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Explore the Best Long-Term Investment options in India for 2023. Secure your financial future with smart investment strategies with smart insights and tips.
Long-term investment plans have several advantages, including the potential for compound interest, similar to fixed deposits in a bank.
People are always on a lookout for safe investment plans with potential of high returns. These long-term investment plans with high returns are typically held for three years or more, demanding commitment even in the face of financial challenges.
Long-term savings plan options can yield superior returns upon maturity, making them ideal for planning your child's future needs, including education, marriage, and lifestyle.
In India, there are varieties of best long-term investment plan choices, so it's crucial to select one that aligns with your financial goals and risk tolerance.
In this article, we will be exploring various long-term investment plans with high returns.
What are Long-term Investment Plans?
Long-term investment plans are financial commitments designed to achieve goals over an extended period, typically 7-10 years.
These best long-term investment plans tend to yield better returns when held for an extended duration.
They are commonly used for future needs like funding your child's education or preparing for retirement through a long-term savings plan.
Planning for long-term investments involves considering your goals, current income, and the expected returns from your investments.
Let's say you want to save for about five years, or maybe you're considering buying a house in the next ten years. Your investment strategy would differ based on these goals and the timeframes involved.
Here are Long-Term Investment choices to consider:
1. PPF and EPF
PPF and EPF are among the top long-term investment plans in India. The Public Provident Fund (PPF) stands out with its attractive 8.7% interest rate, making it one of the best long-term investment plans available.
Additionally, it offers tax benefits under Section 80C, making it a top choice for long-term savings plans.
PPF is significant for low-risk savers planning for retirement but can be part of high-risk portfolios, too.
PPF and EPF offer tax benefits up to Rs 1.5 lakhs under Section 80C. PPF has yearly changing interest rates, matures in 15 years, and allows partial withdrawals after 5 years, making it a flexible, secure, and tax-efficient savings plan.
So, whether you're looking for long-term investment plans with high returns or the best long-term investment plan with tax benefits, PPF is a solid choice that aligns with your long-term financial goals.
2. Direct Equity
One of the best ways to grow wealth is by investing in long-term investment plans with high returns, like equities.
There are numerous examples of stocks that have significantly increased investors' wealth over time.
For instance, the Indian non-banking financial company Bajaj Finance has consistently delivered an annualized return of over 41% in the past 15 years.
3. Fixed Deposits
Fixed Deposits are a traditional approach to investing; they offer stability and security.
You can explore tax-saving fixed deposits and savings up to Rs. 1.5 lakh annually on your investments, aligning with long-term savings plans.
These fixed deposits allow you to choose a lock-in period and access your money when the term ends and is a promising avenue for senior citizens, as it provides higher returns.
4. National Pension System (NPS)
The National Pension System (NPS) is a government-supported retirement-focused long-term investment plan.
It combines various assets like stocks, government bonds, and corporate bonds, allowing you to allocate your funds based on your risk tolerance within your long-term investment plans.
NPS is tailored for long-term savings plans and offers tax benefits under section 80C, making it one of the best long-term investment plans.
Anyone aged 18 to 60 can participate. Compared to some equity-related investments, NPS is a safer option while typically delivering better returns, aligning with long-term savings plans.
5. Real estate
Real estate is a thriving industry in India with great potential in various sectors, such as hospitality, commercial properties, retail spaces, housing, and manufacturing.
Many individuals who've enjoyed substantial gains from prior investments consider allocating their funds to real estate within their long-term plans.
However, while real estate remains a highly favored choice among Indian investors, it's essential to acknowledge the associated risks and limitations.
Notably, one significant risk lies in the potential difficulty of quickly liquidating a property. In urgent situations, you may need to sell at a considerable discount, affecting the returns on your best long-term investment plan.
Even if you require only a portion of the property's value, you might have to sell the entire property to access those funds. Remember these factors when considering real estate as part of your long-term savings plan.
6. Mutual funds
Mutual funds offer an excellent option for those looking to balance risk and returns within their long-term investment plans.
These funds come in various types, catering to different risk appetites. Alternatively, you can consider Systematic Investment Plans (SIPs) to spread market risk by making regular, small investments over time, aligning with the best long-term investment plan.
They fall into three main categories: equity funds, debt funds, and hybrid funds.
- Debt funds: Low risk, reasonable returns, invest in bonds.
- Equity mutual funds: Higher risk, growth potential, invest in stocks.
- ELSS funds: Tax savings, 3-year lock-in, chance for high returns.
ULIPs, short for Unit-Linked Insurance Plans, offer a unique blend of insurance and investment. They allocate a portion of your premium into assets like stocks and bonds, designed to grow your wealth over the long term.
Historically, ULIPs were known for their high charges, but newer versions have become more cost-effective. However, they still come with a 5-year lock-in period.
ULIPs provide tax benefits under Section 80C, with a maximum deduction of Rs 1.5 lakhs.
Also, the redemption proceeds are tax-free under Section 10(D), making ULIPs a tax-efficient choice in long-term savings plans.
These plans are versatile, helping you pursue various long-term financial goals, including retirement planning, funding your child's education or wedding, or saving for a house down payment. Thus, ULIPs are a strong contender when seeking the best long-term investment plans with high returns.
Gold remains a timeless choice for long-term investment plans, available in various forms like gold bars, Gold ETFs, gold mutual funds, and gold deposit schemes.
These options typically offer a tariff-free interest rate of around 4% and often involve a lock-in period of 3 to 7 years, making them an attractive component of long-term investment plans.
Gold has symbolized wealth for centuries and continues to shine as an investment that can effectively combat inflation.
Stocks present an investment option, but they come with no guaranteed returns. If the idea of stock market risk concerns you, bonds offer a safer choice.
For instance, a 10-year government bond offers a fixed interest rate of 7.70 percent, making it a potential component of the best long-term investment plan.
Alternatively, you can explore inflation-indexed bonds, where interest rates are linked to inflation, providing options for long-term savings plans.
Benefits of Long-term Investment Plans
1. Compound Growth: The longer you invest, the more your money can grow. For example, investing a small amount, like ₹500 every month at a 15% rate, could turn into ₹16.42 lakh after 25 years.
2. Stability Against Short-Term Changes: Short-term market ups and downs are hard to predict. Long-term investing helps you ride out these fluctuations for better results.
3. Achieving Goals: Long-term investment plans are great for reaching essential milestones like buying a house, funding your child's education, or preparing for retirement.
4. Convenience: You can set up auto-debit from your bank account or card for hassle-free investing. Plus, you can easily buy long-term investment plans online.
5. Tax Benefits: Long-term investment plans offer tax planning advantages under the Income Tax Act 1961, helping you grow your money while saving on taxes.
6. Steady Amid Market Changes: Long-term saving plans are less affected by small market shifts, giving you peace of mind.
7. Experimenting for Better Returns: You have more time to explore different funds and switch between them to maximize your returns with long-term investments.
Short-term investing is like safeguarding your money, while long-term investing is about building wealth. It's about crafting an investment plan that will provide you with income down the road, whether it's for retirement or achieving big financial goals.
To ensure a comfortable future, you've got to create this financial cushion.
Long-term investing does involve some risk, especially with things like stocks and ULIPs.
These riskier options can have their ups and downs; they might drop by 20% in a few years, but if you stick with them for the long haul, they have the potential to deliver solid returns over 10 or 20 years. On the other hand, safer investments offer stability but usually come with slower or fixed returns.
So, when planning for the long term, remember to be patient through short-term fluctuations to reach your financial goals.