With the economy taking a beating from recession, reducing interest rates and the stock market becoming volatile on fear of further lockdown, identifying the right investment option is becoming a challenge for most of us. Do we park our money in bank FDs/Savings accounts, invest them in stock market/MF or buy policies like SCSS, NPS, etc? This is a dilemma for many investors who are not clear on what kind of approach should be taking to balance out risk and return. This article details Investment Options for different types of Investors in India.
I have divided the article into 3 groups – For Conservative Investors, For Risk Taking Investors and For Investors approaching Retirement. For each group, I have suggested few options giving best returns along basic information about them.
The conservative investors can bank on FDs, Post Office Savings Schemes, National Saving Certificates. However, the options are not limited to that; they can also invest in the below options which will give them comparatively better returns in this category.
These two fixed- income saving schemes carry the same suffix but their returns are different. Here, are the details of these investment schemes.
The government of India has this scheme to support its campaign Beti Bachao Beti Padao. The scheme helps you to save money for her future education needs and to meet wedding expenses. The parent/guardian can open the account in the post office or in the bank any time, from her birth, till she attains 10 years of age. Here are the details of the scheme
These investors normally invest in equity related products like Stock and MF. There are two kinds of investors in the stock market.
These investors are attuned with the latest trends of stock market and do a lot of research. They pay a lot of attention on buying and selling trends. Here are some investment avenues for such investors.
These investors are not looking to take big risks. This is because they either don’t have the time or the knowledge to invest correctly. Instead, they want to earn money in a passive and secure way. Following are the best options for such investors.
There was a time when retirement meant the end of income. However, now people are becoming wise and are building the pipeline of income that generates the return even after retirement. Below saving and investment schemes help them meet their monthly expenses and battle against the rising inflation rate.
This saving scheme is undertaken by the India’s government and is the first choice for pensioners. It can be taken by the senior citizens who have the age of more than 60 years and above from bank or post office.
It is a five year investment plan offered by the government of India. It can be taken by anyone over 10 years of age.
It is another scheme launched by LIC for the senior citizen who are above 60 years. Under this scheme, the investors get assured pension. It can be quarterly, monthly or yearly.
These bonds are issued by government companies like Power Finance Corporation, Rural Electrification and Corporation, Housing and Urban Development Corporation, etc. They are safe and the investor can buy or sell them as per his needs. The interest earned on these bonds can help the senior citizens to meet their monthly expenses. These bonds come with the highest safety ratings and one can buy or sell these bonds on the stock market when needed.
It is a perfect saving plan for retirement. Apart from tax deductions under 80C, additional deductions can be availed under 80CCD. NPS investment can be done by anyone over 18 years of age.
One thing to know in NPS is that from the total corpus (under Tier 1), you can withdraw max 60% on attaining the age of 60 years. The remaining 40% has to be converted into annuities which will give you a monthly pension (taxable).
This scheme is for workers who work in unorganized sectors like house-helpers, gardeners, etc. Under this scheme, the investor can earn a pension of Rs 1000, 2000, 5000, 4000 depending upon the contribution. In this scheme, the central government contributes 50% of the contribution or Rs 1000 whichever is less for 5 years.
These schemes offer steady returns and are less risky than equity mutual funds. These funds invest the amount in fixed interest securities like treasury bills, commercial bills and other money market-related instruments. Debt Mutual Funds generate returns as per the performance of the stock market.
All these schemes are the best ways to save money and earn a high return on investment. It will help you to meet monthly expenses and get regular income even after you retire.
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