Investing is a key method for growing wealth as it utilises the money that’s idle in the present to bring high returns in the future. Thus, making wise decisions in this area is extremely important to secure your financial plans. With this article, we will help the decision-making process by exploring the various types of investments available in India, offering a range of opportunities to consider.
The following are the types of investment available in India:
1. Stocks
Stocks are one of the most common types of investment. They can be categorised into two types:
Equity Shares
They are parts of a company you can buy, thus giving you a say in how it’s run and also the chance to make money, but they come with higher risks.
Unlisted Shares
Unlisted Shares are from companies not on big stock markets. They might be a good investment if the company does well, but are harder to sell and find information about.
2. Bonds
Bonds are the loans you give to governments or companies for earning fixed returns over time. You get lower returns here compared to stocks but at the same time, this is safer and more stable.
In India, investors can choose from various types of bonds such as:
- Treasury Bonds
- Municipal Bonds
- Corporate Bonds
- High-yield Bonds
- Mortgage-Backed Securities
- Floating Rate Bonds
- Zero-Coupon Bonds
- Callable Bonds
- Convertible Bonds
- Inflation-Protected Bonds
3. Fixed Deposits
They are a secure investment. You can deposit a lump sum for a set period, getting a fixed interest rate in return. Banks and NBFCs (non-banking financial organisations) usually offer this option with the promise of returns unaffected by market changes. Here, premature withdrawals are possible, but they do come with a penalty.
4. Mutual Funds
Mutual funds allow you to invest in stocks, bonds, or a combination of both, which are managed by professionals. They are way less risky than direct stock investments and can be tailored according to your financial goals. You can also start investing small amounts regularly through a Systematic Investment Plan (SIP).
5. Unit Linked Insurance Plans (ULIPs)
ULIPs offer you both- investment and life insurance. A part of your premium goes to life cover, and the rest is invested in the market. Additionally, you also get tax benefits as a cherry on the top, making them a smart option for saving and protection.
6. Public Provident Fund (PPF)
The Public Provident Fund is an investment that is supported by the government. It’s secure and long-term, having a lock-in period of 15 years. It also provides fixed returns, where the interest rate is revised annually. You can also get tax deductions of up to ₹1.5 lakh on your PPF contributions under Section 80C of the Income Tax Act, 1961.
7. National Pension Scheme (NPS)
This is a retirement savings scheme especially made for long-term investments. Different types of assets, like stocks and government and corporate bonds are a part of it. It’s on you how much to invest in each asset type based on how much risk you’re comfortable with.
8. National Savings Certificate (NSC)
This is a government-backed savings scheme. It’s best for small savings with a fixed investment period of five years. Can be called a safe way to invest, and has interest rates set by the government which are revised every quarter. If you are an investor looking for reliable, medium to small-scale investment options, this is the right match for you.
9. Senior Citizen Savings Scheme (SCSS)
Senior Citizens Savings Schemes are the savings plans made for retirees. They offer fixed, taxable returns and are available through banks, NBFCs, and post offices in India. As they pay interest monthly, quarterly, semi-annually, or annually, these schemes provide a steady income for seniors after retirement.
Thus, India is offering a wide array of investment options to choose from, fit for all the kinds of financial goals and risk appetites. Needing high potential returns of equity shares, the steady growth of fixed deposits, or the tax-saving benefits of government schemes, you will have a ready option, just a decision away. Just don’t forget to consider both- the pros and the cons of whatever catches your eye, before investing.
