Are you confused about what to do with your extra savings or pocket money? In India, some of the best investment options are available, such as FDs, RDs, mutual funds, and stocks. To pick the best scheme, you must start by defining your investment horizon. This means how long you plan to keep your money invested.

Be aware that this timeframe significantly influences your investment choices. If you have a short-term horizon, you should focus on safer and liquid options. Meanwhile, in the case of long-term horizons, you can make riskier investments that could offer higher returns over time. In this article, we have covered 6 best investment options, where you can consider investing.

If you are looking for a safe investment option, you can consider fixed deposit. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.

• While investing, first define your investment horizon and risk appetite.
• Some of the best investment options you can consider are RDs, P2P lending, PPF, Gold, stock investments through IPOs, and government bonds.
• If you are a conservative investor, opt for low-risk schemes, while aggressive investors can consider equities and debt instruments.

While investing, besides determining your investment horizon, it is also important to assess your “risk tolerance limit”. That’s because if you are a conservative investor, you should prefer schemes that offer non-market linked returns. However, if you are a moderate or aggressive investor, you can opt for investment options that involve equity and debt instruments.

For your greater understanding, below is a list of some of the best investment options, you can consider while investing:
 

1. Recurring Deposits (RDs)

RDs are a type of savings account. They are offered by banks and allow you to deposit a fixed sum of money at regular intervals (mostly monthly). This is one of the best investment options for individuals looking to gradually accumulate money through regular contributions each month.

With RDs, you know exactly how much you need to save each month. Additionally, RDs are considered low-risk investments because they offer a fixed interest rate and guarantee the return of your principal amount at the end of the investment period.
 

2. Peer-to-Peer Lending (P2P)

P2P lending is a financial arrangement where individuals looking to borrow money connect with those willing to lend it. This connection happens through P2P lending platforms that serve as intermediaries. These platforms facilitate these transactions and assess the creditworthiness of borrowers.

One of the main advantages of P2P lending is that it allows you to earn interest on the money you lend. Often, the interest rate you get is significantly higher than traditional bank FDs or government bonds. However, this investment option is risky and can lead to capital losses if the borrower defaults.
 

3. Public Provident Fund (PPF)

PPF is a long-term savings scheme and comes with a 15-year lock-in period. It is supported by the government and offers attractive tax advantages. Contributions up to Rs. 1,50,000 made to a PPF account during a financial year qualify for tax deductions under Section 80C. Moreover, both the interest earned and the maturity amount are tax-free. Investors must also note that the interest rate offered under PPF is revised quarterly.
 

4. Gold

Gold is a safe-haven investment and can be held in various forms, such as:

• Physical gold
• Gold exchange-traded funds (ETFs)
• Sovereign gold bonds (SGBs)

One of the main advantages of investing in gold is its ability to retain value when the economy is struggling. Additionally, gold serves as a hedge against inflation. Historically, it has been observed that its value often increases when the purchasing power of money decreases. By adding gold to your investment portfolio, you can also diversify your holdings and generate more balanced returns.
 

5. Initial Public Offerings (IPOs)

Through IPOs, you can invest in companies that are going public for the first time. In this investment option, you buy shares at an initial offering price. Later, when the share gets listed on the stock exchange, you can either sell it at a high price or prefer to hold it with a long-term horizon.

However, investing in IPOs requires careful evaluation of the:

• Company's financial health
• Market conditions
• Growth potential
   

Please note that when you invest in IPOs, you participate in the “early phases” of a company's journey. This sometimes leads to significant capital appreciation if the company grows successfully.
 

6. Government Bonds

Government bonds are fixed-income securities. Usually, the governments issue them to raise funds for various initiatives, such as infrastructure projects or public services. They offer a fixed interest rate guarantee the return of the principal amount upon maturity.

It must be noted that the interest rates for government bonds are influenced by their duration and current market conditions. These bonds are highly safe and regarded as one of the best investment options for conservative investors.

You can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 7.95% p.a.