Where To Invest Money in India

This is an effective tool for people looking at how to invest money, and a good option whether you're interested in a regular income or long-term wealth creation. The money is pooled in from multiple investors and invested in securities as per the investment objective of the scheme. Most MFs do not have a lock-in period; Equity Linked Saving Schemes (ELSS) have a lock-in period of 3 years, which is the shortest lock-in period among tax saving investments. You can start investing in most MFs using Systematic Investment Plans (SIP) with as little as Rs. 500 a month. You have a variety of schemes to select from based on the asset class (equity, debt, hybrid), investment strategy (sector funds, ETFs, index funds, etc.) or geography (domestic funds or international funds).

Backed by the government of India, PPF is a safe and secure long-term investment, and any Indian resident above the age of 18 can open a PPF account in the nearest post office or most Indian banks. The tenure of PPF is 15 years (can be increased in blocks of 5 years at the end of the term), and the interest earned is compounded. The average interest rate for PPF has been 8.4% for the last 5 years. While it has a long lock-in period, the principal investment, maturity amount, and the interest earned are all exempt from taxes.

You can open an FD in any bank, and all bank deposits are insured up to Rs. 1,00,000 by the Deposit Insurance and Credit Guarantee Corporation (DICGC). This is a popular fixed-income investment option as it offers fixed returns over the tenure of the deposit (depending on the bank between 7 days and 10 years). The interest earned can be paid periodically, or be reinvested with the FD to be paid at maturity. The interest rates for FDs range between 6.5%-7%, and the interest is taxable as per the investor's income tax slab.

ULIPs combine life insurance and investments. You pay premium for your policy, a part of which is used to cover life-risk, and another part is used to fund investments. ULIPs come with a lock-in period of 5 years, however, it is advisable to stay invested for the long term (15-20 years) to reap full benefits. ULIPs impose mortality charges, management fees for the underlying funds, administrative charges, discontinuation charges if you exit before the lock-in period, and the inflexibility of the premium could be burdensome for some investors.

NPS is a Central Government backed initiative open to employees of all sectors except the armed forces. The investor invests in a pension account at regular intervals during employment. Upon retirement, you can take out a certain percentage (not more than 60%) of the accumulated wealth as a lump sum, and the remaining amount is paid as monthly pension. The interest earned is between 8-10%, and up to Rs. 2 lakh of your contribution to pension account is exempt u/s 80C and 80CCD.

The most common assets people look for where to invest money for good returns in India are real estate and precious metals like gold. Investment in real estate can offer returns in the form of capital appreciation and rentals. Apart from buying physical gold like jewellery and gold bars, you can also invest in gold-based securities like gold deposit schemes, gold ETFs, etc.