Where should I invest my money? What are the safest investment options available in India? These are very common questions that arises in our mind whenever we think of making any investment. Well, there are lots of profitable investment options in India. But it is very important that you know how to identify the best investment option for yourself? There are two types of investors namely aggressive and risk averse. First of all, you need to identify which category you fall. To be very honest, a right investment can make you Richie Rich and a wrong investment can bring you to the road.
There are investments which are highly risky and some with low risk. There are also investment which requires your long term commitment and hence lock your money for longer period. So before investing your money, you must know which is the ideal investment option for you. Then only you should invest your hard earned money. Today in this article I have come up with 9 best profitable investment options available in India. Let’s get started.
Best Profitable Investment Options in India
Investing in Stock Market is risky but a profitable investment option in India. Several people today invest in stock market but there is a different set of society which think that stock market is best for gamblers. Well, it is not true as it is just a myth, if you invest in stocks after having detailed information about the company. If you will study the company and its projects carefully then you will never lose money in stock market. There are several stocks which have made their investors wealthy like TCS, MRF, Infosys etc. “Investing in stock market for long-time period might even make you crorepati over a period of time.” However, there are several stocks which have even proved my this statement correct.
Let me explain you this with an example of Maruti Suzuki Shares Vs Maruti Suzuki Cars. If in year 2003 you would have purchased a Maruti 800 for Rs 2 lakhs. After using the car for about 14 years, the car would have become a junk or there might be a chance that the car would have retired way back. So currently after investing Rs 2 Lakhs in Maruti 800 then after 14 years all you have is a junk item in your garage.
Now lets talk about the other side of the example. If you would have purchased Maruti share in year 2003 when its IPO was launched at a share price of Rs 125. Lets say that you invested Rs 2 Lakh in buying the shares of Maruti. Then you would have been allotted with about 1600 shares of the company. As on 5th September, 2017 the current price of one share of Maruti is Rs. 7,817. The current worth of your 1600 share is Rs 12,507,200. Furthermore, this amount is exclusive of the dividends offered by the company.
Investing in stock market is best profitable option in India. But you should invest only when you are willing to take higher risk, or can invest for a longer time period. One thing which is most important is to have proper knowledge and skill to invest in share market. If you do not have skills or knowledge then you can even take advise from the financial adviser. Also stop taking advises from investment guru’s as several times they are paid for promoting a particular company share.
2. Investing in Start Up Companies
Investing in start up companies is another best investment options in India. You must be thinking that I am giving you a false idea. Since start up company has entered newly in the market and there are not enough or may be no data to support its ability. As while investing in any company we go through its balance sheet, income statements, companies graph and lot more.
As with startup companies risk is very high but as in Finance it is said,”higher the risk, higher will be the return.” Basically the potential of start up companies is high and they are even high valuation. Big stock market players like Rakesh Jhunjhunwala even consider start up companies for investing his money.
However, your money is exposed to higher risk while investing in start up companies. So investment in start up companies is profitable investment option for those who are risk takers. Lastly those who wish to take higher risk must invest in these type of investment options.
3. Mutual Funds
Mutual fund is one of the most profitable investment options in India. Basically when investors invest in mutual funds they expect maximum returns from their investment. Mutual funds are actually referred to as a pool of funds in which several investors invest in money with the motive to make money from their investment.
Mutual funds offer different types of benefits like tax saving and maximization of wealth. Even there are some monthly income plans too from which you can generate monthly income. One of the type of mutual fund is Equity Link Saving Scheme (ELSS). ELSS is basically a type of investment which offer 20 – 25% returns to its investors. Since, ELSS comes with the lock in period of about 3 years.
Even there are dividend paying mutual funds which offer period cash flow to the investors. One of the best thing about investing in mutual funds is investors can start investing with monthly SIP of Rs 500. However your money is invested in share market, securities etc so even risk is associated with your fund. So “Mutual Fund investments are subject to market risk. Please read the offer document carefully before investing”.
4. Mid Cap and Small Cap Mutual Fund
Mid cap and small cap mutual fund is another best investment options as they have results in more than 40% return within few years for their investors. Such type of investment options are ideal for those who want to invest money in a particular fund for a longer period of return. One of the most famous example of mid cap fund is Reliance Growth Fund. Well this fund was launched in October 1995 which is 21 years from now.
The net asset value (NAV) of the fund today is Rs 1000. However it is the first fund that today has an NAV of Rs 1000. In simple words the return offered by Reliance Growth Fund is 100 times in 21 years. So if you would have invested Rs 1,00,000 in year 1995 then the value of your fund today would have been Rs 1,00,00,000. Hence you would have become crorepati today.
One piece of advise that I would like to give is that you should review your funds annually not on daily basis or on week basis. While even all the mid cap and small cap mutual funds cannot offer you same level of returns. So while investing read all the documents carefully as while investing in share market risk is always there.
5. PPF (Public Provident Fund)
While Public Provident Fund is issued by State Bank of India and Post Office. Some of the highlights of the fund which make it the most popular investment option in India. The basic idea of the fund is that you can either deposit a certain amount annually or monthly. The amount that you wish to deposit can even vary. Also the amount is locked for a period of 15 years and even after 15 years the amount is tax exempt. So even get tax benefit by investing in Public Provident Fund.
Once you have opened your PPF account you cannot close the account before 15 years. Even if you fail to deposit monthly or yearly installments you will have to pay it later in lump sum. So once you have opened the account then you will be liable to pay and deposit some money for your future. While you can even apply for withdrawal from your PPF account but then can only be done after the end 7th financial year from the date of opening of account.
Furthermore, you can even apply for loan but only after 3rd year from the date of opening the account. Currently the interest rate offered in PPF account is 7.9% per annum which is compounded yearly. One can deposit maximum of Rs 1,50,000 in a financial year in PPF account. While the minimum monthly deposit that can be made is Rs 500. Since one can easily pay Rs 500 monthly and the best part of this profitable investment options is that it is having lower risk.
6. Investing in Real Estate
If we talk about the long term return offering investment options in India, then investing in real estate is best. The word real estate provides you different investment options like you can invest in manufacturing, retail, hospitality, commercial, housing. Now you can clearly see that the invest in real estate will not be in small fraction. As you really need to have big pockets if you are willing to invest in real estate.
But in return of your investment real estate will actually offer you decent returns over the period of time. Going by a report the Indian Real Estate market is expected to reach US$ 180 billion by year 2020. It is seen that among the highest growth offering profitable investment options real estate has been above all. Now SEBI has even given its approval for Real Estate Investment Trust (REIT). Under REIT any interest investor can easily invest in real estate market of India.
7. Investing In Fixed Deposits
Investing in company fixed deposits in another popular investment option in India. Well, let me tell that company fixed deposits are different from bank fixed deposits. While another thing that I would like to mention here is that company FDs are comparatively better then bank FDs. This can be said because the returns offered by company fixed deposit are superior than bank fixed deposits.
Well Company fixed deposit comes with certain lock in period. The lock in period for corporate fixed deposits varies from 12 months to 60 months. Such type of funds are actually ideal for the conservative investors who are looking for risk return balance along with long term fixed gain. It can be said that the expected returns that one will receive is about 12 to 14%.
However while investing in corporate fixed deposit the minimum amount that you will invest will actually vary from one company to another. Once you have opened your companies FD account then later you can add some additional amount in your FD account. You will even receive tax benefits by investing in such type of funds.
8. Post Office Savings Schemes
Well, one of the most easiest, beneficial and profitable investment options is Post Office Savings Schemes. There are multiple schemes that are offered by post offices like 5-Year Post Office Recurring Deposit Account, Time Deposit Account, Monthly Income Scheme Account, 15 year Public Provident Fund Account (PPF) etc. One such schemes is Post Office Savings Schemes where you will get returns of about 8.5 to 8.7%.
You can subscribe this scheme by depositing amount via cash. Well investor can open only one account in one post office. You can even transfer funds from one post office account to another post office account. Well the interest earned from this scheme is tax free up to INR 10,000/- per year from financial year 2012-13.
This scheme is best investment option for investors who are conservative in nature. Do not expect heavy returns from this scheme but the risk in such a scheme is very low or minimum and your capital will be completely save when you will invest in such type of funds.
Investing in bonds is also in the list of best profitable investment options in India. Well if you do not want to invest your hard earned money in some risky investment options then investing in bonds is best option for you. There are several bonds available in the market which actually provides you higher returns on your investment. Since the bonds are regulated by Indian government and the tenure for bond is about 10 years where you receive interest of about 8%.