Invest in India 2020 | 26 Best Investment Options in India for 2020

invest in india 2020

26 Best Investment Options in India for 2020

Invest in India 2020- As you are reading this article, so you want to know where to invest money in India to get better returns.

We all have investment plans, and we are all constantly looking for a better investment option. But he has a fear of investing in wrong investment plans.

You should invest only after understanding the pros and cons of the investment options. I try to keep things easy for you

I have researched in depth all the best investment options available in India and have listed the best legitimate investment plans in India. You can invest based on your needs and risk capabilities.

Let’s understand some of the basics of investing before jumping into choosing an investment. Invest in India 2020

How to double your investment

There is no such thing as doubling the money overnight. It can only happen in dreams, but let me tell you that there is an easy formula to estimate how much time it takes for your money to get doubled.

The formula is base 72.

The estimated time period to double = 72 / the interest rate.

For example, if you want to know quickly, in how much rupees 10,000 rupees will become 20,000 provided you invest at an 8% interest rate.

Then the answer will be, 72/8 = 9 years.

If you invest in something that gives 24% returns?

72/24 = 3 years only to double your investment

If someone promises you to give double money in 2 years, then he gives you 36% returns, which are unrealistic. Most likely it’s a scam. Invest in India 2020

Stock Investment

Equity investment is one of the most preferred investment options due to the high return potential. Since equity investments involve slightly higher risks, they are also able to generate high returns.

You can expect an annual return of 15% – 18% if you know the art of investing in the right stocks at the right time. I would recommend you to start with a small equity investment with the intention to learn before making major investments.

A DIMAT account is mandatory to start investing in the stock market. I’d like to recommend you Upstox if you don’t have any Demat account. Invest in India 2020

Best Investment Options for a Salaried Person

1. Public Provident Fund (PPF)

Regardless of your contribution to regular pensions, investing in a PPF account can save a lot of taxes because all deposits made are deductible under section 80C.

Moreover, all of the accumulated interest principal is exempt from tax at the time of withdrawal.

What we like

  • An interest rate that is more than the bank’s fixed deposits

Returns are tax-free

  • The time is taken to double investment = 9 years

Concerns

  • A PPF account cannot be closed 15 years ago.

Partial withdrawals are only possible after the completion of 6 years.

2. National Pension System (NPS)

Portable NPS layout across functions and locations. The added interest is the return on equity and debt investments.

All your contributions up to Rs. 1.5 to Capital Level 1 are exempted under Section 80C. Plus, you can claim an additional up to Rs 50,000 in tax benefits.

So here you can save Rs 2 Lacs from taxes.

What we like

  • Annual return = approximately 8% to 10%
  • Years took to double investment = 7.2 to 9 years

Concerns

You cannot withdraw before the age of 60.

  • After that, you can withdraw only 60%, which is tax-free, and 40% of the rest of the group is kept for a regular pension.

3. Equity Linked Savings Scheme (ELSS)

You can get a return above 15% to 18% with an investment in ELSS compared to PPF or other investment options.

Investing in ELSS funds has the lowest lock in a 3-year period, and any winnings over Rs 1 Lac are taxable.

What we like

  • Annual return = approximately 15% to 18%
  • Years took to multiply the investment = 4 to 4.8 years

Concerns

  • Treated as LTCG and profit over Rupees 1 Lakh is taxed at 10%.

4. Fixed Deposit Tax Savings

If you want to have a safe investment option without investing in stocks, choose a fixed deposit for the tax savings of any bank or post office.

Interest rates vary from one bank to another and range between 6% and 8.5%.

What we like

  • Yearly return = 7.6%
  • Years took to double investment = 9.47 years

Concerns

  • Interest earned on taxable.
  • Five year lock period.

5. Unit Linked Insurance Plans (ULIPs)

Investments in ULIPs give you the option of creating wealth along with covering life. The premium paid is eligible for deduction under Article 80 C. In addition, returns on maturity are exempt under Article 10 (10D).

The returns differ according to the group of stocks, debts, or mixed funds.

What we like

Returns are tax-free

Returns can be high if the market is performing well

• Concerns

Lots of fees and fees (2% to 4%) such as premium allocation fees, death fees, and money management fees for the policy.

• A high percentage of administrative fees (1.35% annually).

Read carefully: Why not recommend an “insurance policy” as an investment option.

Please note that investment and insurance are separate assets with different goals.

Investments focus on generating returns and therefore involve greater risk, whereas insurance is to protect lives and assets in case of loss and death.

Therefore, both should be considered separately and not combined.

6. Direct investment in stocks

All equity investments carry greater risk and therefore are also able to achieve very high returns. Choose the stock investment option if you are comfortable losing up to 50% of the capital.

The last one-year return from NSE is 12.40%, and in the past two years, it generated 26.5% revenue. Likewise, blue-chip companies have made huge returns in the recent past. Invest in India 2020

What we like

  • Annual return = approximately 18%
  • Years took to double investment = 4 years

Concerns

High-risk factor.

To invest in stocks, you need a Demat account. You can read the full reviews of your favorite Demat accounts.

7. Mutual Funds

Mutual funds are the easiest and most efficient way to invest when you don’t have the time and expertise to do so.

The equity mutual funds have consistently produced higher returns. For funds such as L&T India Quality, Mirae Asset India and ICICI Prudential Blue Chip offer a return of between 14% and 18% for three years.

The mutual fund investment can be a lump sum or a monthly SIP for an amount as small as Rs. 500.

What We Like

  • Approx return per year = 16%
  • Years took to double the investment = 4.5 years

Concerns

  • High-Risk factor.
  • Affected by movements in NSE/ BSE
  • The fund houses charge expense ratio (1.05%).

8. Commercial real estate

Commercial real estate provides rental income and capital increase. The higher estimate is due to the demand for office space and the growth of the corporate environment.

But location, build quality, rental of market space and supply and demand play a major factor in the revenue report.

A good investment in offices and retail space not only yield higher returns but also helps in diversifying investment assets.

What we like

  • Yearly return = 12%

It took years to double investment = 6 years

Concerns

  • Selling real estate takes time.
  • It varies from property to property based on location.

9. Initial Public Offer (IPO)

The best part of investing in a public offering is that the money is only blocked for 7 to 15 days. Prudent investment in a good company going out with an IPO can yield high returns ranging from 20-25% over a period of time. Invest in India 2020

What we like

  • Almost annual return = 20%
  • Years took to multiply the investment = 3.6 years

Concerns

  • Very high risk.
  • Subject to market movements

The best investment plan for one year

10. Fixed deposit

Financial loans are the safest and safest investment options offered by banks and post offices that get higher interest rates from a savings account.

Any excess amount that you will not use for a specified period of time can be safely placed in a fixed deposit.

Bank vs. Post Office Fixed Deposits

Particulars Bank FD Post Office FD
Interest Rates 5.75% to 8% 6.6% to 7.4%
Time to double investment 9 years 9.7 years
Tenure 7 days to 10 years 1 to 5 years
Min deposit amount Vary from bank to bank Rs. 200
Tax benefit On 5-year tax saver On 5-year tax saver

 

11. Recurring deposit

Like fixed deposits, RD would earn a higher interest rate than a savings account.

RD enables you to invest any amount that can be as small as Rs. 5 per month, which is the best option for enhancing your savings habit. Invest in India 2020

What we like

  • Yearly return = 7%

The years took to multiply the investment = 10.3 years

12. Liquid Mutual Fund

This option involves the least amount of risk and for people who have been unemployed for a short period of time.

The mutual fund invests your money in short-term, highly liquid instruments such as CDs, T bills, and commercial paper in general with a maturity period of less than 91 days. Invest in India 2020

What we like

  • Yearly return = 5% -6.5%

The years took to multiply the investment = 11 years

Concerns

  • Fewer returns compared to FD

13. Ultra Short Term Debt MF Plans

Unlike a liquid cash fund, money is invested in bonds and other instruments with a maturity of more than 91 days and less than one year.

Ultra ST MF Debt does not carry interest rate risk, is not very liquid, and therefore gives you higher returns.

What we like

  • Yearly return = 7% -9%

The years took to multiply the investment = 8 to 10.3 years

The best investment plan for three years

14. Savings Account with Sweep in Facility

The sweep option allows you to have the flexibility to manage your savings and also enjoy higher returns from a fixed deposit.

Here, any excess of money lying in your savings account, above a certain threshold level, automatically gets transferred to a fixed deposit and vice versa. Invest in India 2020

What we like

  • Yearly return = 6.5% -7.5%
  • Years took to double investment = 9.6 years

15. Short Term Debt Joint Fund

It is a good option for generating stable returns with modest risks.

Funds are secured for up to 3 years, and there is a 1% penalty for early recovery. You can still expect returns slightly above fixed deposits in a range of 8-10%.

What we like

  • Yearly return = 8% -10%
  • Years took to double investment = 7.2 years

Concerns

Early recovery attracts punishment.

16. Equity Linked Savings Scheme (ELSS)

There are many benefits when investing in an ELSS such as tax savings, higher returns (15% to 18%), and a monthly investment option (SIP) and can start with as low as an investment of Rs 500.

What we like

  • Yearly return = 15% -18%
  • Years took to multiply the investment = 4 to 4.8 years

Concerns

  • Three-year lock period.
  • Gains are treated as LTCG, and any gains are taxed on Rs 1 Lakhs at 10%.

17. Fixed deposit

Returns on FDs for three years vary from one bank to another, usually in a range of 6.5% to 8%. There are also no tax benefits associated with this investment option.

What we like

  • Yearly return = 7%

The years took to multiply the investment = 10.3 years

Concerns

Returns vary, and some banks offer 3-year FD returns.

18. Recurring Deposit (RD)

The returns generated are approximately the same as a 3-year fixed deposit.

What we like

  • Yearly return = 7%

The years took to multiply the investment = 10.3 years

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The best investment plan for five years

19. Direct Equity and Equity-Oriented Mutual Funds

Equity is the best choice for people looking to grow and build wealth. Individual stock returns are high (> 20%) for primarily strong and growing companies over a longer period of time.

For example, Eicher Motors CAGR was born for a 5-year period of 28.77%.

However, high returns carry a high risk, as a bad choice can erode more than 70% of the money. The best way is to invest through mutual funds. Invest in India 2020

However, you can invest in index funds and expect 18-25% returns.

What we like

  • Yearly return = 16 to 18%
  • Years took to double the investment = 4 to 4.5 years

Concerns

  • High risk and return on investment.

20. Gold

Over the years, investing in gold has yielded steady returns of around 10% of inflation and providing diversification. The best way to invest in gold is through a mutual fund for gold, gold ETFs and gold bonds.

You can also invest in the government-organized sovereign gold and RBI bonds. You will possess gold in the form of a “certificate.” The value of the bonds is evaluated in multiples of one gram of gold. The initial minimum investment is 1 gram of gold.

You will earn 2.5% interest annually on the amount invested. The lock period is eight years.

What we like

  • Yearly return = 10%
  • Years took to double investment = 7.2 years

Concerns

  • No tax benefits.

21. Real estate – residential

Investing in residential real estate generates regular rental income and appreciation. Each with a ma modest amount of risk compared to investments in stocks.

The growth in residential real estate investments is due to individuals looking for better urban housing needs and government housing initiatives.

You can benefit from asset ownership, diversification, and even savings on taxes (the benefits of exemption through housing and consumption loans).

What we like

  • Yearly return = 11%
  • Years took to double investment = 6.5 years

Concerns

  • It is difficult to sell the property quickly in case of an urgent need for money.
  • The returns depend on the property, location, and other infrastructure projects in the vicinity.

High political participation.

  • A slight change in government policy may make a big difference to property valuations.

22. National Savings Certificate (NSC)

It is a low risk and fixed income tool and can be easily opened in any post office. The National Savings Certificate comes with two fixed tenure periods of 5 and 10 years.

You are free to invest any amount, but investments of up to 1.5 rupees Lac help you with tax deductions. Interest earned over a period of time is not tax-free.

Profits are 7.6% p.a. NSCs can pledge with banks for loans.

What we like

  • Yearly return = 7.6%
  • Years took to double investment = 9.47 years

Concerns

  • Lower returns.

# 23. FD savings tax

This option gives full capital protection with an additional interest income of 5 years at a rate comparable to 5 years of FD.

However, there is no premature withdrawal (permitted only in the event of death), and interest earned is taxable.

What we like

  • Yearly return = 7.6%
  • Years took to double investment = 9.47 years

Concerns

No premature withdrawal.

Loans cannot be pledged.

24. Bonds

Long-term debt investments can generate steady returns on inflation. Bond investments carry interest rate risk.

Bond investments are for people looking for primary protection, fixed income, or tax savings. Bond investments can be made through bonds rated by Unity State University, governments, and non-communicable diseases for companies.

What we like

  • Yearly return = 7% to 10%
  • Years took to double investment = 7.2 years

Concerns

  • Interest rate risk.
  • Interest earned is subject to tax.

The best investment plan for monthly income

25. Post office monthly income plan

The best investment option in MIS to generate the required monthly cash flow.

For example, if you invested Rs 4.5 (individually) for five years at the current rate of 7.7% p.a. then you get a monthly income of Rs. 2,888 per month.

You can start investing Rs 1500, and the maximum investment can be Rs 4.5 (individually) or Rs 9 (jointly).

What we like

  • Yearly return = 7.7%
  • Years took to double investment = 9.35 years

Concerns

  • Investment amount limited.

#26. Monthly Income Scheme of Mutual Fund

Particulars MIS – Post Office MIS – Mutual Fund
Interest Rates Fixed 7.7% Market movement
Time to double 9.35 years N A
TDS applicability No TDS TDS applied
Investments N A. 20:80
Equity: Debt
Investment Limit Rs. 4.5 Lacs – Individual
Rs. 9 Lacs – Jointly
No limit

 

The main things to consider before investing

 1. Expected goals and returns

There is a purpose that you want to invest, which can be anything from setting up a retirement group to child marriage, buying a home, vacation, or a luxury car.

Knowing the goals and the money needed helps you plan realistically and keeps you committed to your investment path.

Moreover, when you know your goals, choosing investment options becomes easy. In a sense, you know the returns that each option offers and the type of investment you need to choose in order to reach goals.

2. Investment period

Returns or earning cannot take place overnight. You need to look for a matching time period as the money can grow enough to achieve your desired goal.

 3. Risk factor

Even after knowing the goals, you should not invest in haste on the assets giving the highest returns or assets with the lowest period of time. Because of the risk factors and risk capabilities. Both factors differ from person to person.

For example, a fresh individual in a luxurious position does not mind losing 25,000 rupees on shares. While the same amount is sufficient for an elderly person to cover his monthly expenses, the amount needs to be maintained.

A person who receives a salary may have different financial needs from that of the businessman. Consequently, they have different capacities to take risks and face different risk factors. Invest in India 2020

Wealth development with doubling power

We have heard the double word right from our school days. But very few have used power effectively to create wealth in the long run. You might be surprised if you let magic run over a period of time.

It simply multiplies – earning interest on capital, reinvesting all profits and then acquiring not only interest on capital but also interest on interest from next year onwards.

In a way, which doubles, it helps you build a large group over a period of time, even with a small initial investment.

But for the magic to happen, you need two things. One starts early, and the other is to keep reinvesting over a period of time, say ten years to 20 years.

The more you let that happen the more you amass wealth.

Let us see how

invest in india

Let’s assume today that you invest 1 Lac at a compound rate of 8%, and you keep reinvesting all profits. Then after ten years, the money will become Rs 2.15 Lacs, then it will turn into Rs 4.66 Lac after 20 years, then Rs 10.06 Lac in 30 years.

In the initial period, you see that profits are not as much, but in subsequent years, profits increase exponentially, which is due to the combined effect.

Beginning early allows more time for magic, i.e., doubling to happen. Let’s see three scenarios.

The goal is to accumulate a group of wealth at the age of 60. The investment amount is Rs 1 per year and assuming that the compound interest rate is 8%.

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The first scenario

Investing every year from the age of 20 to 40

Rs 2.13 Cruis Corpus in 60 years

The second scenario

Investing every year from the age of 30 to 50

Rs 0.99 Cruis Corpus in 60 years

The third scenario

Investing every year from the age of 40 to 60

Rs. 0.46 in Cruis Corpus in 60 years

invest in india 2020

You can see that the results are remarkably different, even when the investment is for 20 years in each scenario.

You can build a group of Rs. 2.13 crores just by starting early at the age of 20 years compared to Rs 46 Lacs when starting at the age of 40 years.

This is because you get an additional 20-year time period to get money to get a boat.

In this way, it doubles your growth and increases your money earning potential.

 

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