Best Investment Plan in India for Higher Returns
Everyone is looking for a best investment plan in India to get sky rocket returns. If you are conservative or low risk taker there is no way you can get higher returns. If you are a high risk taker, there are more chances that you would get higher returns on your investments. Which are the best investment plans in India that can give higher returns? Which are the alternative investment options that can provide good returns in 2019?
Best Investment Plan – What I meant here?
I am not saying every investment option would get some 15% or 20% returns. If you are thinking that I am going to suggest you a investment plan that can give 20% or 25% annualized returns, you can exit from this article. I would talk about the best investment plan that can give high return compared to where you are investing. E.g. Investing in ELSS Funds could be the best investment option compared to the NSC or tax saving FDs.
Best Investment Plan in India for higher returns
Here are some of the best investment options that can fetch you higher returns.
#1 – Invest in Quality Stocks
Looks simple idea, but every investor would agree this investment option is so complicated that it is difficult to identify a good stock for investment. One should look at the fundamental good stock along with technical analysis to invest in the right stock at the right time. This would help to know when to buy and when to sell a stock. When we did an analysis about some good stocks from BSE 100, though some of them were good, but they actually moved up based on certain positive movements indicated in technical analysis. Next time you pick-up a good quality stock check fundamentally good + technically strong.
Who can invest in Stocks: These are for high risk investors. If you are moderate to low risk taker this is not a best investment plan for you.
#2 – Invest in Equity Mutual Funds with diversified portfolios
Many of us invest in mutual funds. However, certain mutual funds perform well in specific times. I would advice investors to invest in diverisifed portfolio of mutual fund schemes i.e. your portfolio should contains largecap, midcap, smallcap, diversified and balanced/hybrid mutual funds through systematic investment plans (SIP). This way your portfolio is balanced. Diversified portfolio of best mutual funds in India can give anywhere between 12% to 18% annualized returns in the medium to long term of 8-10 years.
Who can invest in equity funds: Mutual Funds are one of the best investment plans for moderate risk to high risk takers. These are not for low risk investors.
#3 – Invest in Debt Funds instead of Bank FDs
Debt funds invests a majority of its portfolio in fixed income securities that would provide high returns compared to bank FDs. Based on the tenure, you can invest in short term debt funds or long term debt funds. These debt funds can give anywhere between 7% to 10% annualised returns. Currently bank FDs are offering 5% to 8% annualized returns, hence debt funds score higher compared to them.
Who can invest in debt funds: Though debt funds invests in fixed income options, these can invest in corporate FDs, NCDS, commercial papers which is high risk. Moderate risk to high risk takers can invest in this investment option in India.
#4 – Invest in midcap/small cap funds
Investing in midcap/small cap mutual funds can provide good opportunity to get higher returns. There are several midcap and smallcap funds that performed well in the long term in 8-10 years and gave 20%+ annualized returns.
Who can invest: Investing in midcap/small cap funds is one of the best investment options for those who are willing to take high risk and looking for higher returns.
#5 – Invest in Tax Saving Mutual Funds instead of low earning tax saving options
There are several ways to save income tax u/s 80C. Most of the tax saving options give 7% to 8.5% annualized returns except for ELSS Funds. ELSS Tax Saving Mutual funds provide tax benefit u/s 80C up to Rs 1.5 Lakhs and provide scope to get higher returns. These ELSS funds can give anywhere between 12% to 18% annualized returns if these can be invested for 5-10 years. However, one should invest in good tax saving mutual fund schemes to achieve this.
Who can invest: ELSS funds are like any other equity mutual funds and carry a risk. If you are moderate to high risk taker, you can invest in Tax Saving Mutual funds.
#6 – Invest in Public Provident Fund (PPF)
If you are risk averse investor and do not want to invest in tax saving mutual funds, you can opt for the Public Provident Fund. PPF provides 8.5% interest rates currently. PPF investment provides tax exemption u/s 80c. The interest received is tax free. The maturity amount is tax free. Hence PPF is called as EEE (Exempt, exempt, exempt) from a taxation perspective. If you and your spouse can save Rs 1.5 Lakhs each per annum totaling to Rs 3 Lakhs per year, you can easily accumulate over Rs 1 Crores in less than 20 years.
#7 – Invest in NPS instead of traditional pension plans
NPS is one of the best retirement tools compared to other traditional pension plans. You can invest upto Rs 1.5 Lakhs per annum u/s 80C and additional Rs 50,000 u/s 80CCC. Some of the best NPS schemes like HDFC pension plan, UTI Retirement solutions, SBI Pension Fund gave 14% annualized returns in the last 5 years. You should ignore traditional pension plans like from LIC.
Who can invest: NPS would invest some amount in equity, hence there is some element of risk. If you are a moderate risk taker, you can invest in NPS Funds.
#8 – Invest in Sovereign Gold bond Scheme instead of Gold ETFs or Gold Funds
Many of us might be interested in investing in gold for either for a daughter’s marriage or for future consumption. Investing in physical gold would not yield anything. Investing in Gold ETFs or Gold Funds are not yielding any returns as gold prices are not going up. In this case, investing in sovereign gold bond scheme would be one of the best investment options. You would get equivalent gold value in rupee terms + 2.5% interest rates per annum. This way you are actually earning money in sovereign gold bonds.
Who can invest in this scheme: If you are planning to invest for future purpose, either through physical gold or through gold funds, investing through this scheme would be best. If you are thinking that gold prices would increase in short term and want to invest, you can ignore this investment option.
#9 – Invest in Tax Free Bonds from the secondary market
There are several tax free bonds available in the secondary market where the interest from these bonds is tax free. You can login to your demat account and check for tax free bonds section and looking for high yield bonds that are being sold and invest in them. One can expect 6% to 8% tax free returns from such tax free bonds.
Who can invest in these bonds: If you are in a higher tax bracket of 20% to 30% and looking for fixed income, investing in Tax free bonds would be a safe investment option.
#10 – Invest in High Rated Secured NCDs
After the recent IL&FS crisis, investors are scared to invest in company FD schemes. One can invest in high rated secured NCDs which keep coming regularly. These secured NCD can offer 8% to 10.5% interest rates.
Who can invest in NCDs: Since these NCDs are secured, the risk is slightly lower compared to unsecured NCDs or corporate FDs. Moderate to low risk takers can invest in these secured NCDs.
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Best Investment Plan in India for higher returns
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