Investments - Popular Investment Options to Get High Returns

An investment is an asset aimed at growing wealth and protecting savings. Popular Indian options include stocks, FDs, mutual funds, PPF, and NPS.
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Popular investment options
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3 mins
15 November 2024

An investment involves allocating money today with the aim of earning a larger return in the future. It’s also a key strategy for saving towards significant goals like major purchases or retirement. By investing in stocks, fixed deposits, bonds, real estate, or commodities, individuals can build a diversified portfolio.

What is Investment?

Investment involves putting money into assets or businesses with the goal of generating future returns. This can include stocks, fixed deposits, or mutual funds. Successful investing requires careful analysis, a long-term perspective, risk management, and portfolio diversification. Investors must stay informed about market conditions, regulations, and industry trends. High-risk investment plans can offer significant long-term returns.

Pro tip

Bajaj Finance launches a new variant, "FD Max", for investments upto Rs. 25,000 . Bajaj Finance is providing one of the highest interest rates of up to 8.85% p.a.for senior citizens and 8.60% p.a. for non-senior citizens , in this variant.

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How an Investment Works

Investing involves strategically using your money to purchase assets like stocks, bonds, or real estate with the expectation of future gains. These assets can potentially grow in value over time (appreciation) or generate regular income payments (dividends or interest). The goal of investing is to increase your wealth and achieve your long-term financial objectives.

Types of investment options in India

Types of investment options include:

1. Low-Risk Investments

Investments with low risk involve minimal or zero levels of risk, providing stable and often guaranteed returns. These options are well-suited for risk-averse investors seeking a secure avenue for earning returns. Low-risk investments include Fixed Deposits, Public Provident Fund (PPF), and Sukanya Samriddhi Yojana, offering a reliable and stable returns.

2. Medium-Risk Investments

Medium-risk investments carry a slightly higher level of risk than low-risk options. They are suitable for investors looking for a balanced portfolio. Medium-risk investments includes Debt Funds, Corporate Bonds, and Government Bonds, offering a balance between risk and reward.

3. High-Risk Investments

High-risk investments are typically market-linked and come with higher levels of risk. Despite the potential for higher returns in the future, these investments involve significant volatility and uncertainty. Suited for investors who can take more risk to earn good return, high-risk investments include Stocks, Mutual Funds, and Unit Linked Insurance Plans (ULIPs).

With many investment plans available, choosing the right one could be challenging. Listed below are a few investment plans that can help grow savings.

Explore Life Insurance policies

Life insurance policies provide an excellent opportunity for savings, investment, and life cover. These policies come with flexible premium payment options, guaranteed maturity benefits or potential to earn market-linked returns. Bajaj Finance Insurance Mall offers a wide range of life insurance plans, including coverage up to Rs. 1 crore from leading insurers. This platform allows you to compare and select the most suitable policy online, making it easy to secure your financial future with affordable premiums. Browse the available plans below.

Popular investment plans in India

If you are wondering where to invest money, here are a few types of investment that you can choose from:

1. Stocks

Stocks represent a share of ownership in a company or an entity. Stocks are one of the best investment avenues for long-term investors to earn generous returns. However, since these are market-linked instruments, there is always the risk of capital loss.

2. Fixed deposit

Fixed deposit is an ideal investment tool for risk-averse investors. An FD bears no effect of the market movements while offering secured returns on your deposit. Even investors with high-risk appetites choose to invest in FD to stabilise their portfolios.

Bajaj Finance, a leading NBFC, offers one of the highest interest rates, up to 8.85% p.a., on its Fixed Deposit. You can also calculate the interest returns with the help of Bajaj Finance Fixed Deposit Calculator.

3. Mutual funds

Mutual funds are investment tools managed by fund managers, which pool people's money and invest in stocks and bonds of different companies to yield returns. You can earn generous returns even when starting with a smaller initial deposit amount.

4. Senior citizen Savings Scheme

Senior citizen Savings Scheme is a long-term saving option for retirees. This option is ideal for those who aim to create a steady and secure income stream post-retirement.

5. Public Provident Fund

PPF is a trusted investment plan in India. Investments start at just Rs. 500 per annum and the principal invested, interest earned, and maturity amount are all exempt from tax. It has a lock-in period of 15 years, with partial withdrawals allowed at various points.

6. National Pension Scheme (NPS)

NPS is one of the profitable government-backed investment options that provide pension alternatives. Your funds are invested in bonds, government securities, stocks, and other investment options. The age of the investor determines the length of the lock-in period, as the scheme does not mature until the investor reaches the age of 60.

7. Real estate

Real estate is one of the fastest-growing sectors in India, which holds excellent prospects. Buying a flat or plot is one of the best tools among India's many investment options. As the property rate is likely to increase every six months, the risk is low and real estate works as an asset that offers high returns over a long-term period.

8. Gold Bonds

Sovereign Gold Bonds are government securities denominated in grams of gold. Reserve Bank issues the bond on behalf of the Government of India as a substitute for holding physical gold. Investors have to pay the issue price, and one can redeem the bonds on maturity.

9. REITS

Depending on your risk appetite, you can choose to invest in either market-linked instruments or those that remains unaffected by the market movements. Market-linked investments yield higher returns, but these are not always the best investment plans as they risk losing your capital. In comparison, investment tools like fixed deposits offer more security of funds. Bajaj Finance is one such financier that provides the dual benefit of high FD rates and safety of funds.

10. Government bond

A government bond is a type of debt security issued by a government to raise capital for various purposes. Some of the purposes are financing infrastructure projects, paying off existing debt, or funding social programs.
When an investor buys a government bond, they are essentially loaning money to the government. In exchange for this loan, the government promises to pay the investor interest at a specified rate for a fixed period of time, usually ranging from a few months to several years.
At the end of the bond's term, the government repays the principal amount (the amount originally borrowed) to the investor. Government bonds are considered a low-risk investment because they are backed by the full faith and credit of the government. This means that the chances of the government defaulting on its debt obligations are considered extremely low.

11. Direct equity

Also known as owning stocks or shares, it refers to the ownership of a company's assets by purchasing its shares directly from the stock market. When you buy direct equity, you own a portion of the company and have a claim on its assets and earnings.
As a direct equity holder, you have the potential to earn profits through capital appreciation. This signifies an increase in the value of the company's shares over time, and higher dividends. Dividends are a portion of the company's earnings distributed to shareholders.

12. Unit Linked Insurance Plans (ULIPs)

A Unit Linked Insurance Plan (ULIP) is a type of life insurance policy that allows the policyholder to benefit from potential returns on investment, while also providing a life insurance cover. ULIPs are designed to provide the policyholder with the benefits of both investment and insurance in a single plan. The policyholder has the option to choose the investment funds based on their risk appetite and financial goals. ULIPs offer flexibility in terms of investment as the policyholder can switch between different funds based on their financial goals and market conditions. They also provide tax benefits on both the premium paid and the benefits received, subject to certain conditions.

13. National Savings Certificates (NSC)

National Savings Certificates (NSC) is a Savings Scheme offered by the Government of India through the Department of Post. It is a fixed-income investment that allows individuals to invest a lump sum amount and earn interest on it. The scheme comes with a maturity period of five years, and the interest rate is fixed at the time of investment. Currently, the interest rate is 7.7% per annum (as of January 2024).
The investment made in NSC qualifies for a tax deduction up to Rs. 1.5 lakh per financial year, under Section 80C of the Income Tax Act. The interest earned on NSC is also taxable as per the individual's tax slab rate, but no TDS (tax deducted at source) on the interest. The minimum investment amount in NSC is Rs. 100, and there is no upper limit for investment.

14. Sukanya Samriddhi Account

Sukanya Samriddhi Account is a government-backed Savings Scheme for the girl child, launched under the Beti Bachao Beti Padhao campaign. The scheme is aimed at promoting the welfare of the girl child in India and encouraging parents to save for their daughters' education and marriage expenses. The account can be opened in the name of a girl child who is below the age of 10 years, by her parents or legal guardian. The account can be opened in any post office or authorised bank branch in India. The minimum deposit amount for Sukanya Samriddhi Account is Rs. 250, and the maximum deposit limit is Rs. 1.5 lakh per year.

The account offers an attractive rate of interest, which is currently set at 8.2% per annum (as of January 2024), compounded annually. The interest earned on the account is tax-free and the contributions made to the account are eligible for tax deductions under Section 80C of the Income Tax Act.

15. Kisan Vikas Patra (KVP)

Introduced in 1988 as a small saving certificate scheme, the Kisan Vikas Patra aimed to instill long-term financial discipline. Initially designed for farmers, the scheme has since expanded its eligibility criteria, allowing anyone who qualifies to invest. Kisan Vikas Patra post office scheme guarantees returns. Investors can obtain certificates from any India Post Office branch or select public sector banks.

16. Post Office Time Deposit

Post Office Time Deposit is a fixed-term deposit offered by India Post. It allows individuals to deposit a lump sum amount for a fixed period, ranging from 1 year to 5 years, at a predetermined interest rate. This investment option provides capital protection and a fixed return, making it suitable for risk-averse investors. The flexibility in choosing the deposit tenure caters to investors with different financial goals and time horizons.

Fixed deposit variants

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42 months

INTEREST RATES UP TO
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FD - Age below 60

INTEREST RATES UP TO
8.60% p.a.
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Systematic Deposit Plan

INTEREST RATES UP TO
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FD - Senior Citizen

INTEREST RATES UP TO
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FD – Special Tenure

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Where should you invest your money?

Depending on your risk appetite, you can choose to invest in either market-linked instruments or those that remains unaffected by the market movements. Market-linked investments yield higher returns, but these are not always the best investment plans as they risk losing your capital. In comparison, investment tools like fixed deposits offer more security of funds. Bajaj Finance is one such financier that provides the dual benefit of high FD rates and safety of funds.

How to start investing

Here is a quick guide on how you can start investing:

1. Define your goal

Determine what you are saving for (retirement, down payment, etc.) and your desired timeframe.

2. Research

Research different investment options, their risks and potential returns. This can involve reading articles, watching videos, reading balance sheets or consulting a financial advisor.

3. Diversify

Begin with a manageable amount and spread your investments across different asset classes (stocks, bonds, real estate) to mitigate risk.

4. Review

Regularly review your portfolio and adjust your investments as needed to align with your goals and market conditions.

How does the risk appetite affect your investment choices?

Most investments carry a certain level of volatility, and usually, the returns on an investment are more when the levels of risk are high. Thus, investment decisions are often taken based on investors' risk appetite.

1. Low-risk investments

Fixed-income instruments include bonds, debentures, fixed deposit schemes, and government Savings Schemes.

2. Medium-risk investments

Debt funds, balanced mutual funds fall in this category.

3. High-risk investments

Volatile investments include instruments like stocks and equity mutual funds.

Factors for choosing the investment plan?

Factors for choosing an investment plan include:

1. Investment goal

It is essential to identify your investment goals - whether it is long-term wealth building, to fund education or marriage expenses, or for short-term financial goals.

2. Risk tolerance

The level of risk that you are willing to take on, which differs based on your age, financial position, and investment goal, must be factored in.

3. Investment Horizon

It is crucial to determine the length of the investment period, and how it aligns with your financial goals.

4. Tax considerations

Investments can be taxed at different rates, based on the investment duration and type.

5. Investment cost

Fees and charges levied by the investment option, such as brokerage fees, administration fees, exit fees, and fund expenses, must be considered before investing.

Benefits of investment plans

Investment plans offer a multitude of benefits for individuals seeking to grow their wealth and secure their financial future. These plans provide a structured approach to investing, allowing you to achieve your financial goals over time while enjoying various advantages. Here are some of the key benefits of investment plans:

1. Goal-based planning

Investment plans enable you to set specific financial goals, whether it's saving for retirement, buying a home, funding your child's education, or starting a business. By creating a structured plan, you can tailor your investments to meet those goals within a defined timeframe.

2. Wealth creation

Investment plans offer the potential for substantial wealth creation over time. By investing in various assets like stocks, bonds, or mutual funds, you can benefit from market growth and compound interest, significantly increasing your net worth in the long run.

3. Inflation protection

One of the most significant advantages of investment plans is their potential to outpace inflation. Inflation erodes the purchasing power of money over time, but by investing in assets that can grow at a rate higher than inflation, you can protect your savings and maintain their real value.

4. Tax benefits

Certain investment plans, such as Public Provident Fund (PPF), Unit Linked Insurance Plans (ULIPs), Equity Linked Savings Scheme (ELSS), and Sukanya Samriddhi Yojana (SSY), offer tax-saving benefits under sections 80C and 10(10D) of the Income Tax Act. These deductions can significantly reduce your taxable income, thereby lowering your overall tax liability.

5. Regular income

Some investment plans, particularly those that invest in dividend-paying stocks or bonds, can provide a regular income stream. This is especially beneficial for retirees or individuals seeking a steady income source.

6. Expert management

Many investment plans are managed by professional fund managers who have expertise in analysing market trends and selecting investment opportunities. This can be particularly advantageous for individuals who lack the time or knowledge to manage their investments actively.

Additional read: Best investment scheme for senior citizens

Why is the Bajaj Finance FD one of the best investment options?

  • High-interest rates up to 8.85% p.a.
  • Highest safety ratings of CRISIL AAA/ STABLE and [ICRA]AAA(Stable).
  • Periodic payout options with a Non-Cumulative FD.
  • Loan against FD to avoid premature withdrawals.

Investing in a Bajaj Finance FD is now easier than ever. Start your investment journey from the comfort of your home with our end-to-end online investment process.

Conclusion

Investing isn't just about putting money aside; it is about strategically putting it to work with the potential to grow it over time. While there is always a chance of losing money, it remains the primary tool individuals use to save for significant life goals like dream homes or a comfortable retirement.

Also read, Articles related to Investing:

Frequently asked questions

What is the Digital FD offered by Bajaj Finance?

Bajaj Finance has launched a new FD variant called "Bajaj Finance Digital FD" for a period of 42 months. Bajaj Finance is providing one of the highest interest rates of up to 8.85% p.a. for senior citizens and for the customers below the age of 60 they are providing up to 8.60% p.a. The Digital FD can be opened and managed only through the Bajaj Finserv website or app.

Investing seems difficult. How to choose the best investment options?

Investing can be overwhelming, but it doesn't have to be. Before investing, analyse your personal financial goals, target corpus, cash flow needs, time horizon, and risk appetite. Once you are clear about your goals, you can design your investment portfolio accordingly.

What are the top 10 investment options in India?

The top 10 investment options in India are Stocks, Fixed deposit, Mutual funds, senior citizen savings scheme, Public Provident Fund, National Pension Scheme (NPS), Real estate, Gold Bonds, REITS, Government bond.

What types of investment options in India are suitable for an average person?

Investment options in India suitable for an average person are Public Provident Fund (PPF), National Pension System (NPS), Fixed Deposit, Mutual Funds, Recurring Deposit (RD), etc.

Is it too risky to invest in stocks?

Investing in stocks can be risky, but it can also be rewarding. It's important to understand the risks associated with investing in stocks and to diversify your portfolio to minimise risk.

Why should I check my risk tolerance before investing money?

Checking your risk tolerance before investing money is important because it helps you determine how much risk you are willing to take on. This can help you choose investments that align with your risk tolerance and financial goals.

What do you mean by a diversified investment portfolio?

A diversified investment portfolio is a portfolio that includes a mix of different types of investments, such as stocks, bonds, and real estate. Diversification can help reduce risk and increase returns.

Is it good to choose a long term investment option?

Choosing a long-term investment option can be a good idea because it allows you to take advantage of compounding interest. However, it's important to choose an investment option that aligns with your financial goals and risk tolerance.

What are the risk factors I should consider while selecting investment options?

The risk factors you should consider while selecting investment options include market risk, credit risk, inflation risk, interest rate risk, and liquidity risk.

What are the best investment options for tax saving in India?

The best investment options for tax saving in India include Public Provident Fund (PPF), National Pension System (NPS), Equity Linked Savings Scheme (ELSS), Tax Savings Fixed Deposit, Unit Linked Insurance Plans (ULIPs), and National Savings Certificate (NSC).

Where to Invest Money In 2024?

The best place to invest money in 2024 depends on your personal financial goals, target corpus, cash flow needs, time horizon, and risk appetite. Some of the best investment options in India for 2024 include Mutual Funds, FDs, Public Provident Fund (PPF), National Pension System (NPS), Stock Investment, Mutual Funds, Commercial Real Estate, Initial Public Offer (IPO), Bonds, etc.

How can I invest to get money?

To invest and earn returns, you can explore various options such as fixed deposits, mutual funds, stocks, or real estate. Each option offers different risk levels and potential returns. Fixed deposits provide stable returns, while mutual funds and stocks offer higher growth but come with higher risk.

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.