Money is like food. It can be delicious, but it can also make you sick.
The difference between the two is how you prepare it. If you just throw money at your problems, it’s going to end up making you sicker than if you never tried to solve them in the first place.
The first thing you need to consider while choosing the right savings plan is whether it provides tax benefits under Section 80C of the Income Tax Act, 1961 or not?
Are they enough for me?
How much can I save?
These are some factors that should be kept in mind before investing in any savings plan or any other instrument.
Let’s dive into various types of investments that you can invest as a rookie
The following are some of the best types of investment in India:
1. Public Provident Fund:
- This savings plan, also known as PPF, is one of the best investing options accessible in India.
- The plan provides both tax benefits and high returns, making it an excellent choice for people wishing to save for their future goals.
- The PPF is classified as an Exempt-Exempt-Exempt type of investment. It means that both the individual returns and the total amount are not taxed.
- PPF contributions can be deducted from taxable income under section 80C of the Income Tax Act.
- One can invest as little as $500 per year up to $150,000 per year. The PPF scheme now pays 7.1 percent per year (as of 2022).
2. National Pension Scheme (NPS):
- This retirement savings plan, which offers various tax benefits and the possibility for significant returns, makes it possible to save for retirement. It’s a fantastic choice for people wishing to put money down for retirement.
- Over the course of a retirement, the value of a pension grows due to compounding.
- Tax incentives are available under sections 80C and 80CCD of the Income Tax Act.
- NPS allows you to choose where you want to invest your money. The percentage exposure to equities and debt channels is chosen.
- When you make a deposit (not less than $500 or $250 monthly or $1,000 annually), you will receive a PRAN (Permanent Retirement Account Number).
3. Mutual Funds:
- Mutual funds are one of the most effective ways to save money in India. The mutual fund industry offers a wide range of options.
- From debt mutual funds to tax-advantaged funds to thematic funds, there’s something for everyone. These mutual funds are a technique to build and accumulate money.
- This is a good alternative if you want to spread your risk and get a high return on your investment.
- Mutual fund returns are variable. Every year, a 15-18% return on investment can be expected. Despite the fact that mutual funds are equity-linked, their returns fluctuate based on market volatility.
- Investors with varying risk appetites can choose from a diverse range of funds offered by many Indian investment providers.
4. Sovereign Gold bonds(SGB):
- SGBs are an excellent substitute for genuine gold. Because these bonds are issued by the Indian government, they are the finest investment option.
- This plan allows you to invest in gold and provides a number of tax advantages as well as the possibility of big profits.
- This product will appeal to those who want to protect their funds against inflation and market volatility.
- These SGB programs offer a tax-free return of 2.50 percent on your investment. All of the dangers associated with real gold are gone.
- The bond has an eight-year term with the option to exit after the fifth year and sixth month. As proof of investment, holding certificates are issued.
5. Post Office Savings Scheme:
- The Indian post office offers this scheme, which provides tax benefits as well as substantial investment returns. It’s an excellent choice for people seeking a secure and profitable investing strategy.
- Individuals or jointly owned by individuals residing at the same location and their family members can register post office savings accounts with a minimum deposit of 500 rupees (spouses included).
- The annual interest rate is 4%.
6. Sukanya Samruddhi Yojana:
- The Government of India implemented this scheme as part of the Beti Bachao Beti Padhao campaign to improve the lives of girls in the country.
- SSY offers the highest return of any saving plan available, making it one of the best child education plan in India
- It has a maturation period of 21 years. Every year, a minimum contribution of $250 and a maximum contribution of $150,000 are required.
- The annual interest rate is 7.6 percent (as of 2022). Contributions to SSY are tax-deductible under section 80C of the Internal Revenue Code.
- The investment made in the SSY can be used for various purposes – higher education, and the marriage of the girl child.
7. Fixed Deposit:
- Fixed deposits are the most popular type of investment in India.
- If you want to invest in a low-risk, stable, and secure instrument, FDs are the best option.
- Because they are highly liquid, FDs are an excellent medium for emergency savings or short-term savings.
- For general citizens, the rate of interest on FDs ranges from 2.8 percent to 6 percent. While senior citizens can earn up to 6.5 percent in certain banks.
- Fixed Deposits are appropriate for senior citizens who do not want to risk their money in equity or equity-related schemes.
8. Unit Linked Insurance Plans (ULIPs):
- ULIPs are insurance plans that provide the security of life insurance coverage as well as the potential for high returns.
- They are an excellent choice for those seeking a savings plan that provides both security and growth potential.
- Furthermore, ULIPs are designed to help you maximize your returns by allowing you to transfer money between different funds.
To live a stress-free life, it is important to have mixed types of investment in your portfolio. All of these goals can be achieved through planned investments by providing you with financial protection while building your corpus over time.
There are several saving plans available in India that you can use to grow your money. Money management involves saving money. A wide variety of saving plans are available in India, making choosing the best one difficult. However, the effort is worthwhile
By contributing to these best investment plans, you can be sure that your future is secure and stable. The method of systematic and disciplined growth of money is different from other investment methods.