Right investment decisions give you the freedom to fulfill your dreams by growing your wealth. But it is not a cakewalk as you need to understand and analyze data to determine how much to invest and how long to stay invested before making an investment decision. To help you with your investment decisions, all digital platforms nowadays provide online tools that help you choose an investment option based on your budget, investment horizon and expected return on investment.
If you want to know more about various investment options, keep reading as this article talks about the top 3 investment options in India that you can consider.
1. National Pension System (NPS):
National Pension System is a voluntary retirement savings scheme that helps you build a corpus for your retirement through planned savings. The scheme provides regular income in the form of a pension during the retirement years. It is a market-linked retirement-focused investment scheme managed by Pension Fund Regulatory and Development Authority (PFRDA). The scheme invests in a mix of equity, FDs, government funds, liquid funds and corporate bonds. An NPS calculator can be used to determine the monthly investment required to build the desired retirement fund. Let us have a look at the key features of an NPS:
- Eligibility –
A citizen of India between 18 to 60 years of age is eligible to apply for NPS.
- Eligibility –
- Type of Accounts –
There are two NPS accounts: a Tier I account and a Tier II account.
- Tier I account is a restricted withdrawal account. It is a retirement account, and tax benefits are applicable to the contributions made.
- A Tier II account is a voluntary savings account where the amount can be withdrawn without any restriction. There are no tax benefits applicable.
- Investment Options –
An applicant can choose how the money is invested under NPS. Through two investment options:
In the active choice, the applicant actively selects a Pension Fund Manager, asset class and percentage allocation for his money to be invested.
- Auto Choice:
For those who don’t have the knowledge to manage their investment, there is an Auto Choice option, where the proportion of investment is invested in different asset classes through a life-cycle fund. It is pre-defined and changes according to the applicant’s age.
At the time of maturity, 40% of the accumulated pension amount is used for purchasing an annuity which provides a pension, and the balance amount is paid in a lump sum. In case of the death of the subscriber, 100% of the pension amount is paid to the nominee.
2. SSY or Sukanya Samriddhi Yojana:
The Sukanya Samriddhi Yojna is a welfare scheme for the benefit of the girl child developed under the government’s ‘Beti Bachao, Beti Padho’ campaign. It is a savings scheme aimed at providing a better future for a girl child. It helps parents save funds for future education, business or marriage expenses of their daughter. It is a small deposit scheme that allows parents to invest regularly. To estimate the returns of the scheme, you can use a Sukanya Samriddhi Yojana calculator. It requires the girl child’s age, investment amount and the year in which the investment started to calculate the investment’s maturity value with interest earned.
Some of the features of Sukanya Samriddhi Yojana are as follows:
- Eligibility –
The account can be opened for girls under 10 years. The child should be a citizen of India, and the account should be active till the girl is 21 years of age. An individual girl can have only one SSY account, and there are only two accounts allowed per family.
- Deposit Amount –
The parents can invest a minimum of Rs. 250 to a maximum of Rs. 1.5 lakhs every year in their daughter’s SSY account till 15 years from the date of account opening.
- Maturity –
After 15 years, no investment is required, and the interest is accumulated on the deposits till the 21st year. The scheme gives guaranteed maturity benefits with accumulated savings growing from compounding interest after maturity.
- Eligibility –
Tax Benefit – All deposits, interest earned, and withdrawals under the scheme are tax-free.
3. Mutual Funds:
Mutual funds are one of the best investment options to grow your money if you understand the capital market and are able to evaluate risk. It allows both short-term and long-term investments as per your preferences. It is a high-return investment, with multiple choices for investment to suit all kinds of investment goals and risk profiles.
A mutual fund is a trust that collects money from investors and invests the collected pool according to the investment objective of the fund. The fund is professionally managed by a manager who takes all investment decisions for the portfolio, which consists of equities, bonds, instruments for the money market, etc., based on the fund’s investment objective.
There are many types of mutual funds based on their investment portfolio. A mutual fund offers many benefits as an investment option like liquidity, diversification, professional management and an option to invest in small amounts in the form of a systematic investment plan.
Tax benefits of mutual funds depend on the type of fund chosen- debt, equity or tax saving. Since mutual funds are long-term investments, there is no specific date for maturity. You can invest in them as long as you wish, which can help you build your forever investment portfolio.
Many factors influence an investment decision, such as flexibility of investing, investment period, risk-appetite, liquidity, returns and tax benefits. The factor that suits your goal is the most important for you while making an investment choice. It may be liquidity or high returns, depending on your priority. So the best investment is the one that fulfils your goal as per your priorities.