Best Long Term Investment plans for individuals
Fixed Deposits (With Banks OR Cooperative Societies)
Commonly called FD or FDR, this are a good way to pool your savings and keep them safe. And, also receive a good amount of interest! Tax saver FDRS are also a good option in this regard which can be invested in. Besides, if there is an urgent requirement, you can go for a premature withdrawal. So, this can turn out to be a very helpful investment.
It is the most traditional form of investment in India when there were not many options. The fixed deposits offered in banks are considered the safest, where the amount can be invested for more extended periods such as three or five or even ten years for a fixed rate of return that ranges between 3% to 6.5% per annum. Once the term ends, it is available for withdrawal. The interest rates are higher than savings account and RD, there is also a possibility of early withdrawal but a penalty is levied.
Public Provident Fund (PPF)
The minimum contribution required in a year for a Public Provident Fund (PPF) Account is Rs. 500 and the maximum could be up to Rs. 1.5 Lacs. There is a lock-in period of 15 years and all these years, you will be getting interested on your accrued interest too! That is, you will receive compound interest every year on a rate specified by the Government.
Also, interest received each year is exempt & the contribution made each year is allowed as a deduction under chapter VI A. So, this investment will have tax-saving benefits also! Any person can open a PPF account with a nationalized bank and make a very safe and secure deposit here.
This is similar to the Employee Provident Fund (EPF) provided to salaried, but the only difference is, anyone can open PPF. PPF investments are to be held for up to 15 years, and the current rate of return is 7.1%, which is fixed by the government every year. The most significant advantage of investing in the PPF scheme is, one can claim tax deduction under section 80C.
National Savings Certificate
The National Savings Certificate has features similar to a PPF Account. It is again an investment with the Government. So, it has got to be safe & it also provides tax benefits. They are also for a fixed term having a fixed interest rate notified by the Government & it also provides good & safe returns. A basic difference between PPF & NSC is that NSC is generally for a shorter term while PPF is for a larger term.
Must Read – Public Provident Fund (PPF)
Real Estate Investment
If you are aware of the risks & rewards associated herewith, Real Estate is another Green area of Investment. Risky, yes it is but if you have made a perfect investment plan & analyzed & forecasted the probable gain or loss in this transaction, this can turn out to be something good. You can buy in properties when the markets are low & sell it off when the market booms!
RECURRING DEPOSITS / FLEXI DEPOSITS:
Similar to FDs, in RD you can invest the amount not in just one go but periodically. This will have dual benefits, you will get the same advantage of a lump sum amount at the maturity like that in Fix Deposit, & apart from that, here you don’t need to pay the entire principal in one go! So, it doesn’t hit hard on your pocket & you can make great investments.
Mutual Funds & Stock Market:
MF turns out to be a little risky investment but if you have a good portfolio manager & you are well aware of the market risks you may face, then you can invest in the same. Just make sure you read the offer document carefully before investing!
Stocks are the best place to generate very good returns over a more extended period. You may choose to invest in long-term investment stocks directly or opt for the SIP route in mutual funds. Either way, you can expect around 12 to 16% returns, and if the economy is doing good, these returns could also touch 20 or 30%. Some of the best mutual funds for long-term investment are large-cap and mid-cap funds with a good track record of delivering excellent returns.
You can study the financial statements of any emerging & growing company & if you find it appropriate, you can invest in the same.
INVESTMENT IN LIC:
You can also invest in insurance policies & receive dual benefits. Not just life security but also good returns on the maturity of the policy.
INVESTMENT IN GOLD BONDS AND OTHER BONDS:
You also have many options in bonds & you can choose the one which suits the best to you. They provide a good & timely return & are preferred as Long Term Investments these days.These deposits are collected by corporates for expansion and operational activities. Though it is similar to bank FD’s, the risk is relatively high compared to other avenues, but the interest rates are slightly higher than bank FDs. They provide an interest rate of 6 to 8% per annum.
Post Office Savings Schemes
Like banks, there are various savings schemes offered by postal offices and are preferred by many nowadays due to the security and better interest rates. Some of the famous post office savings schemes are the post office Savings account, post office monthly income scheme account, 5-year senior citizen savings scheme, National savings certificate, Kisan Vikas Patra, Sukanya Samriddhi Yojana, etc.
National Savings Certificates (NSC)
It is yet another secure long-term investment option in India available with the post office and few public sector banks. The investment tenure is five years, and once can start their savings in NSC with as low as ₹ 100, making it an affordable option for people from the unorganized sector also to start saving. The current interest rate is 6.8% per annum, and similar to PPF, the Indian government fixes the rates every year.
Sukanya Samriddhi Account (SSA)
This is an investment scheme that the Indian government introduced for the benefit of the girl child. A minimum of ₹ 1000 can be invested in one financial year, and deposits can be made till the girl completes 14 years. The account matures on her completing 21 years of age from the date of account opening. The interest rate offered is 7.6% and can be claimed for tax deduction under section 80C.
Unit Linked Insurance Plan (ULIP)
If you are looking for a long-term investment option that combines insurance and investment? Then ULIP could be your best bet as one portion of the premium you pay goes towards securing your life, and the other portion is invested into stock markets for generating returns.
The returns can hover around 8%, but since it invests in stocks, one can expect fluctuations in its prices. Because of the same reason, their premium and administrative charges are also high.
National Pension System (NPS)
It is a pension scheme introduced by the Indian government as a long-term investment plan in india for providing regular income to investors after retirement.
A person can continue to invest in this scheme until the age of 60 years, post which a minimum of 40% of the funds must be utilized to purchase an annuity plan that gives regular income. The remaining 60% can be withdrawn as a lump sum amount.