We all want to make investments with the motive of high returns and low or no risk. And this is the reason why we are looking for the Best Investment Options in India to get high returns.
However, there is no investment plan that gives high returns with low risk. In reality, risk and returns are positively correlated. In other words, the higher the return, the higher the risk and lower the return, lower the risk.
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Top 15 Best Investment Options in India for 2021
What are the best investment options in India to get high returns? Where should I invest my money? These are some common questions that plague both new investors as well as knowledgeable investors.
The selection of an investment option depends on your investment goal, expected returns, investment horizon, and risk-taking appetite. Therefore, you should choose an investment option that’s right for you.
In this post, I will share my thoughts on the best investment options in India for 2021. But before that let us understand some simple investment rules that are evergreen.
How to Double, Triple, Quadruple your Investment
These are simple calculations that you can apply before making investment choices. These rules will tell you in how much time your invested money will double, triple or quadruple on compounding.
Rule of 72
In this rule, just divide 72 with the rate of interest and it will give you the number of years taken for your money to double in value.
Rule of 114
Similar to the rule of 72, simply divide 114 with the rate of interest to know the number of years taken for your money to triple in value.
Rule of 144
Similar to the above rules, divide 144 with the rate of interest to know the number of years taken for your money to quadruple in value.
How to find Best Investment Options?
Before jumping into the best investment options, let us understand how to find the best investment options? There are various types of good investment options available. So, consider the following factors to find out an investment option that’s right for you.
Investment Goals
The first step in successful investing should be to know your investment needs and goals. Examples of investment goals are marriage, children education, buying a car or a house, retirement planning, etc.
Expected Returns
It is worth taking the time to find out the investment required to fulfill your goal. On the basis of this information, it will be easy to choose the best investment option.
Investment Horizon
It is important to know when you need your money back. The amount of time varies for different goals. Your time horizon will help you select the best investment option for you.
Risk Appetite
Knowing your appetite for risk is the most important factor while selecting an investment option. Your risk tolerance capacity will help you determine the right investments for you.
Best Investment Options in India for 2021
Here is a look at the top 15 best investment options in India for 2021 that can fetch you higher returns.
Below is the list of the best investment options available in India for 2021.
Best Investment Options with Low Risk
Bank Fixed Deposit (FD)
Bank Fixed Deposit is a safe choice for investment. The Bank Fixed deposit offers guaranteed returns without any risk. Bank FD interest rates vary from 6.5% to 7.5% p.a. You can opt for monthly, quarterly, half-yearly, yearly or cumulative interest option.
The interest income is taxable. The tenure for investing in FD’s range between 7 days to 10 years. You can invest in bank FDs online or by visiting a branch of the bank.
| Bank Fixed Deposit (FD) | |
| Expected Returns | 6.5% to 7.5% |
| Investment Duration | 7 days to 10 years |
| Risk | Low |
PPF (Public Provident Fund)
PPF is one of the popular and best long term investment in India. It offers safe and risk-free returns with an attractive interest rate. Currently, PPF provides 7.1% interest rates coupled with Section 80C tax benefit. If you want to save taxes with guaranteed returns then PPF is a good investment option for you.
However, PPF is a long-term investment of 15 years. You can deposit any amount between Rs.500 to 1.5 lakhs in a year in your PPF account. Also Read: PPF (Public Provident Fund) | PPF Account
| PPF (Public Provident Fund) | |
| Expected Returns | 7.1% to 7.5% |
| Investment Duration | 15 years |
| Risk | Low |
Recurring Deposit
Recurring deposit is a type of fixed deposit. It allows you to make regular monthly deposits of a fixed amount over a period of time. Recurring deposit earns higher interest rates than a savings account. RD account is preferred by those who want to save money and create a fund.
Almost all the banks and post offices in India offer an RD scheme. The minimum period of RD is 6 months and the maximum is 10 years. Currently, the rate of interest for 5 years post office RD scheme is 5.8% per annum. Also Read: Post Office Recurring Deposit Account – Post Office RD Account
| Recurring Deposit | |
| Expected Returns | 5.5% to 7.4% |
| Investment Duration | 6 months to 5 years |
| Risk | Low |
Tax Saving Fixed Deposit
Tax Saving Fixed Deposit is also a good investment option for salaried people. You can get a tax deduction up to Rs.1.5 lakh under Section 80C. Tax saving FD offers a moderate return of approximately 6% to 7.6% per year.
Moreover, tax saving fixed deposit is a safe and easy investment option to invest. These FDs have a lock-in period of 5 years. You can invest in tax saving fixed deposit through any public or private sector bank.
| Tax Saving Fixed Deposit | |
| Expected Returns | 6% – 7.6% |
| Investment Duration | 5 years |
| Risk | Low |
VPF (Voluntary Provident Fund)
VPF is the voluntary contribution by the employee towards his EPF account. This contribution is over and above the 12% of contribution towards EPF. The maximum contribution is up to 100% of the salary (Basic + DA).
VPF earned the same interest as EPF which is revised annually. This contribution is also eligible for tax deduction under Sec 80C. VPF is a safe investment option and falls under the EEE category. The interest rate on PF deposits is 8.65% for the FY 2018-19.
| VPF (Voluntary Provident Fund) | |
| Expected Returns | 8.5% to 8.65% |
| Investment Duration | Long Term |
| Risk | Low |
NSC (National Savings Certificate)
NSC (National Savings Certificate) is a fixed income investment scheme that can be purchased from any post office. It is an Indian Government saving bond and the holder gets the tax benefit under Section 80C.
NSC is a safe investment scheme and preferred by risk-averse investors. NSC earn a fixed interest which the government revises every quarter. Currently, the rate of interest is 6.8% per annum. NSC offers one of the highest interest rates among fixed rate schemes.
| NSC (National Savings Certificate) | |
| Expected Returns | 6.8% to 7.5% |
| Investment Duration | 5 years |
| Risk | Low |
Post Office Monthly Income Scheme (MIS)
Post Office Monthly Income Scheme is a scheme that promises you a safe and constant stream of income. It is a government-backed scheme so your money is safe until maturity. In this scheme, you invest a certain amount and a fixed interest is paid out to you every month.
The current interest rate of MIS is 6.6% per annum. MIS has a lock-in period of 5 years. It is a popular investment option for regular monthly income. Retired or old age persons can invest in this scheme for their monthly needs. Also read: Post Office Monthly Income Scheme (MIS)
| Post Office Monthly Income Scheme (MIS) | |
| Expected Returns | 6.6% to 7.7% |
| Investment Duration | 5 years (monthly income) |
| Risk | Low |
Senior Citizens Savings Scheme
The Senior Citizens Savings Scheme (SCSS) is primarily for those over 60 years of age. This scheme is very popular among senior citizens as it offers regular income, highest safety and tax saving option. SCSS is a good investment option for those over 60 years of age.
The current interest rate is 7.4% per annum which is very good as compared to a savings or FD account. The tenure of this scheme is 5 years. You can invest a maximum amount of Rs.15 lakhs.
| Senior Citizens Savings Scheme | |
| Expected Returns | 7.4% to 8.6% |
| Investment Duration | 5 years (monthly income) |
| Risk | Low |
Best Investment Options with Moderate Risk
ELSS (Equity Linked Savings Scheme)
ELSS is a type of diversified equity mutual fund. Since ELSS is an equity fund, the earning potential is high. It offers a higher return of 12% to 18% as compared to other tax saving instruments.
You can invest via SIP route with a minimum amount of Rs.500 per month. ELSS comes with 3 years lock-in period. Also Read: 4 Best ELSS Funds to invest in 2020
| ELSS (Equity Linked Savings Scheme) | |
| Expected Returns | 12% to 18% |
| Investment Duration | 3 years |
| Risk | Moderate |
NPS (National Pension Scheme)
NPS (National Pension Scheme) is a voluntary, defined contribution based retirement tool. This is one of the best retirement savings scheme compared to other traditional pension schemes. NPS offers a return of approximately 8% to 11% per year.
The lock-in period in NPS varies for different people as it matures at the age of 60. You can withdraw only 60% upon maturity which is tax-exempt. The rest 40% of the corpus needs to be invested in annuities. Also Read: National Pension Scheme | NPS Scheme | How to open NPS Account
| NPS (National Pension Scheme) | |
| Expected Returns | 8% to 11% |
| Investment Duration | Long Term |
| Risk | Moderate |
Gold
Gold is one of the favorite and oldest investment options in India. Investment in gold has given good returns in the last few years. Investing in gold jewelry and coins would not yield anything. If you want to invest in gold then an ideal way to invest in gold is via Gold ETF or gold bonds.
Investing in Sovereign Gold Bond Scheme is also a good option. You will get equivalent gold value in the rupee. You would also earn an interest of 2.5% per annum. Sovereign Gold Bonds have a lock-in period of 8 years.
| Gold | |
| Expected Returns | 10% |
| Investment Duration | Medium to long term |
| Risk | Moderate |
Best Investment Options with High Risk
Mutual Funds
Mutual funds are currently the safest and popular investment vehicle for investing in the equity market. These funds help you to invest in equities with the help of professional fund managers. Mutual funds allow you to make your money earn for you. The best performing equity mutual funds have generated good returns post inflation.
You can invest in mutual funds either by investing a lump sum or via a SIP. Investments in the mutual fund via SIP is a convenient method to create long term wealth. The SIP installment amount could be as low as Rs.500/month. Also Read: How to invest in Direct Mutual Funds?
| Mutual Funds | |
| Expected Returns | 10% to 16% |
| Investment Duration | Medium to long term |
| Risk | High |
Direct Equity
Equities have delivered higher returns compared to all other asset classes over the long term. However, there is no guarantee of returns and involves a huge risk. Investment in equities requires a lot of knowledge and risk-taking capability.
Selection of good shares to invest is a difficult task. This option is for high-risk investors. You need to open a demat account for investing in direct equities.
| Direct Equity | |
| Expected Returns | 5% to 18% |
| Investment Duration | Medium to long term |
| Risk | High |
IPO (Initial Public Offer)
IPO (Initial Public Offer) is the first sale of shares by a company. It is a great investment opportunity to earn high returns if launched by a good company. A reputed company IPO can fetch return in the range of 10% to 20% over a period of time.
Moreover, when you invest in IPO your money gets blocked only for 7-15 days. Note that with high returns comes high risk. So, choose a good IPO for investment, otherwise, you might lose your money.
| IPO (Initial Public Offer) | |
| Expected Returns | 10% to 20% |
| Investment Duration | Long Term |
| Risk | High |
Real Estate
Real estate is a fastest growing sector in India. And this is the reason why it is a preferred investment option in India. Real estate provides returns in the form of rental income and capital appreciation. Real estate investment doesn’t include the house that you live in.
The investment in commercial property provides higher returns due to the increasing demand for office space. The location of the property is an important factor that plays a major role in deciding the value of the property and rentals.
| Real Estate | |
| Expected Returns | 10% to 12% |
| Investment Duration | Long Term |
| Risk | High |
Final Thoughts
Always select the best investment option as per your investment goal, expected returns, investment horizon, and risk-taking appetite. Which are Best Investment Options in India for 2019 as per you? Do share your opinion and experience in the comment section.
Note: This post was originally published on February 8, 2020 and has been completely updated for accuracy and comprehensiveness.
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