Best Investment Options in India: With stock markets indicating higher volatility in the first half of 2022, investors are looking for other best investment options with fixed returns. In fact, there’re several different ways to make money grow while getting fixed returns, if we look around.
Have you wondered at least once in your life that what are the best investment options in India and where I have to invest my money.
And it’s completely acceptable because we saw, several cooperative credit societies and cooperative banks have been victims of fraud In recent years.
There are some safe investment options in India. It means the risk of losing the money you invest is fairly low. Therefore, you can invest in these schemes and relax. This article will discuss India’s 10 best investment options for 2022 that offer fixed returns.
Top 10 Best Investment Options in India for 2022 with Best Returns
All these investment options that I’m writing about are available from very strong financial institutions. All of them are risk-free. They provide fixed returns. However, these returns can depend upon your age and the financial institution.
Sometimes, the amounts of returns might change. That’s because the Reserve Bank of India often revises interest rates for banks and other financial institutions. Therefore, the returns that I’m writing about are based on figures available in mid-2022.
1. Senior Citizens Savings Scheme
The Senior Citizens Savings Scheme is available as part of financial services offered by India Post, the country’s postal department. This is one of the best investment options for retired persons in india.
The scheme is open to Indian citizens that’re above the age of 60 or defence personnel who have retired at the age of 50 years.
It is also available for civilian employees that have taken the Voluntary Retirement Scheme (VRS) to opt-out of active service.
You can deposit a minimum of Rs.1,000 to a maximum of Rs.1.5 million on SCSS at your nearest post office that offers financial services from India Post. The duration of SCSS is a minimum of 60 months (five years).
However, if the account holder passes away, The beneficiaries can retain the money in the account but get a lower rate of interest.
The SCSS account pays 7.4 percent interest. This interest is calculated and deposited into the account twice a year by India Post. If you’re looking for a safe investment option in this scheme is. Interest below Rs.50,000 per year is exempt from Income Tax under Section 80-C.
2. Monthly Income Scheme
Commonly known as MIS, the National Savings Monthly Income Scheme is another amazing savings plan from India Post. Here you can deposit from a minimum Rs.1,000 and higher in multiples of Rs.100.
And the maximum you could invest in MIS is Rs.450,000. You can get a fixed return at the rate of 6.6 percent every month.
The maturity of MIS is a maximum of five years. However, you can always withdraw the money after five years and subscribe again. In case of the account holder’s death, the capital amount will be paid to the nominees in the preceding month.
There’re no Income Tax exemptions for your monthly payouts. However, you can invest these payouts on a Recurring Deposit scheme of India Posts and earn interest on the monthly income to save taxes.
3. Fixed Deposits
Fixed Deposits are yet another favourite among those who want the best investment options with fixed returns on their money. Interest rates on traditional Fixed Deposits vary between 5.5 percent per annum and 7.5 percent per annum.
These interest rates depend solely upon the bank of cooperative credit society with whom you invest. In some cases, cooperative credit societies offer as much as 10 percent returns per annum, but with some risks.
These risks arise from the fact that some such societies are very prone to frauds and liquidations.
Generally, senior citizens can get up to seven percent interest per annum on their Fixed Deposits. For women that’re above the age of 58 years, banks and financial institutions offer 0.5 percent more interest. Some banks offer this facility to younger women investors too.
Fixed Deposits are however prone to fluctuations in interest rates. That occurs when the apex bank- RBI- cuts interest rates on such deposits. Also, the interest you earn from FDs is taxable if it exceeds a certain amount every year.
The bank will do Tax Deduction at Source (TDS) from your investment amount automatically, if you provide such standing orders. Or you can opt-out of TDS and pay tax yourself.
Though Fixed Deposits are safe, be careful where you put the money.
4. Public Provident Fund
Public Provident Fund or PPF offers a fixed income at the rate of 7.1 percent interest annually. PPF is a 15-year investment plan that you could subscribe to either from India Post, Public Sector Undertaking (PSU) banks, private banks and select other financial institutions.
It also ranks among the most popular investment options among Indians that wish to get into the habit of forced savings and stashing away some money for the future.
Minimum investment in PPF accounts starts at Rs.500 per year and goes as high as Rs.150,000 per year. Minimum instalments for a PPF account are Rs.50 and its multiples.
However, there’s a lock-in period of five years before you can withdraw money partly from any PPF account. Only an individual can hold a PPF account since the joint account facility is not permitted. If you fail to credit at least Rs.500 in your PPF account during any year, the account stands automatically discontinued.
The amount of money you deposit in a PPF account qualifies for Income Tax exemption under Section 80-C of the Income Tax Act. However, the amount you withdraw upon maturity is taxable under Income Tax laws.
5. National Savings Certificate
National Savings Certificates or NSCs are available at India Post offices. They’re also one of India’s safest and best investment options for 2021 that offer fixed returns. NSCs are available in denominations of Rs.1,000. And you could deposit more money in multiples of Rs.100 each.
NSCs have a maturity of five years or 60 months. All your deposits in NSCs qualify for Income Tax rebates under Section 80-C of the Income Tax Act of 1963. They pay you 6.8 percent interest that’s compounded annually.
However, the interest is payable only at the end of the five-year maturity.
An individual can open an NSC account or hold it jointly with a maximum of three persons, including the main investor.
An advantage that NSC offers is that it can be pledged or transferred as security, by submitting a prescribed application form at the concerned post office supported with an acceptance letter from the pledgee.
This means, holding an NSC is almost similar to holding cash and offering it as a security.
You can’t withdraw an NSC prematurely. However, premature withdrawals are allowed only in case the main investor passes away or some government authority to whom you’ve to pledge the NSC forfeits it for any reason.
According to the India Post website, every Rs.1,000 you deposit in NSCs grows to Rs.1,389.49 in five years. The best way to invest in NSCs is by buying a specific number of certificates every month from your earnings and redeeming them after five years.
The money you get can be deposited in a Recurring Deposit account. Or you can buy more NSCs by redeeming matured ones and earn more money.
6. Kisan Vikas Patra
Kisan Vikas Patra or KVP is a form of Fixed Deposit offered by India Post. It gives you an annual compounded interest of 6.9 percent, and this another best investment option in India.
You can open a KVP account at any post office that provides financial services from India Post. A KVP account can be opened by an individual or with two more individuals.
The amount of KVP doubles in 10 years, four months or 124 months. The amount you invest doubles during that period. You can invest Rs.1,000 on KVPs and later in multiples of Rs.100 each.
A KVP deposit cannot be withdrawn prematurely. However, it can be pledged as security to any Indian government department. If the main investor in KVP passes away, the certificates are transferred to their nominees after submitting due proof of death and completing other formalities.
Survivors can also ask for the payout of the cumulative amount upon death of the account holder.
However, KVP comes with a major disadvantage. Your contributions or deposits to KVP do not qualify for Income Tax deductions. And the interest you earn after 124 months is also taxable, if it exceeds a specific amount, as decided at the time by the Income Tax Department.
7. Sovereign Gold Bonds
In collaboration with the Reserve Bank of India, the Government of India frequently issues Sovereign Gold Bonds. These issues are known as Tranches. Every Sovereign Gold Bond (SGB) is equal to the value of one gram of pure 24 carat gold.
However, the Indian government offers these SGBs at prices lower than prevailing ones for 24-carat gold. Additionally, it offers an Rs.50 discount for investors buying SGBs online through banks and stockbroking platforms.
SGBs are one of the best investment options in India in 2021 because of two reasons. The maturity of an SGB is eight-and-half years.
That means, each SGB will fetch you the price of 1gm gold that is prevailing in the market after eight-and-half years. Since gold prices are always on the upswing, you get assured returns.
Additionally, the Indian government pays you 2.5 percent interest on your capital value invested on SGBs. This interest is calculated and paid every six months during a financial year. That means, you get the interest plus the higher gold price on maturity.
You can sell an SGB anytime through your trading and stockbroking account if you need the money. This means, to hold SGBs, you will require a Demat account with an online trading facility.
It is also possible to buy SGBs offline, through banks and other financial institutions. However, in the case of physical certificates, you lose the Rs.50 discount available to those buying SGBs online.
8. National Pension Scheme
National Pension Scheme is a government-sponsored annuities plan with private financial institutions as well as state-owned ones including Life Insurance Corporation of India and Unit Trust of India.
You can open an NPS account online or offline by visiting any of the participating banks. The NPS is managed by National Securities Depository Ltd (NSDL).
NPS operates with two categories- Tier-1 and Tier-2. You can subscribe to both or any one of the categories. Minimum contributions to NPS starts at Rs.500.
However, you have to deposit at least Rs.1,000 towards your NPS account every year, to ensure a continuum of the account.
When you open an account, NPS offers as many as five choices of financial institutions where they will invest your money.
They invest it on retirement plans of reputed financial institutions such as Kotak Asset Management, SBI Group and HDFC Asset Management. You can select different financial institutions for both tiers.
There’re no upper limits on how much money you can invest in NPS every year. But the minimum contribution of Rs.1,000 per year is compulsory.
Upon successful registration, you will receive a Pension & Retirement Authority number known as PRAN. The NSDL will also mail you a PRAN card with your photo.
You have to mention the PRAN number every time you wish to contribute funds to your NPS account or correspond about it with NSDL for any reason.
For those who open an NPS account online (eNPS), it is also possible to download their app and make contributions, check on your total contributions and their value.
NPS starts paying you pension upon attaining 60 years of age. The capital gets invested in annuities from the financial institutions of your choice.
9. Equity Linked Savings Schemes
Equity Linked Savings Schemes or ELSS are a form of Mutual Funds that’re offered by various financial institutions. Depending upon the financial institution, you can invest as little as Rs.500 one-off or make a bigger purchase worth a minimum of Rs.5,000 and multiples of Rs.10.
It is also possible to subscribe to Systematic Investment Plans of ELSS with a minimum monthly contribution ranging from Rs.500 and Rs.1,000.
ELSS offers two benefits. Firstly, all your investments on ELSS Mutual Funds are exempted from Income Tax under Section 80-C of the Income Tax Act of 1963. And secondly, there’s a lock-in period of three years. During this period, your investment value goes up between eight percent and 14 percent.
The value of your ELSS units primarily depends upon the movements of stocks in its portfolio. If these stocks perform well over three years, you could expect as high as 24 percent returns, though this is rare.
The income you earn from ELSS by means of higher value per unit is taxable. But you always have the option of not redeeming these units and making the investment work for higher returns.
10. Pension Plans
Life Insurance Corporation of India and large, private financial institutions offer a slew of pension plans that you could subscribe to. In fact, anyone that’s of legal working age of 18 years can invest money in these pension plans. However, the rate of interest differs according to the financial institution where you invest your money.
Pension plans offer between eight percent and 12 percent returns per year. These pension plans are ideal if you’re planning on retiring early or would require a good source of income when you retire.
Generally, financial institutions that offer pension plans invest your money in hedge schemes. This means, they make your money grow by investing in Mutual Funds and other safe options. They take a part of these earnings as their annuity maintenance costs while paying you the returns every month after you retire.
Pension plans offer a superb facility. You can select the age at which you wish to start getting the returns. That means, even if you’re active and working, it’s still possible to get fixed returns that you could invest on more profitable plans or stocks, Exchange Traded Funds and commodities, among others.
KYC Norms for Best Investment Options
For all these 10 best investment options in India in 2022, you will have to complete the full Know Your Customer (KYC) formalities. For SGBs and ELSS as well as for NPS, you would require a Central KYC number.
In 2021, getting CKYC is very easy. All you need to do is visit the website of any financial institution that offers ELSS plans and do an online KYC.
This means you’ll have to pose before a computer’s camera for your face shot, hold a paper bearing your signature for capture by the camera and fill out your Permanent Account Number and Aadhar Card details while holding them before the camera.
Generally, CKYC takes about a fortnight to complete. Having a CKYC is compulsory if you wish to invest in Mutual Funds, ELSS, NPS and SGBs as well as for opening a Demat and trading account.
Depending on your financial goals, select one or more of the above 10 best investment options in India for 2022.
If you prefer to hedge your money, opt for plans available from India Post and PSU banks. And if you’re looking for saving money for those golden years, go for retirement plans and NPS. The choice is yours.