7 Best Long Term Investment Options in India

9/14/2016
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7 Best Long term Investment

Options in India
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Long term Investment : Meaning
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Long term Investment is one where you invest your money for a
fairly long period of time.Here,the investment is spread over a longer
tenure to meet your long term nancial goals.
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An investment done for a period of more than 3 years ,in some cases 5
years is generally considered as a long term investment.For some long
term period goes beyond 10 years as well.
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Long term Investments are usually done to meet your long term
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nancial objectives and the future expenses like:

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Education of children.
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Marriage of children.
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Purchasing a House.
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Setting a retirement corpus.
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Or any other long term nancial goals that you want to achieve.
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If you invest wisely,it will provide you a sense of personal security and
yield higher returns in the long run.The main objectives of parking your
funds for a longer duration are :
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Benet from the power of compounding.

Money invested for longer period tends to generate good
returns.
From the various alternatives available

following are the best Long term
Investment options available :-
PPF Account,PPF Interest

rate,PPF Rules The Ultimate
guide !
How to start Investing your
money A Beginners Guide !
Tax saving FD one of the
popular tax saving options !
GST : What is the impact of GST
on the common man ?
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1.Public Provident Fund (PPF) :

PPF is the most common and one of the traditional long term
investment options in India.It presently yields interest @8.1% per
annum.PPF is considered as one of the safest and most tax ecient
tools.When you invest your money in PPF or Public Provident
Fund,there is an assurance that you will get xed returns at maturity
and there is no risk involved.Your money is lying safe and you shall be
earning a xed annual rate of return.
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But,the lockin period for PPF is 15 years, with partial withdrawal in the
tax GST GST Bill how to save tax How
5th year subject to certain conditions.The interest as well as the
to start SIP investing Invest in SIP
maturity amounts are totally exempt from tax.You can claim a

deduction U/s 80 C of Income Tax act,for contribution made towards
PPF upto a maximum of Rs.1.5 lakhs.
Investment long term
investment long term

investment option
NPS
Mutual Funds
PPF Real estate save money

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So,PPF is normally considered as one of the Best Long term Investment
section 80 C service tax
Optionsdue to its EEE nature i.e.Exempt,Exempt and Exempt.
option
SIP tax saving
tax saving options
To clarify further,EEE or Exempt at all 3 stages means :

Contribution or Deposit amount is Tax free U/s 80 C of The
Income Tax Act.
Interest earned is Tax free.
Maturity/Withdrawal amount is also Tax free.
For detailed analysis on PPF you can follow : PPF Account,PPF Interest
rates,PPF Rules The Ultimate Guide !
However,the falling GetvaluableFinanceTipsdeliveredinyourInbox!Joinusforfree.
interest rates of PPF e.g.From 8.6% to 8.1% recently
is a major point of concern for the potential investors.The reduced PPF
Interest rates over the period
lead the investors to look into SubscribeNow
other
investment alternatives.
Have a look at our popular blog posts in this regard : PPF or ELSS Which is better Investment ?
and PPF or Sukanya Samriddhi Yojana Which is better ?
2.Gold Investments :
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Investingin gold jewelleryhas been a traditional way of investment for

people around the globe especially Indians.Other than gold
jewellery,one can invest in gold in various other ways like Gold
ETFs,Gold Mutual funds,Gold Deposit Scheme etc. Gold prices are rising
high since past few years but still it hasnt lost its lustre.People love
investing their money in gold and it yields very good returns.
Also,gold has been a popular investment option since ages and it has
often proved to be handy at various times.
No matter in what form,Gold is certainly a value addition to your
Financial portfolio.It is just that you have to time the market and buy
some gold when prices are low.
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For further details on gold refer Gold -Is it best Long term
investment !
3.Mutual Funds :
Mutual funds are instruments that pool in savings of various
investors to invest them in shares(stocks), debt securities or xed
income securities,money market securities etc. Mutual funds have
grabbed the attention of potential investors and gained popularity over
the past few years.
In simple terms,you will not directly invest in stocks or securities etc.but
through mutual funds.The companies that manage these funds are
known as Asset Management Companies or AMCs and these are
regulated by SEBI or
Securities and Exchange Board of India.
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Following are 3 broad categories of Mutual funds further invest your

money in either xed income securities,equity or both :
Debt Mutual Funds invest inDebt Instruments orFixed Income

Securities only.
Equity Mutual Funds invest in Equity or as we say Stocks.
Hybrid or Balanced Funds invest partly in stocks and partly in
xed income securities.
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Equity mutual funds are linked to equity so carry more risk as

compared to Debt funds.But,based on historic data,equity funds
perform better and yield high returns if the amount is invested for a
longer period.
However,if you still want to play safe, debt funds are a better option.
In order to enjoy good returns from mutual funds,you have to invest
your money for a longer period.
You can invest lumpsum or small amounts(instalments) in mutual
funds.Investing small regular amounts is a better option since that will
not overburden your pocket andSIP is a good way to do it.
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For additional details on SIP you can refer What Is SIP ? What are its
benets? and How to start SIP in Mutual Funds 10 Simple Steps to
Follow !
4.Real Estate :
Tired of paying the monthly rent,most of us wish to buy our own house
or a piece of land where we can build our dream home.If planned in a
proper way,you can invest your savings in the real estate sector.But,you
have to be very careful while choosing the right option since this
involves huge investment.Moreover,one has to be patient enough to
face the impact of uctuating prices in the real estate sector.Your
property might appreciate immediately or it might take many years for
appreciation.
So,investment in real estate involves huge sum of money,you need to
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plan things in a systematic manner in order to enjoy good returns.
Also,Investing in real estate is a big decision,you wont earn returns

immediately.You need to be cautious and be aware of the market
trends and sit back and wait for the property to appreciate.
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To grab more details refer Smart tips for home buyers.

Must Read : Home Loans 5 Facts You Need to Know !
5.Long term bonds :
What is a Bond ?In simple terms,A Bond is an instrument to borrow
money.
Who needs to borrow money and Why ? The Government and
companies require money from time to time for various projects or
their expansion.
So,you get your money invested and the borrower will pay you a xed
rate of interest based on the term of the bond.If you invest in
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bonds,you will be considered as a lender unlike equity where you have

an equity stake in the company.Bonds are normally issued for a denite
period,they shall be redeemed once the period is over.
Investing in long term bonds is also a good alternative for earning
decent returns on your investments.
e.g.Infrastructure bonds and NABARD Rural bonds will give you good
returns as well as Tax benets Under Section 80 C of The Income tax
Act.
You can also select other government bonds or Ination Indexed bonds
that can give you fair returns over the long period.Hence,bonds with
longer maturity will payback higher returns as compared to short term
bonds.
6.National Pension Scheme(NPS):
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NPS is a government approved pension scheme regulated by Pension

Fund Regulatory And Development Authority (PRDA).The main aim of
investing in NPS is building a retirement corpus for yourself.You can
start contributing to NPS at an early age of 18 years maximum upto 60
years .It is mandatory for central and state government employees
while others can voluntarily contribute to it.
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Under NPS or National Pension Scheme 2 types of Pension Accounts

are there :
(i) Tier I Account : You contribute to NPS account with certain
restrictions on withdrawal.So,this is basically a non-withdrawable
account till retirement.
(ii) Tier II Account : You can withdraw from Pension account any time
without any restriction.
For Tier I Account :The minimum annual contribution has been
reduced to Rs.1000(earlier this was Rs.6000).
For Tier II Account :The minimum annual contribution of Rs.250 and
maintaining a minimum balance of Rs.2000 at the end of the nancial
year has been waived.
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In NPS your money is invested in dierent asset classes as per your

choice in E-Equity, G-Government Securities/Government bonds or
C-Credit risk bearing xed income securities.
If you are a safe player,you can invest in C or G asset classes.If you can
aord high risk,you can choose E Asset class. As far as equity is
concerned,you can putupto a maximum of 50% in equity.
To get deeper insight on various asset classes you can refer : What are
dierent asset classes An Overview !
There are certain restrictions on withdrawal from NPS before
retirement and the minimum 40% of the corpus has to be used to buy
annuity.But,the main disadvantage of NPS is that the maturity amount
is not tax free completely
unlike PPF where maturity amount is fully
exempt from tax.
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For a detailed analysis on NPS, you must go through our popular

blog post :
What is National Pension Scheme or NPS Your Perfect guide !
7.Post Oce Saving Schemes (POSS) :
Investment in Post Oce Saving Schemes is preferred by individuals
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who want to earn xed returns with no risk.Since,it is a government

scheme ,no risk is attached to it.Post oce schemes are in the form of :
National Savings Certicate(NSC), National Saving Scheme(NSS),Monthly
Income Scheme,Recurring deposit scheme or Kisan Vikas Patra(KVP).
Looking at the long term goals and guaranteed returns,investing in 5
year or 10 year NSC is considered as best amongst other Post Oce
Saving Schemes.
So,Post Oce Schemes are basically for the conservative investors,who
are hesitant to take nay sort of risk and are satised with normal and
not so high returns.
Hence,a well planned investment strategy aligned towards achieving
your long term nancial goals can yield very good returns in the long
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run.This will not only add to your nancial assets but you can enjoy tax
benets as well and save some of your hard earned money.
So,diversify your portfolio by adding dierent options to it rather than
sticking to age old methods like Fixed Deposits and gold jewellery.This way
you tend to get maximum returns with lesser risk involved and are able
to manage your personal nance in the best possible manner.
Feel free to give your suggestions and feedbackDont forget to share it with
your family and friends
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9/14/2016

Your Tax Calendar

7 Best Long term Investment

May 10, 2016

Long term Investment : Meaning

nancial objectives and the future expenses like:

Setting a retirement corpus.

What is National Pension

Making yourself nancially free.

Scheme or NPS Your perfect

Benet from the power of compounding.

From the various alternatives available

PPF Account,PPF Interest

1.Public Provident Fund (PPF) :

planning Financial Planning tips

Gold Goods and services

tax GST GST Bill how to save tax How

5th year subject to certain conditions.The interest as well as the

to start SIP investing Invest in SIP

maturity amounts are totally exempt from tax.You can claim a

Investment long term

investment long term

PPF Real estate save money

So,PPF is normally considered as one of the Best Long term Investment

section 80 C service tax

Optionsdue to its EEE nature i.e.Exempt,Exempt and Exempt.

SIP tax saving

tax saving options

To clarify further,EEE or Exempt at all 3 stages means :

Investingin gold jewelleryhas been a traditional way of investment for

Following are 3 broad categories of Mutual funds further invest your

Debt Mutual Funds invest inDebt Instruments orFixed Income

Equity mutual funds are linked to equity so carry more risk as

So,investment in real estate involves huge sum of money,you need to

plan things in a systematic manner in order to enjoy good returns.

Also,Investing in real estate is a big decision,you wont earn returns

To grab more details refer Smart tips for home buyers.

bonds,you will be considered as a lender unlike equity where you have

6.National Pension Scheme(NPS):

NPS is a government approved pension scheme regulated by Pension

Under NPS or National Pension Scheme 2 types of Pension Accounts

In NPS your money is invested in dierent asset classes as per your

For a detailed analysis on NPS, you must go through our popular

who want to earn xed returns with no risk.Since,it is a government

You will also like these Posts

How to Get Rich

Best Long Term

What is SIP? What are the benets of

investing through SIP?

Copyright 2016. Finance & Taxation Tips for Indian Investors

Mesocolumn Theme by Dezzain

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