings Certificate (NSC), Post Office Monthly Income Scheme (POMIS), Senior Citizen Savings Scheme (SCSS), Post Office Savings Account, Post Office Recurring Deposit Account, Sukanya Samriddhi Account (SSY), Kisan Vikas Patra (KVP) and Post Office Time Deposit Account (POTD).
Currently, the expected returns from these savings schemes are in the range of 4%-7.6% p.a.
9. Gold
Gold as an asset class has always been a popular investment among Indian households. In India, every year households make huge expenditures in buying gold jewelleries.
In our opinion, investments in gold should not be made with the motive to earn returns rather it should be treated as a hedge against inflation. A small allocation to gold in your investment portfolio can also offer good benefits of diversification. Along with that, there are many other advantages of investing in gold for long periods. Traditional ways of investing in gold include buying gold coins, jewelry, etc. New ways of making investments in gold are buying gold mutual funds, gold ETFs, sovereign gold bonds, etc.
Also Read: How to Invest in Gold in India?
10. Real Estate
Real Estate is another popular type of investment made by investors in India. Indian economy has been one of the fastest-growing economies in the world. This presents an opportunity to invest in the real estate sector of India to earn capital appreciation over the long term with the opening of new businesses & expansion in existing businesses of the country. Also, real estate investments can offer high rental incomes on the constructed properties.
Investments in real estate are generally large in value and therefore are suitable for investors who have idle money to invest for the long term. These investments carry high liquidity risks & also involve a lengthy legal procedure while making the investment.
Also Read:
1. What is Estate Planning - Facts, Why & Who Needs Estate plans