Best investment plans for 5 years in India:
1. Savings accounts:
Get returns of 4-6%, with least risks, so there is no chance of decline in your principal. You can also grow the value of your savings, which remain unaffected by the influence of market forces.
2. Liquid funds:
With a tenor of less than 91 days, liquid funds are types of debt mutual funds that give you the advantage of liquidity. You can easily withdraw your funds at your will, and enjoy easy access to your money. With attractive interest rates, you can expect higher returns and greater liquidity.
However, it is best to park only a portion of your surplus money in liquid funds, as there are several tax implications.
However, it is best to park only a portion of your surplus money in liquid funds, as there are several tax implications.
3. Short term and ultra-short-term funds:
These are also debt mutual funds with a longer maturity period, where duration
ranges between 90 days to 3 years. Due to comparatively longer tenors, these
funds protect the investments against falls in the interest rates.
As a result, they are more stable as they charge an exit load. Returns on short
term debt funds are attractive for those falling in a higher tax slab as
opposed to bank fixed deposits. However, both short term and ultra-short
term funds are affected by market volatility, unlike fixed deposits.
ranges between 90 days to 3 years. Due to comparatively longer tenors, these
funds protect the investments against falls in the interest rates.
As a result, they are more stable as they charge an exit load. Returns on short
term debt funds are attractive for those falling in a higher tax slab as
opposed to bank fixed deposits. However, both short term and ultra-short
term funds are affected by market volatility, unlike fixed deposits.
4. Fixed deposits:
Fixed deposits are often hailed as one of the most stable and safe investment
options for 3-year investment period. It is advisable to invest in various
FDs because of the following reasons:
options for 3-year investment period. It is advisable to invest in various
FDs because of the following reasons:
- Accumulate higher returns by availing FD schemes from credible financiers
- Hassle-free renewals provide you the benefit of compounding, and help
- you increase your savings
- Deposit Credit Guarantee Corporation of India insures all bank FDs up
- to Rs.1 lakh, which ensures better security
- Greater stability, where you needn’t fear about depreciation of your principal
- amount
- Assured returns and greater liquidity
You can also opt for company fixed deposits as they offer a higher rate
of interest as compared to bank fixed deposits. This makes them a lucrative
option. You can also calculate the returns on your investments, by
using a fixed deposit calculator.
of interest as compared to bank fixed deposits. This makes them a lucrative
option. You can also calculate the returns on your investments, by
using a fixed deposit calculator.
5. Fixed maturity plans (FMPs):
These are also close-ended debt mutual funds with a maturity period that
extending up to five years. FMPs invest in debt or money-market instruments
that have the same maturity period as the plan itself. If FMP tenor is three
years, it means it will invest your money in those debt instruments that expire
at the 3-year mark. FMPs are most sought after at the end of the financial year
as they offer greater tax advantages. But, FMPs have their disadvantages too
especially in terms of less liquidity.
extending up to five years. FMPs invest in debt or money-market instruments
that have the same maturity period as the plan itself. If FMP tenor is three
years, it means it will invest your money in those debt instruments that expire
at the 3-year mark. FMPs are most sought after at the end of the financial year
as they offer greater tax advantages. But, FMPs have their disadvantages too
especially in terms of less liquidity.
6. Treasury bills:
Government can raise money by issuing Government Bonds or Treasury Bills,
wherein treasury bills are for a shorter tenor, and government bonds are for a
longer period of 5-10 years.
wherein treasury bills are for a shorter tenor, and government bonds are for a
longer period of 5-10 years.
Government can raise money by issuing the following two types of instruments:
- Government bonds
- Treasury bills
Treasury bills are for a shorter tenor, and Government bonds are for a
longer period of 5-10 years.
Treasury bills have gestation periods of 91 days, 182 days and 364 days.
They are issued at a discount and are redeemable at face value (which is more
than the reduced amount) on maturity. They offer good returns too. The only
drawback is that you have to invest in multiples of Rs.25,000 to buy them from
the government.
longer period of 5-10 years.
Treasury bills have gestation periods of 91 days, 182 days and 364 days.
They are issued at a discount and are redeemable at face value (which is more
than the reduced amount) on maturity. They offer good returns too. The only
drawback is that you have to invest in multiples of Rs.25,000 to buy them from
the government.
7. Gold:
There are three ways you can invest in gold:
Physical form: It is mandatory for you to have a PAN Card
Exchange-Traded Funds (ETFs): Gold ETFs are mutual funds where each
unit represents 1g of gold, either in its physical or electronic form.
Sovereign gold bonds: These offer a high rate of interest, without the
risk and hassle that comes along with purchasing physical gold. These bonds
do not attract tax after you redeem them.
Physical form: It is mandatory for you to have a PAN Card
Exchange-Traded Funds (ETFs): Gold ETFs are mutual funds where each
unit represents 1g of gold, either in its physical or electronic form.
Sovereign gold bonds: These offer a high rate of interest, without the
risk and hassle that comes along with purchasing physical gold. These bonds
do not attract tax after you redeem them.
After the 2008 financial crisis, gold prices increased twice in three years and
have risen to almost three and half times since then. This is because after
the world’s economy collapsed, investors began to take protection
in gold. Through diversification, gold helps to keep your portfolio intact.
have risen to almost three and half times since then. This is because after
the world’s economy collapsed, investors began to take protection
in gold. Through diversification, gold helps to keep your portfolio intact.
