What is an Investment Plan?
Investment plans are financial products designed to help individuals create wealth and achieve their financial goals by investing in various funds, schemes, and products. They encourage disciplined investing and long-term wealth accumulation. In India, there are several investment plans that allow individuals to invest their money systematically and maximize savings. These plans offer the potential for long-term wealth creation. We have listed down the best investment plans that offer inflation-beating high returns. It is important to assess financial needs and risk profile before choosing the right investment plan. Some of the best investment plan with high returns include:
Best Investment Plan With High Returns in 2023
|Equity Mutual Funds||12.00% to 15.00% p.a.||High Risk||Long term goals|
|Direct Equity||Market Linked||High Risk||High growth potential and dividends|
|Liquid Funds||4.50% to 7.50% p.a.||Moderate Risk||Short term goals|
|National Pension Scheme (NPS)||9.00% to 12.00% p.a.||Low-High Risk||Retirement|
|National Savings Certificate (NSC)||7.70% p.a.||Low Risk||Medium term goals|
|Post Office Monthly Income Scheme (POMIS)||7.40% p.a.||Low Risk||Monthly Income|
|Bank Fixed Deposit||3.50% to 8.50% p.a.||Low Risk||Safety and liquidity|
|Employee Provident Fund (EPF)||8.15% p.a.||Low Risk||Retirement|
|Real Estate||6% to 8%||High Risk||Capital appreciation and rental income|
|Gold||9-11%||Low Risk||Hedge against inflation and currency fluctuations|
Best Investment Plan With High Returns in 2023: In Detail
Let’s look at the best investment plan that offers high returns in detail:
1. Equity Mutual Funds for Long Term Goals
- Meaning: Mutual funds that invest more than 80% of their assets in equities are known as equity mutual funds. They best suit investors with long-term goals and high-risk tolerance levels.
- Investment amount: INR 500 per month.
- Investment Tenure: Equity mutual funds have the potential to give high returns in the long term. A tenure of more than five years is considered ideal for these funds.
- Risk: Since these funds invest in equities, they are subject to market volatility. Their returns depend on market movements.
- Advantages: Equity mutual funds have the potential to generate significant returns in the long term. Equity Linked Saving Scheme (ELSS) is a class of equity funds that qualify for tax exemption under Section 80C of the Income Tax Act, 1961.
2. Direct Equity for Investor with Share Market Knowledge
- Meaning: Investing in direct equity means buying the shares of a company from the stock market. They best suit investors with sound market knowledge and a high-risk tolerance level.
- Investment Amount: The stock market allows investors to buy a minimum of one share. The price of a share trading on the stock market varies across companies.
- Investment Tenure: Investing in equities can help accumulate significant wealth in the long term. Invest in direct equity if you have a horizon of more than five years.
- Risk: Investing in direct equity is very risky.
- Advantages: Equity investing can be very fruitful, provided you invest in fundamentally strong companies for the long term.
Exchange Traded Funds (ETFs)
- Meaning: Exchange traded funds are passive investment instruments that replicate the underlying index. These can be bought and sold on a stock exchange. Its value is determined based on the net asset value of the underlying asset or stocks in it.
- Investment Amount: Investors can buy a minimum of one ETF unit. The price depends on the underlying index and the shares in it.
- Investment Tenure: Long term
- Advantages: ETFs are passive investment options that help you invest across a basket of securities. These funds replicate the index holdings in the same proportion. Thus, investing in an ETF will give exposure to the entire index portfolio.
3. Liquid Funds for Short Term Goal
- Meaning: They are debt mutual funds that predominantly invest in high-liquid money market instruments and debt securities.
- Investment amount: The minimum investment in liquid funds is as low as Rs 1,000.
- Investment Tenure: These funds best suit an investment horizon of one to three months. Hence investors with very short-term goals can park their money in them.
- Risk: The underlying bonds and securities can default on the payments of interest and principal.
- Advantages: Liquid funds are low-risk securities compared to other types of mutual funds. They are highly liquid and can give returns that are higher than fixed deposits.
4. National Pension Scheme (NPS) for Tax Exemption
- Meaning: NPS is a retirement investment option that allows citizens of India to invest regularly towards their retirement. It is a long-term investment option that allows investors to earn market-based returns.
- Investment Amount: NPS tier I account requires a minimum investment of Rs 500 or Rs 1000 in a year. NPS Tier II account requires a minimum investment of Rs 250.
- Investment Tenure: NPS account matures when the investor attains 60 years. On maturity, you can withdraw up to 60% of the fund amount and the remaining 40% to purchase an annuity plan.
- Risk: Low to High, depending on the type of investment allocation.
- Advantages: A good retirement solution for those who want a regular income source post-retirement. NPS investments up to INR 1,50,000 qualify for tax exemption under Section 80C of the Income Tax Act,1961 and an additional INR 50,000 exemption under Section 80CCD.
5. National Savings Certificate (NSC) for Tax Benefits
- Meaning: A Central Government backed small savings scheme that offers tax benefits to investors.
- Investment Amount: Minimum investment amount is Rs 100, with no limit on the maximum amount.
- Investment Tenure: 5 years
- Risk: Low risk and guaranteed income scheme.
- Advantages: With a lock-in period of 5 years, NSC is a popular small and medium savings option available in India. The scheme offers tax benefits under Section 80C of the Income Tax Act, 1961.
6. Post Office Monthly Income Scheme (POMIS) for Regular Income
- Meaning: POMIS is a monthly savings scheme regulated by the Department of Post (DOP). The scheme intends to provide a monthly income for small and medium individual investors.
- Investment Amount: Minimum investment amount is INR 1,000.
- Investment Tenure: 5 years
- Risk: Low risk
- Advantages: POMIS is a better option if you are seeking an additional regular income and a lower-risk investment option. Since the interest rate and income are fixed, predetermined, and guaranteed, POMIS is a low-risk investment option.
7. Bank Fixed Deposit for Safety and Security
- Meaning: Fixed deposits are the most popular investment options offered by public and private banks. A lump sum amount of money is invested in FD in exchange for interest on maturity along with the principal amount.
- Investment Amount: Varies from bank to bank
- Investment Tenure: 6 months to 10 years
- Risk: Low risk
- Advantages: FDs offer assured interest rates and thus are a popular investment option. You can take a loan against their FDs in times of emergencies without having to break the deposit prematurely.
8. Employee Provident Fund (EPF) for Retirement Benefits
- Meaning: Employee Provident Fund (EPF) aims to build a sufficient retirement corpus for an individual. The fund includes monetary contributions from both employer and employee.
- Investment Amount: Employee and Employer have to contribute 12% of the employee’s basic salary (Basic + Dearness allowance) towards this fund every month.
- Investment Tenure: Employment years
- Risk: Low risk
- Advantages: It is a tax-saving scheme that offers tax exemptions on investment amount and interest income and tax-free withdrawal after five years. It helps build a retirement corpus and provides financial assistance during unemployment.
9. Gold to Hedge Against Market Volatility
- Meaning: Gold is the most precious metal and an excellent investment alternative. It is available in multiple forms, including physical gold, mutual funds, ETFs, digital gold, and sovereign gold bonds.
- Investment Amount: The minimum investment amount varies based on the type of gold investment. Physical gold is costlier than digital gold. You can invest in digital gold with an amount as low as Rs 1.
- Investment Tenure: Gold is a suitable long-term investment alternative, ideally for 5 years or more.
- Risk: Gold can be very volatile in the short term due to demand and supply factors.
- Advantages: Gold helps beat inflation and diversify an investment portfolio. Moreover, it also acts as a hedge against market volatility.
10. Real Estate To Diversify Portfolio
- Meaning: Investing in residential or commercial property either directly or through a real estate investment trust (REIT) qualifies for real estate investment.
- Investment Amount: Investing in real estate is a costly affair. To buy physical land, you might require lakhs or even crores. In contrast, you can start investing in REITs with Rs 10,000.
- Investment Tenure: Real estate is a long-term investment, and one would require a period greater than five years.
- Risk: The biggest risk of real estate investment is vacancy. The properties that you invest in could lie ideal for months together, creating zero income.
- Advantages: Real estate can help diversify your portfolio, and it is a relatively safer investment than equities.