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All of us seek to put our hard-earned money in investments that give good results. But investment options that offer low risk with high return do not exist. In real life, risks and returns are inversely related. Here is a list of the best investment options in India that offer good financial security:
Mutual funds: People who desire to invest in bonds and equities that offer a balance of risk and return prefer mutual funds. A systematic investment plan in mutual funds for a long time is considered as a good investment option. It offers a much better return compared to other forms of investments.
Direct Equity: Investing in equity is considered as risky by most people as it is a volatile asset class and there is no guarantee of returns. But over long periods of time, equity has been shown to deliver higher than inflation-adjusted returns when compared to other asset classes.
Real Estate: Real estate is one of the fastest growing sectors in India that promises good returns in major sectors like commercial, manufacturing, hospitality, retail and more. The risk in real estate is low as the value of property rises with time.
Gold: A unique asset, highly liquid, yes precious and scarce; it’s a luxury good as much as an investment. Gold is no one’s liability and carries no counterparty risk. As such, it can play a fundamental role in an investment portfolio. Gold acts as a diversifier, mitigate losses in times of market stress in simple term it can serve as a hedge against inflation and currency risk.
Now few key facts that investors should know: Gold is a mainstream asset driven by many factors, not just investment demand, Gold is one of the most effective diversifiers, Gold at times provides really competitive returns compared to other major financial assets, Gold offers downside protection and positive performance, Over time. The combination of these factors means that adding gold to a portfolio can enhance risk-adjusted returns.
Public Provident Funds: Unarguably, one of the safest long-term investment products has to be the Public Provident funds. It is completely tax-free. The funds get locked into this PPF account in bank or post office for a period of 15 years and earn compound interest.
National Pension Scheme: For those opting for a very low risk profile, the National Pension Scheme sponsored by the Government of India is one of the best modes of investment. It offers definite returns and also qualifies for additional tax benefits.
Bonds and NCDs: Bonds and NCDs are a kind of low-risk income investment product for investors. The bonds are an investment instrument which makes the investor a creditor and here the company is obliged to pay the principal and the interest. The bonds generally have some lock in period typically in the range of 5-10 years. This lock in period is also known as the maturity period. The bonds are also very commonly known as Non Convertible Debentures or NCDs in short as they are virtually debentures issued by the company but they cannot be converted into shares & hence they are termed as non convertible. Hence generally Bonds and NCDs are almost the same kind of investment avenue. Here are the types of Bonds available in India: Tax Savings Bonds, Corporate Bonds, Banks and Financial Institutions Bonds and Government of India Bonds.
