Investments are a smart way to grow money, which can help you gain financial independence and secure your future. There are several saving schemes available in India that can help you get good returns on your investments. If you are planning to start investing, here are some of the best options available to help you save for your future:
1. Personal Provident Fund
Personal Provident Fund or PPF is one of the safest and most popular investment options available for in India. The government-backed long-term saving schemes offer tax-free returns. A PPF account can be opened at any bank or post office and has a term of 15 years, which can be extended by another five years. The minimum investment amount in a PPF account is Rs 500, and the maximum amount is Rs 1, 50,000 p.a. It has a minimum lock-in period of 5 years and gives a compound interest at nearly 8% p.a.
2. Fixed Deposits
Fixed Deposits (FD’s) are considered one of the safest and hassle-free investment options, where you deposit a fixed sum in a lump sum and get a fixed rate of interest. You can withdraw the amount prematurely in case of an emergency and can also take a vehicle loan against the FD amount. Upon completion of the term, investors get a lump sum amount, which includes the principal amount plus interest accrued. For FD’s the interest rate, period, and the minimum amount vary in different financial institutions.
3. Mutual Funds
Mutual Funds help you gain returns from investing in equity and debt funds based on your risk profile. Investing in the share market via mutual funds can help you balance your risk and earn higher returns. Investing in mutual funds is considered safer than investing directly in the stock market. A systematic investment plan (SIP) is one of the best ways to invest in mutual funds, as it allows you to make small regular investments. This can help you keep a balanced portfolio and earn better returns in comparison with other traditional investment options.
4. National savings certificate
NSC is a government-backed saving scheme which gives guaranteed returns with tax savings. You can invest in NSC saving scheme at any post office for a period of five years. The interest rate on NSC investment is decided by the government and is reviewed every quarter.
The minimum investment amount in NSC is Rs 500, and there is no cap on the maximum amount of investment. Investors can avail tax benefits to the maximum amount of Rs 1, 50,000 under Section 80C.
5. ELSS schemes
ELSS or Equity-linked savings scheme are tax saving mutual funds which come with a lock-in period of 3 years. These make an investment in equity and have a higher risk and return profile. ELSS tax-saving mutual funds allow a deduction up to Rs 1, 50,000 under Section 80C. The minimum amount of investment is Rs 500, and there is no cap on the maximum amount.
To have a balanced portfolio, it is advisable to invest in a combination of the saving schemes mentioned above. Investors should choose a mix of traditional plans like FD’s and non-traditional plans like mutual funds to balance their portfolio and get higher returns on their savings and make sure they are investing their money at the right place.