A long-term investment is a must-do for all in today's world due to rising inflation and reducing returns on many investment instruments. There are many types of investment options available today. Some of them are more suited to better economic growth for the investor. The biggest fallacy that investors make is expecting high returns in a short period without risking a loss of the principal. When higher returns are concerned, the types of investment products linked to the market like stocks and equity mutual funds are available.
On the other hand, fixed income products like PPF and bank fixed deposits are types of investments that offer the security of the principal amount. Below mentioned are a few types of assets that can provide reasonable returns for the long term. Some of these offer more protection, and others provide higher returns.
• Equity is one of the most common types of investment that is very suited for the long term, but it does encompass a very high risk. Picking the right stock is the first step, and then the investor needs to time the entry and exit with good perfection. If the investor has a higher appetite for risk-taking, this is a viable option.
• Mutual funds, both Equity and Debt funds, are also excellent types of investment. The risk is higher in equity mutual funds than debt funds as equity funds invest a bulk in stocks. Debt funds invest in fixed income instruments like government securities, bonds, etc. These are safer, but they also have underlying risks like interest rate risk and credit risk.
• PPF or public provident fund is among some of the safest types of investment available today. It has a long tenure of 15 years, and the interest is tax-free. The effect of compounding is considerable, especially in the later years. The interest rate of PPF is revised quarterly by the government, and an investor should remain updated.
• Bank fixed deposits are very secure, especially when compared to equities or mutual funds. These deposits are insured up to Rs. 5 Lakhs per depositor per bank under the deposit insurance and credit guarantee corporation (DICGC) rules. This makes it one of the safer types of investment in India.
• Senior Citizen's Savings Scheme or SCSS scheme is one of the types of investment that retirees should definitely have in their portfolio. It may be subscribed at any post office or many banks when a person attains 60. The tenure of the SCSS scheme is five years that can be extended by another 3 years upon maturity. An investor can invest up to Rs. 15 Lakhs in the SCSS scheme. The interest rate remains locked once until maturity.
• Pradhan Mantri Vaya Vandana Yojana or PMVVY is a pension scheme for senior citizens. It is also secure and offers a good return of 7.4 per cent per annum. It is among the safer types of investments in India and has a ceiling limit of 15 Lakhs. The pension amount starts from Rs. 1,000 per month and goes up to Rs. 9,250 per month. The scheme is available till the 31st of March, 2023. Upon maturity of the yojana, the principal amount is refunded to the depositor.
• Investment in real estate and gold are excellent types of investments for those with a higher risk appetite. Still, real estate or gold do not provide periodic income. The amount invested stays parked, which grows in value over time. The investor can enjoy handsome rewards by selling off the investment later. Gold can now also be held in electronic form as gold bonds that benefit capital appreciation without the hassles of storage costs and worries. There are gold bonds that also provide a fixed interest amount though the rate is low.
Investing is definitely a personal choice. One should consider all the options above before investing.
Author Bio
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.