India has changed a lot since Independence; so has Indian citizens’ saving habits. While earlier the focus was on savings, it has now shifted to investing.
This article gives you a sneak peek into the top-6 long-term investment options if you are planning to park your money in Indian financial instruments.
1. Fixed Deposits
When it is about popularity and flexibility, nothing can beat an Fixed Deposit (FD). There are two places where you can open an FD account.
a. Housing Finance Companies/ NBFCs
Housing finance companies offer higher FD interest rates than banks or most NBFCs. Contrary to popular belief, a reputed HFC’s FD is safer, and the interest rateis higher than many banks. If you decide to choose an HFC for investing, make sure the FD is CRISIL FAA-rated, as they are the most stable.
Banks are everywhere, which makes them popular and accessible. However, bank FD interest rates are on a non-stop downward slope. At present, the FD interest rate of an HFC is nearly 3% more than banks.
Irrespective of the financial institution you choose, a fixed deposit is one of the safest and the most rewarding instruments for long-term investment.
2. Public Provident Fund
PPF carries with it a sovereign guarantee. The excellent post-tax returns make it an attractive long-term investment option. A demerit of PPF is that the account has a lock-in period of 15 years. However, you can withdraw part of the money after four years from the date of opening the account.
Gold is the traditional safe-haven. It is a wonderful investment for the long-term. However, since the price of gold is determined by market forces, there is no guarantee that the value of physical gold will be higher than your purchase price when you feel like selling it.
4. Mutual Funds
When invested for long-term, mutual funds might generate better returns than any other investment medium. But, many investors lose patience quite early and take their money out as soon as they see its value coming down, albeit for a short while. If you want to extract the maximum benefits out of a mutual fund, keep track of your investments regularly and shift it from equity to debt or vice versa, depending on market conditions.
5. Real Estate
Real estate is an excellent long-term investment as long as the property is in a high-value or a potentially high-value zone. Before investing in real estate, check the background of the developer or seller and the legal status of the property.
A recent report shows that Indian real estate prices have constantly been declining. So, before you decide to invest, make sure it is worth the investment.
Sample this – in 2010, one share of Titan Company cost Rs. 100. Ten years later, the stock went past Rs. 1300/-. An investment of Rs. 10000 in 2010 would have turned into Rs. 130000 by 2020.
No other investment medium can as much return as equities. But finding out a multi-bagger is no mean feat. If you have an enormous risk appetite and excellent research skills, the equity market can help you in generating industry-best returns.
In these highly volatile times, few other investment mediums are as liquid and assured as FD. High FD interest rates offered by housing finance companies make it one of the best options for generating high post-tax returns.