10 Best Long Term Investment Plans In India (2023) And Its Benefits
Long-term investment plans are known to outperform short-term ones. However, irrespective of market conditions, investors need to plan properly and stay invested to reap the benefits in the long run. Investors must also stay aligned with financial goals to make informed choices while investing.
If you are interested in understanding and investing in long-term investment plans, then here is a list for you. Read on!
10 Best Long Term Investment Plans in India
Here is a list of a few of the best long-term investment plans in India giving high returns:
1. Bank Fixed Deposits (FD)
Fixed Deposits (FDs) are the most traditional form of investing money in India. Individuals can invest their money in FDs for 3, 5 or even 10 years with a return rate ranging between 3%-6.5% per annum. Once the term ends, the investor can withdraw the money. They also withdraw some savings early; however, the bank will levy a small penalty. Moreover, the fixed deposit interest rates are higher than RD and savings accounts.
2. Mutual Funds
Mutual funds are becoming a popular investment option these days. They are safe to invest in as SEBI (Securities and Exchange Board of India) regulates the mutual funds market. There are three categories of mutual funds – debt, equity, and hybrid funds. The debt funds invest money in corporate bonds and government securities. This is perfect for risk-averse investors.
On the other hand, an equity fund invests money in stocks and offers capital appreciation to the investors. Since the returns are linked to stock markets, it is riskier than debt funds, but the returns are also high. On the other hand, hybrid funds are a mix of debt and equity funds, which is why they are popular among investors.
3. ULIP (Unit Linked Insurance Plan)
ULIP (Unit Linked Insurance Plan) is useful in fulfilling various financial goals like building a retirement corpus or paying a down payment. Further, under section 80C and section 10(D), one can claim a maximum deduction of Rs 1.5 lakhs. ULIP plans have a minimum lock-in period of 5 years but have a higher risk involved than equity funds.
4. Public Provident Funds (PPF)
This scheme is very similar to Employees Provident Funds (EPF) which only salaried individuals receive from their employer. However, anybody can open a PPF account in banks or post offices. These are held for 15 years, and the current interest rate is 7.1% per annum. The Government of India fixes these rates of interest every year. It also allows individuals to claim tax deductions under Section 80C of the Income Tax Act.
5. National Savings Certificates (NSC)
National Savings Certificates (NSC) is a secured long-term investment option in India available in post offices and specific public sector banks. Investment tenure for this scheme is 5 years, and one can start saving with as low as Rs 100. The current government fixed interest rate is 6.8 % per annum.
6. Sukanya Samriddhi Account (SSA)
The Government of India introduced Sukanya Samriddhi Account (SSA) to benefit a girl child. In one financial year, an investor can deposit up to Rs 1,000 in a financial year till the girl child turns 14. Moreover, an investor can withdraw the amount after 21 years when the account reaches maturity. GOI offers a 7.6% rate of interest for tax deduction claims.
7. Real Estate
Investing in real estate is typically long-term in nature. However, this form of investment takes a good amount of money to get started, and the commission is also quite high. In this case, the returns are high when the individual holds the property for a very long period.
This is popular as one can take a loan from the bank and then pay the mortgage by keeping the asset on rent. Later, when the property prices increase exponentially, they can sell the property at a higher price than the one they originally bought.
However, there are some risks attached, like the price of the property can decrease with time instead of increasing and then the investor will be at a loss.
8. Gold
Investing in gold is a popular long-term investment option for Indians. Investors can invest in gold in form of Gold coins, Gold Bars, Gold ETFs, gold deposit schemes, mutual funds, and much more. These bonds have a lock-in period of 3-7 years and a tariff-free interest rate of 4% per annum.
9. National Pension System (NPS)
The government of India introduced the National Pension Scheme (NPS) as a form of long-term investment plan in India. This scheme ensures people a regular income post-retirement. One can invest in this scheme up till the age of 60. After reaching 60 years of age minimum of 40% of the funds will be used to buy annuity plans to provide regular income to investors. Investors can withdraw the remaining 60% as a corpus amount.
10. Corporate Fixed Deposits
They are riskier than bank fixed deposits, but the interest rates are also high. Interest rates range from 6%-8% per annum. In this case, the corporates collect funds for operational activities and expansions.
Benefits of a Long-Term Investment Plan
Individuals who invest their money in long-term plans have a lot of time to try out various funds. They can even switch between funds to make up for non-performing funds. Here’s a list of all the benefits of long-term investment plans:
- Power of compounding: The more time one gives their investments to grow, the higher their returns. For example, if an individual invested Rs 500 monthly at a 15% rate, it will increase to Rs.16.42 lakh in 25 years.
- Security: In long-term investments, people suffer less from market fluctuations. Moreover, nobody can fully predict market conditions; as a result, it is good to invest long-term to maximise profits. One can also overcome short-term volatility.
- Goal-centric planning: When one invests in long-term plans, they can systematically strategise for significant goals like purchasing a house, child’s education, marriage, retirement, etc.
- Tax benefits: Long-term investment plans make it easier for investors to plan their taxes. Moreover, they can avail of tax benefits as per the Income Tax Act, 1961.
- Convenience: Investors do not need to worry about premium due dates. They need to talk to the bank and allow standing instructions to auto-debit the money from one’s account during each premium paying due date.
How To Plan a long-term Investment?
Individuals can plan their long-term investments based on their income, goals, and expected return. For example, if an investor is 35 and is planning to save for retirement, then one has approximately 25 years to build one’s fund before retirement. However, if the person has other additional goals like funding a child’s higher education and marriage, one should plan accordingly.
Things to Consider Before Investing
When it comes to investing your money, there are a lot of things to consider before making any decisions.
Before you invest, here are some things to think about:
1. Objectives
What are your investment goals? Do you want to build your business over time or make quick money? Knowing your goals will help you make significant investment selections.
2. Your Risk Tolerance
Are you ready to take a calculated risk? Investing in something with a significant potential return usually entails a higher level of risk. If you are not comfortable taking on many risks, you may want to focus on investments with lower potential returns but are also less volatile.
3. Your Investment Time Horizon
How long do you intend to invest? If you invest in the long term, you may be able to take more risks. However, if you want to generate income in the short term, you will want to focus on less volatile investments.
4. Your Investment Vehicle
There are a variety of investment vehicles available, from stocks and bonds to mutual funds and ETFs.
What is a Long-Term Investment Plan?
A long-term investment plan is an investment that’s held for a year or more. These investments are beneficial for future needs like a child’s education, marriage or creating a retirement corpus. Moreover, long-term investment plans help create financial discipline to achieve one’s financial goals.
Overall, these plans help accumulate wealth for the future and maximise them as well. However, one needs to assess their financial requirements and risk profile before choosing a long-term investment plan.
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Final Word
Investing in a long-term investment plan could help accumulate wealth over a long period of time. However, before you start investing, consult with a financial expert and analyse the return on investment. If you want to invest, visit Navi Mutual Fund and get started today!
*Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
FAQs
Ans: The various kinds of risks involved in long-term investment plans are as follows:
– Market-related risk
– Credit risk
– Liquidity risk
– Inflation risk
– Longevity risk
Ans: Both risk and returns are related to investment plans because when the risk factors increase, the potential rate of returns on those investments will also increase.
Ans: The best way to start investing is by figuring out your goals, risk tolerance, and time horizon, deciding on the investment vehicle and strategy and then investing the money for a long-time.
Ans: Some of the best investment plans with a 5 years lock-in period are:
– Fixed Maturity Plans
– Bank Fixed Deposits
– Recurring Deposits
– Monthly Income Schemes
– 5 years NSC
Ans: In India, the best long-term investment options include stocks, bonds, real estate, mutual funds, public provident funds (PPF), gold, fixed deposits, etc. However, which instrument to invest in will depend upon your goals and risk capacity.
Ans: A list of 5 safest investment options include:
– Certificates of deposit
– Municipal bonds
– Treasury inflation-protected securities
– S&P 500 Index Fund/ETF
– Money Market Accounts
Ans: Some of the best apps to invest money in mutual funds are:
– Groww
– Coin by Zerodha
– Kuvera
– ET Money
– Paytm Money Mutual Funds App
Ans: Long-term investment helps fulfil long-term goals, and investors need not be worried about market volatility as the short-term losses are offset in the long run. Further, it helps in growing wealth exponentially because of compounding returns.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
