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12 Best Investment Options In India

12 Best Investment Options In India

If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).


Most investors are looking for the best investment options in India that will provide them with significant returns as fast as possible while avoiding the danger of losing their principle.

This is why many Indians are continually looking for best investment options in India that will allow them to quadruple their money in a matter of months or years with little or no risk.

Unfortunately, a high-return, low-risk combination in an investment product does not exist. In truth, risk and return are inextricably linked; the higher the profits, the higher the risk, and vice versa.

Before investing, you must match your individual risk profile with the related risks of the investment product.

Some investments have high risk yet have the potential to create larger inflation-adjusted returns than other asset classes over time, whereas others are low risk and so yield lower returns.

Investment goods are classified into two categories: financial assets and non-financial assets. 

Market-linked goods (such as stocks and mutual funds) and fixed income products are two types of financial assets (like Public Provident Fund, bank fixed deposits).

Non-financial assets, in which many Indians invest, include actual gold and real estate.

Things to Consider when Investing in India

What characteristics make the best investment options in India? A savings plan’s efficiency may be measured by a variety of characteristics, including its flexibility in investing, pre-withdrawal, and the amount of tax exemption it enables.

Most investors’ investing decisions are influenced by the following variables, which are listed below:

  • The ability to invest and withdraw funds at any moment.
  • The freedom to invest whatever amount
  • A more secure risk-return proposition
  • Personalized investment time
  • Tax breaks and other advantages

Depending on your objectives and needs, you may choose which element is most important to you when making a long-term investment.

Also, keep in mind that you cannot have the best of both worlds; any investment will have a few good qualities while sacrificing others. For example, if you invest for high liquidity, you may lose out on total profits.

12 Best Investment Options in India

1. Direct Equity

Since stocks are a volatile asset type with no assurance of returns, investing in them may not be for everyone. Furthermore, choosing the appropriate stock is challenging, and it can be challenging to time your entrance and exit.

The sole bright spot is that, relative to all other asset classes, equities has been able to produce stronger returns over extended periods of time than inflation-adjusted returns.

At the same time, unless one chooses the stop-loss approach to limit losses, there is a substantial chance of losing a sizable percentage or perhaps all of your cash. One enters a stop-loss order in advance to sell a stock at a particular price.

You might diversify between industries and market capitalizations to somewhat lower the risk. One has to create a demat account in order to invest directly in stock.

The opening of a 3-in-1 account is also permitted by banks.

12 Best Investment Options In India
Photo from Forbes

2. Equity Mutual Funds

Equity mutual funds are the best investment options in India. Equity mutual funds are a subcategory of mutual funds that invest primarily in equity stocks.

Between 70 and 95 percent of the fund value may be invested in equities stocks and associated securities by equity mutual funds. Due to their equity foundation, companies have a high risk-to-reward ratio.

An equity fund may be managed actively or passively.

a) Actively Managed Mutual Funds

The fund manager actively participates in managing these types of funds. The skill and ability of the fund manager have a significant impact on how well this product performs. Based on research and company analysis, he or she selects the equities that the fund will purchase.

b) Passively Managed Mutual Funds

The fund management doesn’t have a significant impact in this kind of fund. A particular index or market portfolio serves as the foundation for the fund. A fund composed of NIFTY50 stocks, for instance, or something similar. This fund’s performance is determined by the index’s performance.

Schemes for equity mutual funds mostly invest in equities stocks. A current equity mutual fund scheme must invest at least 65 percent of its assets in equities and equity-related securities in accordance with Securities and Exchange Board of India (Sebi) Mutual Fund Regulations.

The capacity of the fund manager to create returns determines a substantial portion of the returns in an actively traded fund. Passively managed exchange-traded funds (ETFs) and index funds follow the underlying index.

Equity plans are divided into groups based on their market capitalization or the industries they invest in. They are further divided into local (investment solely in equities of Indian firms) and foreign categories (investing in stocks of overseas companies).

3. Debt Mutual Funds

As we’ve seen, investing in stock has a significant risk as well as the potential for excellent gains. What if you don’t enjoy taking on a lot of danger or don’t want to? If so, you might want to think about debt mutual funds.

The sum is invested in long-term fixed income assets such as corporate and government bonds, debentures, and other debt funds. Debt funds may have a variety of risk profiles depending on the types of securities they hold in their portfolio.

Before making an investment, you should verify the ratings of the securities owned by the fund to determine the risk.

Investors who desire consistent returns might choose debt mutual fund schemes. Comparing them to equities funds, they are less hazardous since they are less volatile.

Debt mutual funds invest largely in assets that provide fixed income, such as corporate bonds, government securities, treasury bills, commercial paper, and other money market instruments.

These mutual funds, however, carry risks. They come with dangers including credit risk and interest rate risk. Investors should thus research the associated risks before making an investment.

If you desire the steadiness of returns with less risk, funds containing highly rated securities or government bonds are right for you.

Thus, you can consider debt funds when:

a) You are risk-averse

b) You want relatively fixed returns

c) Safety of principal is a priority

Keep in mind that all debt funds will still be subject to the risk of shifting interest rates.

4. National Pension System

Investments like the National Pension Scheme are made with your retirement in mind. Government support and oversight of NPS are provided by the Pension Fund Regulatory and Development Authority (PFRDA).

Hence, the Pension Fund Regulatory and Development Authority (PFRDA) is in charge of managing the National Pension System (NPS), a long-term retirement investment product.

You may choose how much of your money to invest through NPS in stocks based on your risk tolerance.

You can have a substantial retirement corpus at your disposal thanks to NPS. As a salaried or independent investor, you are permitted to use the NPS retirement account.

There are two types of NPS accounts.

a) Tier-I (Retirement Account)

b) Tier- II

For an NPS Tier-1 account to stay active, a minimum yearly (April–March) payment of Rs 1,000 rather than Rs 6,000 is now required. It consists of a variety of assets, including government funds, fixed deposits, corporate bonds, liquid funds, and stock.

The main distinction between NPS and other provident fund investments is that NPS enables you to aggressively expand your corpus. As you become older, NPS uses an auto-rebalancing strategy to maintain a portfolio with decreasing risk.

5. Public Provident Fund

One of the best investment options in India, and also one of the most well-liked and secure investments for your long-term objectives is PPF. Due to PPF’s lengthy 15-year term, compounding tax-free interest has a significant impact, particularly in later years.

Furthermore, it is a safe investment because the principal invested and the interest gained are supported by a governmental guarantee. Keep in mind that the government reviews the PPF interest rate every three months.

The plan, which was first developed as a secure retirement investment plan for independent contractors, has proven to be popular with long-term investors because of the following:

  • Tax Efficiency – For investments in ULIPs, you may deduct up to Rs. 1.5 lakhs under section 80C. The maturity value is tax-free as well.
  • Liquidity – Within the first five years of the account, you may borrow against the accumulated corpus. Partial withdrawals are permitted after five years.
  • Risk-Return Mix – Low-risk investment with an annual update to its market-linked interest rate.
  • Investment Period – After the first 15 years, the account can be extended in batches of 5 years.

6. Bank Fixed Deposit (FD)

In India, a bank fixed deposit is seen as a somewhat safer investment option (than stocks or mutual funds) as compared to other best investment options in India.

It is a service provided by banks that guarantees the security of your invested funds and offers consistent returns.

With effect from February 4, 2020, each depositor in a bank is insured up to a maximum of Rs 5 lakh under the rules of the Deposit Insurance and Credit Guarantee Corporation (DICGC), for both principal and interest amount.

Previously, the coverage was limited to Rs 1 lakh for both principal and interest. One can choose between monthly, quarterly, half-annual, yearly, or cumulative interest options in them, depending on their needs.

The interest rate earned is added to one’s income and taxed according to one’s income bracket.

In bank fixed deposits, you must deposit a lump sum of money with the bank for a set period of time at a set rate. You will get your principal, plus the compound interest accrued over the period, after your term is over.

Information you need to know about bank fixed deposits:

  • A bank FD provides you with assured profits. As a result, your principal is safe.
  • You cannot withdraw funds from your FD until it has matured. By prematurely terminating your FD, you risk losing compound interest and incurring penalty penalties.
  • Fixed-income investments can be both long-term and short-term. The duration might be as short as 7 days or as lengthy as 10 years.
  • In a Bank FD, the interest rate agreed upon from the outset will be maintained throughout the period, resulting in fixed interest rates.
  • You can either receive or reinvest the interest.

7. Senior Citizens’ Saving Scheme (SCSS)

The Senior Citizen Saving Scheme, or SCSS, is one of the best investment options in India especially for persons who are or have retired.

It is a government-backed investment option in which you can deposit a lump sum and get a regular income stream once you retire.

The Senior Citizens’ Saving Scheme, which is probably the first option of most retirees, is a must-have in their financial portfolios.

This program is solely available to senior persons or early retirees, as the name implies. Anyone over the age of 60 can apply for SCSS through a post office or a bank.

The SCSS has a five-year term that can be extended by an additional three years once the program is complete.

One may register several accounts, and the maximum investment is Rs 15 lakh. The SCSS interest rate is completely taxable and is paid on a quarterly basis. Keep in mind that the scheme’s interest rate is subject to quarterly review and change.

However, if an investment is placed in the program, the interest rate will stay constant until the scheme matures. Section 80TTB allows senior citizens to deduct up to Rs 50,000 in interest generated from SCSS in a fiscal year.

Because of its guaranteed and high returns, SCSS is a popular investment choice for older folks. The current return rate is 7.4%. (as per Q2 FY 2021-22). These rates are subject to quarterly adjustment.

Here are some features of SCSS:

  • If you are over the age of 60, you can invest in SCSS. People over the age of 55 who have already taken VRS may also apply (Voluntary Retirement Scheme).
  • The minimum investment is Rs 1000, which means you must deposit at least Rs 1000.
  • The maximum amount that may be invested is Rs 15 lakh. You are not permitted to invest more than this amount.
  • In SCSS, interest is paid quarterly.
  • The maturity period is 5 years, which can be extended by up to 3 years.

8. Pradhan Mantri Vaya Vandana Yojana (PMVVY)

PMVVY is a program for older persons aged 60 and over that guarantees a 7.4 percent annual return. The system provides pension income that can be paid monthly, quarterly, half-yearly, or annually, depending on your preferences.

The lowest pension payment is Rs 1,000 per month and the highest pension amount is Rs 9,250 per month. The maximum amount that may be invested in the plan is Rs 15 lakh. The programme has a 10-year term.

The programme is valid until March 31, 2023. The investment amount is refunded to the older person at maturity. In the case of a senior citizen’s death, the money will be given to the nominee.

If you desire a consistent source of income for yourself, this is an excellent investing strategy.

Here are some features of PMVVY:

  • Pension payable monthly, quarterly, or annually
  • It has a maturity date of ten years.
  • The lowest amount you must invest is Rs 1000, and the most amount you may put in a month is Rs 9250.
  • If you have owned it for more than three years, you can use it as collateral for loans up to 75% in value.

9. Real Estate

Real estate is with no doubt one of the best investment options in India.

Your residence is a personal asset that should never be seen as an investment. The second home you purchase might be an investment if you don’t plan to live there.

The value of your home and the potential rental income it may provide are both greatly influenced by its location, which is the single most critical element. Real estate investments yield returns through capital growth and rental income.

Real estate, on the other hand, is a very illiquid asset class. The second significant risk is related to obtaining the required regulatory permissions, which has been substantially resolved with the establishment of the real estate regulator.

Real estate investing is another wise choice. Purchasing assets like land and buildings is referred to as investing in real estate. One of the finest ways to invest to fight inflation is in this.

You may be able to generate both regular income and capital gains by investing in real estate.

The building you have acquired may be rented out. This will guarantee you monthly payouts. If your property has increased in value, you can sell it for more money and receive a capital gain.

A well-known proverb states that “location, location, location” are the three key factors in real estate. This is the main element that will determine if your real estate venture is a success.

While owning real estate in a desirable location could be expensive, it can also increase your rental income and increase the likelihood of appreciation.

12 Best Investment Options In India
Image from Entrepreneur

10. RBI Bonds

As an investment alternative, BI used to offer 7.75% Savings (Taxable) Bonds. However, the central bank has ceased issuing these bonds as of May 29, 2020.

With effect from January 10, 2018, these bonds replaced the previous 8% Savings (Taxable) Bonds 2003 with 7.75% Savings (Taxable) Bonds. These bonds had a 7-year term.

The Central Bank has introduced the 2020 Floating Rate Savings Bond with effect from July 1st. 

The interest rate on the newly announced savings bond is subject to reset every six months, which is the main difference between the prior 7.75% savings bonds and the newly introduced variable rate bond

The interest rate on the 7.75% bonds was set for the term of the investment. The bonds now provide an interest rate of 7.15%.

RBI Bonds are one of the best investment options in India and one of the most secure investment alternatives available. The Reserve Bank of India, or RBI, offers public bonds to collect funds for the development of different government projects.

These bonds are known by a specific term. After maturity, the principal amount is refunded, together with the interest earned.

RBI bonds can be purchased via any of the 12 national chains, as well as four private banks. The RBI will provide you a certificate of holding to recognise your debt. This certificate will serve as proof of adulthood.

These can be non-cumulative, where the interest is paid as a monthly income, or cumulative, where the interest is reinvested.

11. Gold

Gold is frequently seen as the best investment to protect a family’s heritage in India. However, they are becoming less appealing due to increased expenses and charge rates.

Jewelry made of gold comes with its own set of risks and high costs that come with ownership. 

Then there are the “making charges,” which normally represent between 6 and 14 percent of the price of gold (and may go as high as 25 percent in case of special designs). Still an alternative exists for individuals who would like to purchase gold coins.

Today, a lot of banks provide gold coin sales. Paper gold is a different method to own gold. The more cost-effective way to invest in paper gold is through gold ETFs.

With gold as the underlying asset, such investments (buying and selling) take place on a stock market (NSE or BSE). Another way to possess paper gold is to invest in sovereign gold bonds. Also available to investors are gold mutual funds.

ETFs that invest in gold are growing in popularity nowadays. These are frequently called “paper gold.” Stocks and investments related to gold are included in gold ETFs. These may be purchased from the stock market according to your ability, unlike pricey gold.

This is passively managed because it is an ETF, or Exchange Traded Fund. It reflects Gold’s performance. The performance of ETFs will also improve when gold does.

12. Guaranteed Savings Scheme

Last in this list of best investment options in India is the guaranteed savings scheme.

Guaranteed savings plans are a less risky option to ULIP investments, but they only give fixed returns.

The investment length and the quantity of yearly payments determine the guaranteed returns.

Pained by financial indecision? Want to invest with Adam?

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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.

This website is not designed for American resident readers, or for people from any country where buying investments or distributing such information is illegal. This website is not a solicitation to invest, nor tax, legal, financial or investment advice. We only deal with investors who are expats or high-net-worth/self-certified  individuals, on a non-solicitation basis. Not for the retail market.



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