In today's world we are all looking for instant gratification. While we know that patience and discipline can bring better rewards, we all want to achieve our goals in the shortest amount of time. We want to generate the highest return in the shortest possible time. That's why we're always looking for the best investment plans that can double or triple our money.
While certain investment plans can help you multiply your money, finding these investment products can be a tricky task. Also, it may take longer than you think to get the results you want. Therefore, in order to successfully grow your wealth, you must match the investment plans available to your investment horizon and the level of risk you are willing to take.
One way to choose the best investment plans for your portfolio is to divide your financial goals into three areas: long-term, medium-term, and short-term. This will give you an idea of how much time you have to reach the goal. After that, you can choose between the available options depending on your risk appetite.
This blog will look at some of the most popular investment options in India that fit into these 3 categories i.e. H. long-term, medium-term and short-term. More importantly, we explain how you can combine multiple investment options to create the best investment plan for yourself.
Best investment opportunities for long term
Long-term goals are those that you want to achieve in the next 7-10 years. So when you're looking for the best long-term investment plans, you may be opting for options that are volatile but have the potential to generate high returns over the long term.
However, you must decide what kind of volatility you can endure and choose your investment options accordingly. Let's take a look at some of the investment options that fit your long-term investment goals, the risks they entail, and the returns they can deliver.
One of the best ways to create wealth for your long-term goals is to invest in stocks. There are many examples of stocks that have multiplied investors' fortunes over time. For example, Indian non-bank financial firm Bajaj Finance has produced over 41% annualized returns over the past 15 years.
To put this return in perspective, an investment of Rs. 10,000 in Bajaj Finance in January 2007 would have turned out to be more than Rs. 18 lakh in January 2023. That means your investments would have grown 180x.
There are many more stocks like Bajaj Finance that have emerged as wealth creators for investors. But at the same time, there are many companies that have proven to be wealth destroyers. Take Reliance Communications for example. Share prices have fallen 98-99% from their January 2008 peak. And investors in these stocks have seen their wealth eroded.
In summary, while stocks have immense potential to grow your money over the long term, the risks of investing in stocks are also significant.
You can invest directly in company stocks. But the real challenge is finding the right stocks. And with over 5,000 stocks listed on Indian stock exchanges, picking the right stocks is certainly a daunting task.
One way to reduce the risk of dodging the wealth destroyers is to seek professional help and spread your investments across multiple stocks. This is where mutual funds come into play.
Equity funds invest primarily in stocks. But they don't just focus your money on 1 or 2 stocks. These funds diversify your investments across multiple stocks. More importantly, professional fund managers manage these funds. So you invest your money only after proper research. This increases your chances of generating good returns in the long term.
Here are some popular categories of stock funds and their long-term performance.
|Name||5 year return (%)||10 year return (%)|
|Large & MidCap||9.48||14.68|
*Data as of January 16, 2023
It is certainly one of the most popular investment options among Indians. Although real estate investing has historically delivered amazing returns, it still comes with its own set of risks and limitations. One of the biggest risks with real estate is that you may not be able to liquidate it in a short period of time. And in a hurry to sell the property, you may need to sell at a deep discount.
Even if the money needed is less than the property, you will have to sell the entire property to get the money.
Gold has been a symbol of wealth since ancient times. And even now, it hasn't lost its luster as an investment option that can beat inflation.
Physical gold was the traditional way to buy the yellow metal. But it comes with limitations such as additional manufacturing or design fees or storage costs. To overcome these limitations, you can buy gold through mutual funds and ETFs. We have a blog that explains different onesGold investment options in India. Read it through to find out which one is best for you.
As for gold's returns, historically, gold hasn't delivered returns as high as stocks over the long term.
|Renditevergleich (Gold vs. NIFTY 50 TRI)|
|investment period||Goldrenditen (%)||NIFTY 200 TRI Rank (%)|
Still, the price of gold usually rises when people want to invest in safe haven assets during a crisis. So they are a good hedge against inflation or stocks.
Small saving systems like PPF
The government has introduced many small savings programs for people who want to invest in highly safe investment opportunities. These programs offer investors secure returns with low volatility. But you get lower returns than market-based products like NPS, mutual funds, or stocks.
However, small savings plans usually beat inflation and FDs by a decent margin. Examples of small long-term savings plans include investment options such as the Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS), Sukanya Samriddhi Scheme and Kisan Vikas Patra.
The table below shows some of the small savings plans that are suitable for long-term investing and the returns you can get from them.
|Savings program for seniors||8%||Quarterly and paid|
|System of public provident fund||7,1 %||Yearly|
|Bauer Vikas Patra||7,2 %||Yearly|
|Sukanya Samriddhi Account Schema||7,6 %||Yearly|
*As of January 2023
The National Pension System (NPS) is a long-term, retirement-oriented investment product. It is a mix of different assets such as stocks, government bonds and corporate bonds. You can decide how much of your money can be invested in different asset classes depending on your risk appetite.
A unit-linked insurance plan (ULIP) combines life insurance and capital investments. A portion of your premium is invested in asset classes such as stocks and bonds to generate wealth over the long term. Another part of your premium goes towards life insurance.
In the past, ULIPs were notorious for high fees. However, new ULIPs do not have such high fees. But they still come with a 5-year lock-up period. You can read our blogMutual Funds vs. ULIPsto find out which option suits you better.
Best medium-term investment plans
Mid-term goals are those goals that are 3-5 years away. Medium-term goals can e.g. B. Saving for the wedding, down payment on the house, home renovation, etc.
For such medium-term financial goals you need investment opportunities that can beat inflation properly and at the same time should be low in volatility. Here are some investment options that can meet your mid-term financial goals.
National Savings Certificates (NSC)
National Savings Certificate or NSC is a postal savings product supported by the Government of India. It works like a 5 year FD. So your deposits with NSC will mature in 5 years and you will earn 7% annual interest. But the full amount is not payable until the due date.
So if you have a goal that is 5 years away, NSC is one of the safer investment options. But there are caveats like a 5-year lockup and muted returns compared to debt funds or hybrid funds.
fixed deposit at the post office
Like banks, post offices also offer FDs. Known as National Savings Time Deposit, these investment options allow you to invest your money for the short to medium term. The benefit of National Savings Time Deposit is that they offer better returns than banks. And without any additional risk, because these programs are supported by the Indian government.
Here is a table showing post office deposit returns for various time periods.
|tenure||Interest rate for fixed deposit at the post office||SBI FD interest rate|
|1 year||6,6 %||6,75 %|
|2 years||6,8 %||6,75 %|
|3 years||6,9 %||6,25 %|
|5 years||7,0 %||6,25 %|
*As of January 2023
Debt capital for medium-term terms
There are up to 16 types of debt funds. All of these debt fund categories differ in terms of the risk taken and the return sought. Therefore, you need to be sure of your goals in order to choose the right debt fund for you.
There are three categories of debt funds that hit the sweet spot between risk and return for a medium-term goal. These three categories of debt funds are Banking & PSU Fund, Corporate Bond Fund and Short Duration Fund. You can read our blogThe best debt mutual funds for 3 yearsto find out why these 3 debt fund categories best fit your mid-term goals.
These types of mutual funds invest in more than one asset class. The most popular combination of asset classes these funds use is equity and debt. However, some hybrid funds also invest in gold or even real estate. The benefit of these funds is that you can enjoy the growth potential of stocks and the stability of debt in a single fund. You can find out more about these funds on our Hybrid Funds page.
Best investment opportunities for a short time
When looking for the best investment plans in the short-term, you need to consider two key aspects. First, you need to minimize the risk to the invested capital. And second, your investments must be easily accessible. Let's look at the investment options that can fulfill both of these goals.
Bank Fixed Deposits (FDs)
This is one of the most popular investment options in India as they offer guaranteed returns. How FDs work is quite simple. You invest your money with the bank, which ensures you a certain return on your capital investment at the end of your term of office.
Although FDs are one of the safest investment options, they have some significant limitations. After-tax returns on FDs barely beat inflation. This means that when you invest in FDs you are essentially earning negative returns and erode your wealth over time. Also, FDs charge a penalty if you withdraw your investments before their due date. Therefore, the liquidity of FDs is also a significant constraint.
Debt fund for short-term
Liquid Funds, Ultra-Short Duration Funds and Money Market Funds are the 3 categories of Debt Funds that fit well in your short-term investment basket. These are very low risk products. Also, they offer better access to investments than traditional products like FDs. You can read more about these 3 categories on our blogBest Types of Mutual Funds for Short Term Investing.
How do you find the best investment plan?
All of the investment products we've discussed so far take different levels of risk and try to generate different returns. No investment product is a one-stop solution for all your investment needs. In order to achieve your goals, you must carefully construct a portfolio of multiple investment products based on your risk profile, investment horizon and expected returns.
However, figuring out your risk profile, suitable investment options, right exit strategy, etc. is never easy. You need constant expert advice to make these important investment decisions. And this is where ET Money Genius can help you.
AND money geniusis a membership that creates and recommends personalized investment plans suitable for all of your goals. Whether you have a short-term goal, a medium-term goal, or a long-term goal, Genius will first understand you as an investor and assess your risk appetite.
After that, Genius creates portfolios in accordance with your risk assessment. These portfolios give you exposure to Indian and international equities, debt and gold. Allocation to these asset classes is decided based on several market factors such as inflation, valuations and price developments. In addition, Genius tells you exactly what changes you need to make in your portfolio each month. The proposed changes will help you take advantage of prevailing market conditions and consistently deliver market-beating returns. The best part is that all of this happens seamlessly and you can complete the rebalancing with one tap.
Genius' intelligent way of personalizing, asset allocation and monthly rebalancing helps you achieve high returns with high consistency. You also enjoy better protection in the event of market corrections. A telling sign is that Genius portfolios have delivered 80% more than their benchmark while offering 40% better protection in the worst market downturns.Click here to learn more about Genius.