Every investor wants to get sky-high returns quickly without risking the principal amount. Hence, they are searching for top investment options that help them double the investment soon. But unfortunately, there is no product providing a combination of high returns and low risk.
So, one must carefully evaluate these factors when going ahead with an investment. However, it is worth noting that money back policy generates higher inflation returns though they carry increased risk.
These investments fall into two buckets of financial products. The first is financial assets, and the second being non-financial assets. Several financial schemes, such as fixed deposits, come under the financial assets. On the other hand, physical properties like gold and real estate come under non-financial assets.
List Of Top Investment Avenues
This is a list of investment avenues Indians prefer when trying to save for their financial goals. These are also the best money back plans.
1. Direct Equity
Stock’s investment might not suit everyone. Moreover, it is a volatile asset class without any returns guarantee. Further, it is challenging to pick the right stock, but entry and exit timing are not easily accessible.
The only advantage of equity is that it could provide a higher return than the inflation-adjusted returns compared with other asset classes. However, it also comes with a considerable risk of losing a large portion or all of the capital unless one chooses a stop loss method which helps to cut the losses. The stop-loss method helps to place an advance order of selling the stock at a particular price.
Diversifying across the sectors and market capitalisation can help one to reduce the risk to a certain extent. One has to open an account in the Demat account to directly in the equities. Currently, banks are also allowing to open a 3 in 1 account. They fall in the money back policy category.
2. Debt Mutual Funds
When an investor wants steady returns, debt mutual fund schemes are the best. These funds have less volatility and hence can be considered less risky than other equity funds and are a kind of money back policy. Investments are primarily made to generate securities such as corporate bonds, treasury bills, government securities, commercial paper and several other market instruments.
But Mutual Fund comes with a risk factor. Credit risk and interest rate risk are the most common risks they carry. Hence investors should always study related documents before investing.
3. National Pension System
NPS is a long-term money back policy that majorly focuses on retirement. Pension Fund Regulatory and Development Authority manages this system. For Tier 1 accounts, the minimum contribution got reduced from Rs 6,000 to 1,000. This system has a mix of fixed deposits, equity, liquid funds, corporate bonds and government funds.
One can decide on how much investment they can make depending on the risk appetite. Therefore, one should choose this system, especially when searching for a money back plan. This is one of the best investment options in India.
4. Public Provident Fund
Many people are turning towards public provident funds. PPF comes with a long tenure that is 15 years and is a money back policy. It also shows a significant impact in compounding the tax-free interest.
Moreover, the interest and the principal have a sovereign guaranteed backup. These factors are making PPF a safe investment. Government reviews the interest rates every quarter.
5. Fixed Deposits
All banks provide fixed deposits which are a comparatively safer choice. Deposit insurance and credit guarantee corporation rules say that every bank’s depositor gets an insurance cover of 5 lakh maximum, which brought into effect from February 4, 2020, including principal and interest amount.
Previously this coverage was set a maximum limit of 1 lakh for interest as well as principal. Depending on the need, one may choose monthly, quarterly, half-yearly early or accumulated interest options. The interest earned gets added income as per the Income Tax slab. Fixed deposit is a significant part of money back policy.
6. Term Insurance
Term insurance is one of the simple ways of life insurance. It helps to secure the financial future of your family and loved ones. Some term insurance policies also have a money back policy. One should take care of the sum assured and the premium while purchasing it.
Some investments offer fixed income, whereas others are linked to the financial market. Both have an equal share in the process of creating wealth. They are part of money back policy. For the long-term goal, it is crucial to make a choice using both of these. So, one should plan a judicious mixture of these Investments by keeping risk, time horizon and taxation in mind.
(About the Author: Mithlesh Singh is a writer who specialises in writing content on Insurance and Finance subjects. He is a Digital Marketing Consultant, Blogger, and Founder of Tech Preview.)