Step By Step Guide To Know About The Top Investment Plans In India 2022
Adulthood is all about financial responsibilities. You have to earn your living, pay your bills. And in case, you have children, you have to save for their education. In a nutshell, financial burdens are many. All the more reason for you to do more than just depend on your monthly paychecks. You need to invest.
By investment, we don’t only mean investment in the security market. Not everybody has the risk appetite to invest in the security market. That said, you can invest in the best investment plans in Indiato generate a corpus that can help you live your life without any financial anxieties.
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Here’s a list of some of the best investment plans in India:
1. Public Provident Fund
Public Provident Fund, also known as PPF, was introduced in 1968 with the objective of helping individuals build a corpus through investment. It is a tax saving investment plan in India that is safer, and suitable for risk-averse individuals. As of FY 2022, the interest rate for the PPF account is 7.1%. Under Section 80C of the Income Tax Act, the PPF investment plan in India is subject to tax benefits (up to the limit of INR 1,50,000).
A PPF account can be set up in the post office, or any bank account. The minimum tenure of PPF is 15 years, with a minimum investment requirement of INR 500 and a maximum of INR 1,50,000.
2. Unit Linked Investment Plan
Unit Linked Investment Plans, also known as, ULIP, is an investment plan in India that has both the features of investment and insurance. It is a premium-based investment; a portion of the premium is paid towards investing in market-linked instruments, and the other portion goes towards the term insurance premium.
Anyone who is looking to create wealth and provide a financial net to their family can opt for this investment plan in India.
However, it is to be noted, that as an investment instrument, ULIPs don’t provide guaranteed returns. As it is a market-linked plan, the returns depend on the performance of the stock on a particular date. Thus, if you are someone who can afford to take risks, ULIPs can be your go-to investment plan in India.
3. Pradhan Mantri Vaya Vandana Yojana
Pradhan Mantri Vaya Vandana Yojana is a government introduced investment plan in India. The plan was designed to help individuals create a pension cum retirement scheme.
Retirement meaning is well understood, hence a retirement fund is meant for your post-employment life. As of FY 22, the scheme promises to provide an assured pension of 7.40 % p.a. The amount is payable for a policy term of 10 years.
4. Systematic Investment Plan
Systematic Investment Plan, also known as SIP, is one of the best investment plans in India. The plan helps build a corpus against regular investment habits. The returns or interest on SIPs are averaged out, so there’s no need to worry about the market’s ups and downs. In other words, when the market is down, you can buy more units of a share. That’s how the cost of purchase averages out.
Additionally, the power of compound interest helps accumulate wealth that can be withdrawn upon maturity. SIPs work through monthly fixed sum payments. This payment is used to buy units of stock in mutual funds. The fund at maturity includes the returns on the stocks and compound interest.
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5. ELSS Mutual Funds
Equity Linked Savings Scheme or ELSS is a type of mutual fund scheme that invests in the stock market. ELSS has a short lock-in period of 3 years and has tax benefits (up to INR 1,50,000). The fund manager selects the best stocks across small caps, medium caps and large caps, and uses your invested amount to buy the stocks.
ELSS is suitable for salaried individuals and first-time investors. There are 3 ways of investing in ELSS mutual funds, growth option, dividend option, and Dividend reinvestment option. All of them differ according to payout priorities.
Returns in ELSS mutual funds are not guaranteed as these funds are subject to market risks but are higher than other tax saving instruments.
Lastly,
Even though investing in the best investment plans in India, is a go-to way of generating wealth. However, don’t let that be a quick and unresearched decision. Research carefully, know the do’s and don’ts and your rights as an investor.
Remember, a smart investor is the best investor.
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