Business

Know the Different Types of Investment Schemes in India

According to the IMF, India’s economy will continue to remain one among the fastest growing in the world. Majorly contributing to this growth are increased domestic investments, which also make it the most attractive market among investors. There are various types of investment options available with different risk levels.

When choosing an appropriate investment vehicle, it is essential to consider the risks involved, RoI, financial plans, etc. A well-planned strategy not only generates attractive returns on the investment but also provides a secure financial cushion in the future.

Types of investment

In terms of risk levels, there are primarily 3 types of investment schemes available –

  • a) Low-risk investments – These are usually not market-linked and pay a fixed income.
  • b) Medium-risk investments – These may involve some risk but generate high returns as well.
  • c) High-risk investments – Such instruments have no limit to the risk downside and upside of risk returns.

Check the investment options in India

Once you assess your financial preferences, improve your investment portfolio accordingly. Below are some of the popular choices in 2019 – 2020 –

   1. PPF or Public Provident Fund

PPF is one of the most trusted and common investment avenues in this country. It is primarily a retirement corpus that aims to provide monetary benefits in the future. PPF comes with a lock-in period of 15 years and pays the interest earned annually. The minimum investment amount needed per year is Rs.500.

Public Provident Fund offers a high rate of interest, governed and revised by the government periodically.

    2. Stocks

If you want to invest in businesses, purchasing their shares is one of the easiest plans. Companies offer publicly listed stocks that are on the stock exchanges. Here, every investor purchases the company’s part ownership unit and trades the shares in the stock market. Stocks or company shares are long-term, but the riskiest types of investment schemes.

    3. Mutual Fun

Mutual funds are quite popular investment vehicles today providing higher RoI over a longer tenor. Individuals can invest their money via SIP or Systematic Investment Plans instead of a lump sum amount.
In this scheme, a fund manager pools several investments together and invests in bonds and stocks of various businesses to generate a return. Note that the returns are market dependent with higher risk-exposure. However, it is slightly less compared to stocks.

Besides, some other types of investment choices include gold, real estate investment and Senior Citizens’ Saving Scheme (SCSS). Most of these vehicles are market-linked, and hence, involve moderate to high risk. If you are looking for a low-risk investment plan, fixed deposits continue to remain the most preferred option.

Why choose fixed deposits over others?

Fixed deposits are time-tested investment vehicles offering fixed interest rates for over a pre-set tenor. Usually starting from Rs.25,000, there is no upper limit to the investment amount.

Below are a few reasons highlighting the advantages of choosing fixed deposits over others –

  • As FDs are completely free from market influences, your principal amount remains secure and creates guaranteed returns on maturity.
  • The scheme can provide a constant stream of income with its different interest pay-out options. While cumulative FDs provide the earned interest only on maturity, non-cumulative FDs allow investors to choose their interest pay-outs yearly, half-yearly, monthly, etc.
  • In case of emergencies, you can break an FD against a premature withdrawal fee or avail a loan against fixed deposit. Make sure to learn how to break your FD before maturity for more clarification.
  • Leading organisations offer the opportunity of choosing a convenient tenor, usually between 12 to 60 months. Open multiple FD accounts with varying maturity dates for a continuous source of fund.
  • You can also choose the auto-renewal option easily when opening an FD account to reduce lengthy documentation later.

If you are looking for the highest FD interest rates in India, you can approach one of the prominent NBFCs. Bajaj Finance is one such organisation bringing their Fixed Deposits with attractive benefits and flexibility. It holds two of the highest credit ratings of FAAA from CRISIL and MAAA from ICRA for their stability on investment returns. Senior citizens are eligible to enjoy additional interest rate over and above the existing ones.

 

The first stage of investment is to identify the right vehicle, which matches your requirements and profile. Apart from adequate research, consider your age, financial goals and tax implications as well. Strategies your funds to generate wealth smartly.

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Gerald Thomas

Gerald Thomas is a freelance writer, with years of experience, creating content for varied online portals. He has expertise in writing about lifestyle, food & many more.

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