10 Best Investment Plans in India 2023 for Higher Returns

In today’s fast-paced world, everyone seeks ways to achieve their financial goals as quickly as possible. We all want to multiply our money and secure higher returns in the shortest span. With the myriad of investment options available, finding the best ones that align with our goals and risk tolerance can be a challenging task.

In this comprehensive guide, we will explore the 10 best investment plans in India for 2023, categorizing them based on their suitability for long-term, medium-term, and short-term financial goals. Whether you’re looking to invest in the stock market, mutual funds, real estate, gold, or tax-saving instruments, this article will equip you with the knowledge to make informed investment decisions.

What is an Investment Plan?

An investment plan is a financial instrument that facilitates the creation of sustainable wealth for the future. It provides individuals with the opportunity to invest their savings systematically and periodically into various money-market products. The objective is to achieve financial goals and secure one’s financial future.

Factors to Consider While Choosing Investment Plans

When selecting an investment plan, several factors come into play to ensure it aligns with your financial needs and goals.

1. Monetary Goals

Determine your long-term and short-term financial objectives, such as buying a home, funding education, or planning for retirement. Having clear goals helps you choose the most suitable investment plan.

2. Planned Upcoming Expenses

Consider any significant upcoming expenses, such as marriage or education costs. Evaluating these expenses will help you calculate the required investment amount to achieve those goals.

3. Present Expenses

Assess your current financial obligations to understand how much you can save or invest. This evaluation will guide you in selecting an investment plan with the right risk and return balance.

4. Financial Dependents

Take into account the needs of your financial dependents, such as children or elderly parents. Ensure that your investment plan provides sufficient coverage for their financial well-being.

Understanding Risk and Return

Every investment carries an element of risk. Higher-risk investment plans often offer higher potential returns but come with increased volatility. On the other hand, low-risk plans provide stability but might offer lower returns. Evaluate your risk tolerance and consider the potential return and risk of an investment before making a decision.

Best Investment Options for Long-Term Goals

Long-term goals typically span over 7-10 years, requiring investments with high return potential and a willingness to withstand market volatility. Choose from savings accounts, liquid funds, post office time deposits, or large-cap mutual funds for better returns in a 7-10 year investment.

1. Direct Equity

Investing in equities has proven to be one of the most effective ways to create wealth over the long term. Companies like Bajaj Finance have demonstrated remarkable annualized returns of over 41% in the past 15 years, showcasing the power of equities as wealth creators. However, investing directly in stocks demands extensive research to identify the right opportunities among the thousands of listed options.

2. Equity Mutual Funds

For those seeking a more diversified approach to equity investments, Equity Mutual Funds offer a prudent solution. These funds invest in a portfolio of stocks across various companies, reducing the risk associated with individual stock selection. Managed by professional fund managers, Equity Mutual Funds provide better chances of earning consistent returns over the long term.

3. Real Estate

Real estate has long been a popular investment option in India. While it can deliver attractive returns, it also comes with liquidity limitations and the risk of needing to sell at a discount during urgent financial requirements.

4. Gold

Gold, known as a safe-haven asset, can act as a hedge against inflation and equities during economic crises. However, historical data shows that the returns from gold have been lower than equities over the long term.

5. Small Saving Schemes like PPF

Government-backed small saving schemes, such as Public Provident Fund (PPF), offer a secure investment option with assured returns. While they may not provide market-linked returns like mutual funds or stocks, they generally outperform traditional FDs and beat inflation.

6. NPS (National Pension System)

NPS is a retirement-focused investment product that allocates funds to various assets based on an individual’s risk appetite. It offers the potential for higher returns and serves as an effective tool for long-term financial planning.

7. ULIPs (Unit-Linked Insurance Plans)

Combining life insurance with investment, ULIPs can be beneficial for long-term wealth creation. Modern ULIPs have lower charges, making them a viable option for those seeking life cover along with investment growth.

Best Investment Plans for Medium-Term Goals

Medium-term goals, with a time horizon of 3-5 years, require investment options that offer relatively stable returns without excessive volatility. Opt for liquid funds, fixed maturity plans, or recurring deposits for those looking for higher returns in a relatively short span.

1. National Savings Certificates (NSC)

NSC, offered by the Indian post office, operates like a 5-year fixed deposit with an annual interest rate of 7%. It is suitable for medium-term goals due to its guaranteed returns and lower risk profile.

2. Post Office Time Deposit

Similar to bank FDs, Post Office Time Deposits offer higher interest rates than traditional banks, making them a favorable choice for medium-term investments.

3. Debt Funds

Among the various Debt Fund categories, Banking & PSU Funds, Corporate Bond Funds, and Short Duration Funds are well-suited for medium-term goals. These funds strike a balance between risk and return, making them ideal for investors seeking stability.

4. Hybrid Funds

Investing in multiple asset classes, Hybrid Funds combine equity and debt, providing investors with the potential growth of equities while mitigating risk through debt exposure.

Best Investment Options for Short-Term Goals

Short-term goals demand investments that prioritize capital protection and offer easy liquidity. Consider options like recurring deposits, fixed maturity plans, or post office deposits for short-term goals.

1. Bank Fixed Deposits (FDs)

Fixed deposits are a common choice for short-term investments due to their guaranteed returns. However, they may offer lower post-tax returns, making them susceptible to inflation erosion.

2. Debt Funds for Short-Term

Liquid Funds, Ultra-Short Duration Funds, and Money Market Funds are ideal Debt Fund categories for short-term investments. They provide lower risk than FDs and better accessibility to funds.

Benefits of Investment Plans

1. Wealth Creation: Investment plans enable wealth creation and provide higher returns compared to traditional savings methods.
2. Sustainable Financial Protection: By investing in various plans, you secure financial protection for your family and yourself in times of uncertainty.
3. Death Risk Coverage (Unit Linked Insurance Plans): ULIPs offer life coverage, ensuring financial security for your loved ones even in your absence.
4. Retirement Savings: Investing in plans like pensions ensures a steady income post-retirement, supporting your lifestyle and financial needs.
5. Flexibility: Investment plans provide flexibility in selecting the investment amount and tenure based on your goals and timelines.
6. Tax Saving Benefits: Several investment plans, including ULIPs and Equity Linked Savings Schemes (ELSS), offer tax-saving benefits under Section 80C of the Indian Tax Act.

Types of Investments Based on Risk

Low-Risk Investment

1. Sukanya Samriddhi Yojana: A government scheme for the girl child, offering tax savings under Section 80C.
2. Public Provident Fund (PPF): A long-term investment option with fixed interest and tax deductions.
3. Post Office Monthly Income Schemes: Provides decent returns for risk-averse individuals.
4. Government Schemes For Senior Citizens (SCSS): Offers significant financial security for senior citizens.

High-Risk Investment

1. Direct Equities: Invest in company stocks with the potential for high returns over the long-term.
2. Unit Linked Insurance Plans (ULIPs): Offer life insurance and investment benefits with the flexibility to switch between high and low-risk funds.
3. Mutual Funds: Pooling money from multiple investors to invest in a diversified portfolio of securities.

Medium-Risk Investment

1. Hybrid Debt-Oriented Funds: Balance investments with a mix of equity and debt instruments for stable returns.
2. Arbitrage Funds: Mitigate risk by exploiting price discrepancies between cash and derivative markets.
3. Monthly Income Plans: Provide regular income with a balanced risk and return profile.

How to Choose an Investment Plan

Selecting the right investment plan involves assessing your financial needs, goals, and risk tolerance. Diversify your portfolio by investing in multiple plans aligned with your objectives. Regularly review your investment plans to ensure they remain relevant to your financial goals.

Tax Considerations/Benefits for Investment Plans

Various investment plans offer tax-saving benefits under Section 80C of the Income Tax Act. For instance, contributions to Public Provident Fund (PPF) and Equity-linked savings scheme (ELSS) qualify for tax deductions up to a maximum of Rs 1.5 lakh per financial year. Additionally, life insurance premiums are also eligible for deductions under Section 80C, ensuring tax benefits for the investors.

Investment plans play a pivotal role in shaping our financial future. Understanding the meaning and significance of investments empowers us to make informed decisions that lead to sustainable wealth creation and the achievement of our long-term financial goals.

In conclusion, the key to successful investing lies in understanding your financial goals, risk appetite, and investment time horizon. By diversifying your investments across various asset classes and staying informed about market trends, you can craft a well-rounded investment portfolio that aligns with your aspirations for higher returns and financial security.

Frequently Asked Questions (FAQs)

What are some good investment options in India?

There are several good investment options in India, including Mutual Funds, Fixed Deposits, Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), Unit-Linked Insurance Plans (ULIPs), Real Estate, and Gold, among others.

Which investment gives the highest return?

The investment with the highest return can vary based on market conditions and risk profiles. Generally, investments in the equity market have the potential for the highest returns, but they also come with higher risk. Past performance does not guarantee future returns.

Is automatic investing (automatic fund allocation) a good idea?

Automatic investing, such as Systematic Investment Plans (SIPs), can be a good idea as it promotes disciplined investing and helps mitigate the effects of market volatility. It allows you to invest a fixed amount regularly, regardless of market fluctuations.

How do you withdraw from investments?

The process of withdrawing from investments depends on the specific investment vehicle. For example, in mutual funds, you can redeem your units either partially or fully by submitting a redemption request online or through the fund house.

How much can I withdraw from my investments?

The withdrawal limit from investments depends on the type of investment and the terms and conditions of the investment plan. Some investments may have lock-in periods or penalties for early withdrawals.

What investment funds are offered under the Investment Plan?

The investment funds offered under an Investment Plan can vary depending on the plan provider. Commonly, they may include equity funds, debt funds, balanced funds, and money market funds.

Is buying gold a good investment?

Gold is often considered a safe-haven asset and can act as a hedge against inflation and economic uncertainties. It can be a part of a diversified investment portfolio, but its value can also fluctuate based on market conditions.

How can I start investing in my early 20s?

To start investing in your early 20s, you can begin with small amounts in SIPs of mutual funds, open a PPF account, invest in ELSS funds for tax-saving benefits, and consider other long-term investment options.

What is the safest investment with the highest return?

Generally, there is a trade-off between risk and return in investments. Investments with the highest potential returns often carry higher risks. Government-backed schemes like PPF and some fixed deposits are considered relatively safer options, but their returns may not be the highest.

What are a few types of investments?

Some types of investments include stocks, bonds, mutual funds, real estate, fixed deposits, gold, and other commodities.

What are the modes of investment?

Modes of investment include lump-sum investments, Systematic Investment Plans (SIPs), and Systematic Transfer Plans (STPs), among others.

What is a Fixed Deposit?

A Fixed Deposit (FD) is a type of investment where you deposit a lump sum amount with a bank or financial institution for a fixed period at a predetermined interest rate.

What is Provident Fund?

Provident Fund (PF) is a savings scheme in which employees contribute a part of their salary, and the employer also contributes, creating a corpus that provides financial security upon retirement.

How can I save money from my salary?

To save money from your salary, create a budget, set financial goals, automate savings, avoid unnecessary expenses, and consider investing in suitable investment plans.

How to get maximum returns from the fixed deposit?

To get maximum returns from a fixed deposit, compare interest rates offered by different banks or financial institutions, consider a longer tenure, and check for special FD schemes.

How Much Money Do I Need to Retire at The Age of 55?

The amount of money needed to retire at the age of 55 depends on your lifestyle, expected expenses, and financial goals. It’s essential to plan for retirement early and consult a financial advisor for a personalized retirement plan.

How Can I Double My Money in 5 Years?

Doubling money in 5 years is a challenging task without taking significant risks. It’s generally advisable to focus on long-term investments with compounding effects, such as equity investments.

Are Investment Plans Risk-Free?

No, most investment plans carry some level of risk. Higher potential returns often come with higher risks. It’s essential to assess your risk tolerance and invest accordingly.

What Are SIP Investments?

SIP (Systematic Investment Plan) is a method of investing in mutual funds, where you invest a fixed amount regularly at predetermined intervals (monthly, quarterly, etc.).

What Are Examples of Short-Term Investments?

Examples of short-term investments include Fixed Deposits with short tenures, Liquid Funds, Treasury Bills, and Short-term Debt Funds.

What Are Examples of Long-Term Investments?

Examples of long-term investments include Equity Mutual Funds, Stocks, Real Estate, Public Provident Fund (PPF), and Unit-Linked Insurance Plans (ULIPs).

How Much Does the Average Person Have in Savings?

The average savings of individuals can vary widely based on factors such as income, age, and location. It’s advisable to focus on building a substantial emergency fund and investing for the future.

Who Should Invest in Savings Plan?

Savings plans are suitable for individuals looking to build wealth systematically over time while enjoying life cover benefits.

What is Partial Withdrawal?

Partial withdrawal allows you to withdraw a portion of your investment from certain investment plans, leaving the remaining amount to continue growing.

How Can I Pay the Investment Plan Premiums?

You can pay investment plan premiums through various channels like net banking, mobile wallets, cheques, or automatic deductions from your bank account.