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15 Oct 2020

Best Investment Options In India Available In 2021

CoinSwitch Kuber

Investing in India is grossly misunderstood. 

Some confuse it with taking a life insurance policy, and some consider it a tax-saving process. Due to this lack of understanding, many prefer to stick with low-return options such as bank fixed deposits. 

The aim of investing is not just capital safety, but income generation and capital gains too. Investing is the key to wealth creation and a way to beat inflation to fulfill your long term financial objectives.

There are multiple avenues of investing in India that can suit your risk profile and generate decent returns over a specific tenure.

Best Investment Options In India 2021

That’s why let’s check out some of the short term and long term investment options in India that can help in your financial needs:

Low-risk Investment Options in India 2021

  • Bank Fixed Deposits

A Bank Fixed Deposit scheme is where you can park your lump sum cash for a minimum period of 7days to 10yrs based on when you will need your money back. It is one of the safest ways to invest for short durations with decent returns.

  • Recurring Deposits

A Recurring Deposit just like Bank F.D is an investment scheme that is appropriate for investing for a period as short as 6months, the only difference here is that instead of a lump sum you invest a specific amount over regular intervals.

  • Corporate Deposits

Corporate Deposit schemes are similar to the general deposit schemes however this scheme is especially for a corporate account holder. However, the interest earned under this scheme is generally higher than the usual deposit schemes.

  • Liquid Mutual Funds

A liquid mutual fund is a debt fund that invests your money in fixed income instruments like government securities, treasury bills, etc with a maturity period of up to 91days.

  • Short Duration Mutual Funds

Short-duration Mutual Funds are debt funds that invest in debt and money market securities for a period of a minimum of one year.

The short-term investment options are generally low-risk low return class of investment and are designed to provide safety to capital and park surplus cash.

Read more about short-term investment plans in India.

  • Public Provident Fund (PPF)

PPF is a long-term investment scheme with consistent returns through which individuals save up for retirement.

  • Large/Mid-cap Mutual Funds

Large and Mid-cap Mutual Funds are investments investing in equity funds.

  • Unit Linked Insurance Plan (ULIPs)

A ULIP is a combination of an insurance plan and an investment vehicle where a portion of the premium paid is used to secure insurance and the remaining is invested in equity and debt instruments.

  • National Pension Scheme (NPS)

NPS is a retirement scheme where individuals between the age of 18 – 60 years contribute and create a corpus that can be utilized on the maturity of the fund.

Other Investment Options in India

  • Cryptocurrencies like Bitcoin etc

Cryptocurrencies are the new age investment vehicles with the potential to yield maximum returns with relative risks involved.

  • Stock Market

The stock market is an investment vehicle where you can invest in potential stocks listed on NSE and BSE.

  • Gold

Gold is one of the most trusted and traditional investing means that has historically proved itself to be one of the most lucrative investment vehicles.

  • Real Estate

Real Estate is also one of the traditional investing means where investors invest their money for longer durations.

The risk and returns vary under each option, and investments should be made based on your requirements and risk profile about which we will talk further in the article. 

Best Investment Options With High Returns In India

Some investment options have outstripped inflation growth over the term of the investment. They have a minimal effect of inflation on the investment. 

Such options are high risk & high reward, hence the risk of losing capital is also highest.

But the good news is:

Investing for a longer duration, can minimize the impact of volatility and enhance your returns.

Here, the returns are neither fixed nor assured just like any other investment; all depends on the underlying asset’s performance. 

#1. Cryptocurrencies

Cryptocurrencies are a form of digital currencies, that first came into existence in 2009 through the launch of Bitcoin. As 0f now, there are thousands of cryptocurrencies available in the market.

Cryptocurrencies like Bitcoin are fully decentralized and designed to work as a medium of exchange. All data related to its ownership and transactional information is stored in a decentralized ledger giving it much-needed transparency which we lack in the current financial ecosystem.

Over the decade of existence, some cryptocurrencies have emerged as an efficient medium of value transfer and an excellent store of value.

For instance, Bitcoin has grown from $0.0001 to $10,000 in just a decade, touching a peak of nearly $20,000 in 2017. To put that in perspective, that’s a whopping million percent returns in just 10 years. 

However, cryptocurrencies are extremely volatile. Investors need to plan and stay cautious to make the most of this new asset class.

Invest In Crypto With Just Rs.100

#2. Equity Investing

Investing in equity shares has been around for three centuries. It first started in the 18th century, and the Dutch East India Company issued the first share. 

Equity investing involves investing your money in equity shares of a company. These companies are listed on stock exchanges such as the National Stock Exchange and Bombay Stock Exchange.

The shares are traded on the exchange, and their price increases or decreases according to the underlying company’s financial performance. 

A potent wealth creator, the benefits of equity investment come through dividends (profit sharing by the company) and capital gains (income from the sale of an asset).

To put things in perspective:

Over the last decade, the Nifty 50, which houses India’s top 50 bluechip companies, has generated returns of 91.45% and this isn’t a small number.

#3. Real Estate (Investing in Properties)

Real estate investing is a very lucrative investment option where you can make money through rental income and price appreciation of the property itself.

Investing in real estate provides a steady flow of income, and it can also be leveraged to raise funds. Also, there are tax deductions on the property’s acquisition and maintenance, which makes it a highly profitable investment option. 

However, there are a few downsides to real estate investing, such as it is capital intensive and an illiquid form of investing, meaning it is difficult to sell the property at short notice. 

If one does it right, it might turn out to be a good option in the long run for generating good returns. But don’t just take my word for it and do your own research too.

But speaking of good returns, I wanted to share what good returns actually are in the next section.

Invest For Good Return On Investment In India

The definition of good returns varies for each one.

Still, technically, those investment options which can generate returns of inflation plus 3-4% over the long term are considered a good return investment option.

Investment options like PPF, large/mid-cap mutual funds, liquid/low duration debt mutual funds, corporate deposits, ULIPs, NPS, and gold usually fall under the category. 

The returns are only indicative; however, you should select the investment product most suitable for you based on the following three criteria:

  • Financial Goal: While planning for an investment, you should be clear about the financial goal in your mind. Whether you are investing for retirement or saving for your child’s future or buying an asset, it will guide you to choose the right investment instrument. 
  • Investment Horizon: Based on your investment horizon, you should select the investment instrument and should stick to the options classified under long-term investments and short-term investments.
  • Investment Risks: Every investment option carries a certain degree of risk, and you should invest according to your risk profile only. 

Many strategies may be applied to earn good returns on investment. One of my favorites is the Aggressive Investment Strategy. 

What Does Aggressive Investment Strategy Mean?

It is a style of investment or portfolio management strategy wherein you maximize returns by taking a high-risk level. The primary objective of this style of investing is capital appreciation rather than the safety of capital.

In such a strategy, you allocate a significant part of your capital in investment options that are generally high-risk and high-reward like stocks and cryptocurrencies but not so much in fixed income instruments like fixed deposits, etc.

Having said that, this isn’t a piece of investment advice but an example to drive home the message of aggressive investments.

Conclusion

Warren Buffet said, “Investing is simple, not easy,” and successful investing is more about common sense and less of a beautiful mind. 

For investors, the purpose of investment varies according to the financial objective and risk-taking abilities.

Therefore, to generate lucrative returns, you need to have a good understanding of the different types of investment options available in the market. And, also deploy a smart investment strategy through a judicious mix of both worlds, i.e. high-risk and low-risk investment products.   

But I suggest you not only take my word but do your own research also. And never invest more than what you can afford to lose in any investment class.

Happy investing !!

FAQs on Investment Options in India 2021:

1. Which is the best investment plan in India for the middle class?

There is no one size fits all approach when it comes to investing. Hence, the right way to make the best investment plan for yourself is first to understand your risk appetite and capital investment and then explore multiple investment avenues to make the right choice.

2. Which is the best investment in India 2021?

The one investing medium that has attracted a lot of investors this year has to be cryptocurrencies, but that doesn’t mean it is the best investment choice for everyone.

It would help if you explored all the investing mediums available and then choose to go for the one that best suits you.

3. Where should I invest a lump sum in India?

There are multiple investing avenues where you can invest a lump sum. But, the safest would be Fixed Deposit schemes. You can also choose to spread the lump sum across multiple investment vehicles like Equity, Crypto, etc.

4. What are safe investment plans with high returns in India?

Every investment vehicle ties in with some risks and returns. This means that the safest investment vehicle will not necessarily be the highest yielding. Although what you can do is have a balanced portfolio where your funds are spread evenly between high and low yield investments to mitigate risk

[su_note] KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing. [/su_note]

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

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CoinSwitch Kuber

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