12 Best Investment Plans in India in April 2023 – Returns & Benefits
Working extra hard to earn money? Great! But, how about making your money work as well? Yes, we are talking about investing – one of the surest ways to grow wealth in the long run! However, if you are not certain how or where to start, this blog is especially for you. Here, we will give you 12 secrets to building wealth or in other words 12 best investment plans in India in 2023.
12 Best Investment Plans in India 2023
Here is a list of best investment plans 2023:
| Sr. No | Best Investment Plans |
| 1 | Direct Equity |
| 2 | Fixed Deposits |
| 3 | Public Provident Fund (PPF) |
| 4 | Mutual Funds |
| 5 | Real Estate |
| 6 | Gold |
| 7 | ULIP |
| 8 | Bond |
| 9 | National Pension Scheme (NPS) |
| 10 | National Saving Certificate (NSC) |
| 11 | IPO |
| 12 | Senior Citizen Saving Scheme |
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12 Best Investment Plans in India in 2023 – Detailed Overview
The following are some of the most popular types of investment plans in India:
1. Direct Equity
If we are discussing best investment plans with high returns in India, we will probably have to begin with direct equity. Why? That’s because it has the potential for delivering high returns over sufficiently long periods. Even though it falls in the high-risk-high-reward category, you might be able to maximise your profit margin by staying invested for a long time.
To invest in or trade equities in the stock market, you will need a demat and trading account.
Just to give you an idea of how the stock market has performed in the recent past, let’s look at the 1-year and 5-year CAGR returns of Nifty 50, an index which represents 50 of the biggest companies in India, in terms of free-float market capitalisation:
- Compounded annual growth rate (CAGR) for 1 year: 3.18%
- CAGR for 5 years: 11.26%
2. Fixed Deposits
Fixed deposits (FDs) are investment options where you invest a certain sum of money for a fixed period of time at a predetermined rate of interest. These are considered among the safest investments because the returns are guaranted and not market-linked. In most cases, you could expect higher returns when compared to savings accounts. Fixed deposits have different investment periods, ranging from a few days to a few years.
The 1-year, 3-year, and 5-year returns could vary vastly from bank to bank. But, in general, you could expect anywhere between 5 to 7.5% return, with senior citizens usually receiving an additional 250 to 500 basis points on their investments.
3. Public Provident Fund (PPF)
It is a long-term investment scheme that offers a combination of benefits, such as savings, assured returns, and tax exemptions. In PPF, you can invest a minimum of Rs. 500 and a maximum of Rs. 1,50,000 per annum. Here are a few more interesting things to know:
- PPF comes with a lock-in period of 15 years, but you could extend the tenure in blocks of 5 years.
- The rate of return is usually decided by the government on a quarterly basis. At present, the rate of interest on PPF is 7.1% p.a.
- The interests and principal investments are backed by a sovereign guarantee, making them a safe investment.
- PPF investments are subject to maximum tax exemptions under section 80C of the I-T Act, 1961, which means you can claim tax benefits of ₹46,800 per year.
4. Mutual Funds
Mutual funds are investment vehicles that pool money from multiple investors to create a diversified portfolio of securities, such as stocks, debt instruments, market market schemes, or other assets. A fund manager could invest the funds in a single security or a combination of securities, depending on the stated objectives of the fund, to generate returns for the investors.
Each investor owns a share of the fund, representing a portion of ownership in the portfolio. Mutual funds could be an attractive investment destination for a wide range of investors, because they are simple, usually well-diversified, and have the potential to generate consistent returns over a sufficiently long period of time. However, please note that there could be many different types of mutual funds, depending on the holding pattern, allocation weightage, investment strategy, etc.
Moreover, asset management companies (AMCs), such as Navi, allow investors to start by investing as little as ₹10, making them convenient as well. Maximum annualised returns* delivered by some of the top Navi Mutual Fund schemes are:
- Flexi Cap Fund – 13.34%
- Nifty Midcap 150 Index Fund – 10.8%
- Nifty 50 Index Fund – 8.43%
- Nifty Bank Index Fund – 7.28%
*Data correct as on 13th February 2023
Disclaimer: Mutual fund investments are subject to market risks, read all scheme-related documents carefully.
5. Real Estate
Real estate investing could be a great source for generating long-term passive income. If you want to generate a steady cash flow, you could consider renting out your property – be it commercial or residential. However, real estate properties could also generate wealth for you through price appreciation in the long term. It is could also help:
- Diversify your investment portfolio
- Safeguard your investment portfolio against rising inflation
- Claim yearly tax deduction of up to ₹1.5 Lakh under Section 80C (on the principal component) and up to ₹2 Lakh under Section 24(b) (on the interest paid), in case you have taken a home loan.
According to the Reserve Bank of India’s (RBI) all-India house price index (HPI) data, the average growth rate of residential properties in India, between Q1 FY11 and Q1 FY21, was 10.1% p.a.
Disclaimer: Please note that past performance of an investment is not a guarantee of future results. Please do your own research before investing.
6. Gold
Gold has been a popular investment option for many in India for decades. During an economic crisis, gold is often seen as a stable investment instrument for hedging against inflation and market uncertainties. Therefore, gold prices usually go up during an economic downturn. You could invest in gold in many different ways, some of which are:
- Gold coins, ornaments, bars and other physical forms
- Gold Exchange Traded Funds (ETFs)
- Sovereign gold bonds, which are government securities
- Digital gold
- Gold mutual funds
Did You Know?
Between 1947 and 2021, gold has given its investors a return of 54,000% in the retail bullion market!
7. ULIP
A unit-linked insurance plan (ULIP) offers investors the combined benefit of investment and insurance. The premiums paid towards ULIPs are contributed to life cover and invested in equity or debt securities. It could be a great option for investors with long-term financial goals. Moreover, with ULIPs, you can enjoy maximum tax benefits under Section 80C of the Income Tax Act.
8. Bond
Bonds are debt instruments with fixed tenures. Upon maturity of a bond, you will not only receive your principal in full, but also get an interest. The rate of return (also known as the coupon rate) could be fixed or variable. Some of the popular options available in India are:
- Sovereign bonds (a type of debt instrument issued by a government)
- Treasury bonds
- Corporate bonds
- Inflation-linked
- Zero coupon
- Capital gains bond (could help lower your long-term capital gains tax liability)
- Convertible bonds
9. National Pension Scheme (NPS)
It is a government-sponsored voluntary retirement saving scheme. The scheme was launched with the aim to encourage the habit of saving and building a corpus for your post-retirement life. The pooled money is invested by government-approved fund managers in a diversified portfolio consisting of treasury bills, stocks, corporate debentures, and bonds, with the aim to create optimum risk-adjusted returns potential. With this low-cost and regulated option, you can also enjoy tax benefits, under Section 80C and Section 80CCD(1B). Any Indian citizen between the ages of 18 and 65 years can voluntarily join NPS.
10. National Saving Certificate (NSC)
The National Savings Certificate is a government-regulated fixed income investment scheme that you can start at any post office branch in India. This low-risk investment option offers dual benefits of wealth generation and tax savings of up to ₹46,8000 under Section 80C of the I-T Act. Here are some of the important features and benefits of NSC:
- The government has hiked the NSC interest rate of return to 7% from the earlier 6.8% for the January-March 2023 quarter.
- The lock-in period for NSC is 5 years.
- The minimum investment amount is just ₹1,000. There is no upper cap on investment. You can invest any amount exceeding ₹1,000 in multiples of ten. However, please note that irrespective of the actual investment amount, you can claim a maximum tax deduction of up to ₹1.5 Lakh.
- Any resident Indian citizen is eligible to invest in NSCs. Also, there is no age limit.
11. IPO
An Initial Public Offering (IPO) is the first time a privately-held or an unlisted company’s shares become available to the general investors. It could be beneficial to both the issuing company and its potential investors because while it gives private companies a stable source of funding, it simultaneously gives investors the opportunity to own companies with high growth potential, and maximise their profit margins. Different types of investors, such as retail investors, qualified institutional investors (QIBs), high net worth individuals (HNIs), non-institutional investors (NICs), and anchor investors, can subscribe to an IPO.
An IPO is often seen as a great opportunity for an investor to own multiple shares of a company with a high growth potential at a reasonable price. There are two most popular types of IPO:
- Fixed Price IPO, wherein the price of the stock is decided before the issue, based on several qualitative and quantitative factors. An investor must pay the full share price at the time of application. However, the actual success or demand is only known after the issue is closed.
- Book Building Offering, wherein the company doesn’t fix a price, but a price band or range. The lower and the upper price limits are known as the floor price and the cap price respectively. You, as an investor, can bid for the stock at a price within that range. However, the final offer price is determined based on the demand. This process of evaluation is known as the book building process.
12. Senior Citizen Saving Scheme
The Senior Citizen Savings Scheme (SCSC) is a government-regulated scheme that offers senior citizens the dual benefits of savings and tax deduction. You can invest as little as ₹1,000 and in multiples thereof. During Budget 2023, the deposit limit was raised to ₹30 Lakh from the earlier ₹15 Lakh.
It has a 5-year tenure, which can be extended by another 3 years after maturity. The current rate of return offered by this scheme is 8% p.a. Just like with most other low-risk, fixed-income investment options, you can claim a maximum tax deduction of up to ₹1.5 Lakh with SCSC.
You are eligible to apply an individual account or a joint account (with your spouse) if:
- You are aged at least 60 years
- You’re aged between 55 years but less than 60 years, and have retired under a voluntary retirement scheme (VRS), Superannuation or special VRS.
- You’re a retired defense services employee aged at least 50 years, subject to fulfillment of certain additional conditions.
What are Investment Plans?
Investment plans are financial products that allow you to make a profit. It includes both financial assets, such as stocks, mutual funds, bank deposits, and PPF among others and non-financial assets, such as real estate and physical gold. Some of the common reasons for investing are:
- Meeting your long- and short-term financial objectives.
- Optimising your risk-adjusted returns margin
- As a hedge against inflation
- To build an emergency fund or a nest egg
Different asset classes carry different levels of risk and potential to generate returns. To select the best investment policy in India, carefully evaluate your goals, risk appetite, tax position, and liabilities.
Benefits of Investing
The benefits of choosing the best investment plans are:
- You may be able to protect your savings from inflation.
- You may be able to maximise your profit margins and get consistent returns on your investment over a long time horizon
- You may be able to build a corpus for your retired life or other significant life events.
- You may be able to maximise your tax benefits.
- You may be able to fulfill not just your needs but also your aspirations
Who Should Invest in a 3-Month Investment Plan
The 3-month investment plans are an ideal investment option for individuals with short-term financial goals and need for liquidity. If you have received a sudden windfall and want to quickly grow it further, you could choose a short-term investment option that is liquid and relatively safe.
Some of the options that you could consider are:
- Treasury bills
- Government bonds
- Certain money market instruments
Who Should Invest in 6-Months Investment Plan
These plans also come with high liquidity, which means you can easily convert your investment into cash within 6 months to a year.
It could be a good option for someone with a relatively high risk tolerance or someone who wants to balance their portfolio consisting mostly of long-term investment options. It could also be used to save for a significant life event, which could be occurring within a few months. Some options that you could consider are:
- Certificate of deposits
- Government securities
- Savings accounts
- Arbitrage funds
- Bank fixed deposits
- Recurring deposits
Who Should Invest in 5-Year Investment Plan
Investment plans for 5 years or longer could be ideal for investors looking to create wealth, diversify their investment portfolio, build an emergency fund, or maximise their tax savings. Always consider your risk tolerance and objectives before investing. If you’re unsure, you could also consider hiring a financial expert. Some of the available options are:
- Fixed maturity plans
- Equities
- Mutual funds
- Arbitrage funds
- Fixed deposits
- Recurring deposits
- Monthly income schemes
Choosing the Right Investment Plan – Points to Consider
- Where to invest: Consider the pros and cons of an investment option, the costs, tax benefits, and growth potential. Also, you should consider your current circumstances and objectives.
- Risk levels: Different investors have different risk tolerance, depending on factors such as age, financial situation, and liabilities. Choose an investment option based on its level of associated risk.
- Return on investment: Always appraise the potential margins of return against the associated risks.
- Investment objective: It goes without saying that you need to choose an investment plan based on your short-term, intermediate, and long-term goals. Maintain a well-diversified portfolio and rebalance it from time to time to maximise your profit margins.
- Costs and expenses: Look at all the charges. A low-cost investment, like a passive investment fund, could offer a higher returns potential.
Final Word
So, what according to you is the best investment plan 2023? Tell us in the comments below.
Just to summarize, choose a plan after carefully considering your goals, situation, and profile. Do your own research or seek the professional help of a financial expert to build a diversified portfolio.
You will be pleased to know that starting your investment journey is easier than your think. Because with Navi Mutual Fund, you can invest in an index-linked mutual fund, starting at just ₹10 – be it SIP or lump sum. So, what are you waiting for? Happy investing!
*Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
FAQs
Investment is a journey where you need to keep making financial decisions to achieve a goal. Therefore, the longer you stay invested, the higher will be your returns at the end of that journey. You will ideally want to start investing when you are young or as soon as possible.
Fixed income investments carry low risks and volatility and help to preserve your accumulated wealth to meet your desired goals. Examples of such investment plans include bonds, fixed deposits, government savings schemes, etc.
On the other hand, market-linked investments carry high risks but offer the potential for high returns. It includes volatile investments like equity mutual funds, stocks, etc.
The following are some of the important benefits of planning your investments:
– Proper investment planning is essential for wealth creation.
– You can choose the right investment as per your financial goals, risk appetite and tenure.
– Goal-based investment makes it easier to achieve your dreams.
– With proper planning, you can get considerable tax benefits.
When picking long-term investment plans, you will want to choose an option that can deliver high returns in the next 7-10 years. Equity-oriented funds, stocks, real estate, gold and savings schemes like PPF, NPS, ULIPs, etc., are ideal for the long term.
Short-term investment plans are ideal for short-term goals like accumulating funds to buy a car. You will want to look for an option that minimises the risks of capital invested and is highly liquid. Fixed deposits, liquid funds, ultra-short duration funds and money market funds are ideal for such goals.
The traditional and popular investment products like fixed deposits, gold, PPF, NPS, real estate, recurring deposits, etc., can be included in your portfolio to avoid risks and receive reasonable returns.
Savings do not mean investments. The money lying idle in your kitty or a low-interest earning bank account will not suffice to meet your future needs as the cost of living rises alongside inflation rises. Money must be invested in various assets to earn extra income. Only then it can be termed an investment. Savings are the money set aside to meet unforeseen or contingent expenses.
To create wealth and secure your future against all odds, you must make your investment plan. It induces a habit of regular contribution towards building a corpus optimum for your overall financial well-being. Kindly reach out to a financial advisor if you need help creating the best investment plan.
Before you go…
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Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
