10 Best Long Term Investment Plans in India to look for
Long-term investments are generally considered to outperform short-term investments if planned properly. So, if you are planning for your kids’ education or marriage or planning to buy a retirement home or plot, long-term investments are the right choice as you can start setting aside the funds and wait for that particular period to arrive for you to make use of the funds.
The recent COVID-19 pandemic has taught a few valuable lessons on savings and investment to everyone. One such story is of Vinay Kumar, a 34-year-old media professional who lost his job during the COVID-19 crisis as his company wanted to reduce costs. The news came as a considerable jolt to him, who was living with his wife and two kids in a flat that he had recently purchased via home loan. There was a lot of fear already because of the virus infection, and this news of job loss was like the entire world is falling apart for him. He had three things to cover – to take care of his family, pay the home loans without default, and look for a suitable job.
Vinay started working at the age of 25 and has been investing regularly in post office deposits, mutual funds, and recurring deposits. He knew those savings would help him overcome this financial crisis till he gets a job. Without wasting any more time, he quickly got into action, closed the RD, post office deposits, and redeemed some units of mutual funds, which made him mobilize six lakhs. This money helped Vinay tackle the COVID-19, take care of his family, and pay the home loan EMI for six months, after which he got a job with a better pay package. The investments that were started 25 years ago helped him now, proving the worth of long-term investments.
Usually, investors who are more inclined towards short-term investment options aren’t really interested in waiting for years in order to get their money multiplied many times over. Instead, they look for quick and effective results. This is where short-term investment plans come to their rescue. There are many short-term investment options in India available that can provide high returns in a short period of time which can be a year or even a few months.
If you are investing for more than five years, it can be classified as long-term investments. It also means that you won’t be requiring those funds until the need arises. There are several long-term investments plans in India, which are:-
List of 10 Best Long Term Investment Plans in India 2021
Here is a look at the top 10 long term investment plans Indians can look at while saving for their future goals:
- Bank Fixed Deposit (FD)
- Post Office Savings Schemes
- Public Provident Fund (PPF)
- National Savings Certificates (NSC)
- Corporate Fixed Deposits
- Sukanya Samriddhi Account (SSA)
- Unit Linked Insurance Plan (ULIP)
- National Pension System (NPS)
- Stocks and Mutual Funds
- Real Estate
Depending on the type of goal, period, and risk-taking ability, one can choose from any of the above best long-term investment plans and start saving. Let us look into each investment plans in detail and their features:-
1. Bank Fixed Deposit (FD)
This is the most traditional form of investment in India when there were not many options. The fixed deposits offered in banks are considered the safest, where the amount can be invested for more extended periods such as three or five or even ten years for a fixed rate of return that ranges between 3% to 6.5% per annum. Once the term ends, it is available for withdrawal. The interest rates are higher than savings account and RD, there is also a possibility of early withdrawal but a penalty is levied.
2. Post Office Savings Schemes
Like banks, there are various savings schemes offered by postal offices and are preferred by many nowadays due to the security and better interest rates. Some of the famous post office savings schemes are the post office Savings account, post office monthly income scheme account, 5-year senior citizen savings scheme, National savings certificate, Kisan Vikas Patra, Sukanya Samriddhi Yojana, etc.
3. Public Provident Fund (PPF)
This is similar to the Employee Provident Fund (EPF) provided to salaried, but the only difference is, anyone can open PPF. PPF investments are to be held for up to 15 years, and the current rate of return is 7.1%, which is fixed by the government every year. The most significant advantage of investing in the PPF scheme is, one can claim tax deduction under section 80C.
4. National Savings Certificates (NSC)
It is yet another secure option for long-term investment in India available with the post office and few public sector banks. The investment tenure is five years, and once can start their savings in NSC with as low as ₹ 100, making it an affordable option for people from the unorganized sector also to start saving. The current interest rate is 6.8% per annum, and similar to PPF, the Indian government fixes the rates every year.
5. Corporate Fixed Deposits
These deposits are collected by corporates for expansion and operational activities. Though it is similar to bank FD’s, the risk is relatively high compared to other avenues, but the interest rates are slightly higher than bank FDs. They provide an interest rate of 6 to 8% per annum.
6. Sukanya Samriddhi Account (SSA)
This is an investment scheme that the Indian government introduced for the benefit of the girl child. A minimum of ₹ 1000 can be invested in one financial year, and deposits can be made till the girl completes 14 years. The account matures on her completing 21 years of age from the date of account opening. The interest rate offered is 7.6% and can be claimed for tax deduction under section 80C.
7. Unit Linked Insurance Plan (ULIP)
If you are looking for a long-term investment option that combines insurance and investment? Then ULIP could be your best bet as one portion of the premium you pay goes towards securing your life, and the other portion is invested into stock markets for generating returns. The returns can hover around 8%, but since it invests in stocks, one can expect fluctuations in its prices. Because of the same reason, their premium and administrative charges are also high.
8. National Pension System (NPS)
It is a pension scheme introduced by the Indian government as a long-term investment option for providing regular income to investors after retirement. A person can continue to invest in this scheme until the age of 60 years, post which a minimum of 40% of the funds must be utilized to purchase an annuity plan that gives regular income. The remaining 60% can be withdrawn as a lump sum amount.
9. Stocks and Mutual Funds
Stocks are the best place to generate very good returns over a more extended period. You may choose to invest in long-term investment stocks directly or opt for the SIP route in mutual funds. Either way, you can expect around 12 to 16% returns, and if the economy is doing good, these returns could also touch 20 or 30%. Some of the best mutual funds for long-term investment are large-cap and mid-cap funds with a good track record of delivering excellent returns.
10. Real Estate
Investing in a booming sector like real estate is one of the time-tested best long-term investment strategies that require huge capital initially but is guaranteed to fetch you massive returns if held for a longer term. One can look to invest in plots, houses, farmhouses, commercials, hotels, restaurants, etc.
So, if you are looking for long-term investment plans, you may consider the above options. However, you should go through and research each of the investment plans carefully before opting for one so that you can make the maximum out of your decision.
Long-Term Investment Plans FAQs:
1. What are the Long Term Investments?
As the name suggests, Long term investments are those investments that usually have longer tenure – 5 years or more. These typically offer higher returns after several years and involve more market risks as compared to short-term investment plans.
2. What are the best long term options for investment in India in 2021?
There are various kinds of long term investment options available in the market. Depending on your goals, affordability, and risk-taking ability, you need to opt for the right one. The various long term investment plans include Bank Fixed Deposit (FD), Post Office Savings Schemes, Public Provident Fund (PPF), National Savings Certificates (NSC), Corporate Fixed Deposits, Sukanya Samriddhi Account (SSA), Unit Linked Insurance Plan (ULIP), National Pension System (NPS), Stocks and Mutual Funds and Real Estate.
3. Which are the best investment options with high returns in India?
Long-term investment options usually offer higher returns. However, the best investment options include Stocks and Mutual funds, Real Estate, National Pension System, and Public Provident Funds.
4. What are the advantages of investing in long term investment?
The main advantages of investing in long term investment include:-
longer tenure of investments,
diversification of portfolio,
time to rectify your mistakes,
low risk of losing the investment,
gives ample time to your money to grow.
5. What types of risks are involved in long term investment plans?
The risks involved with long term investment plans are:-
· Market-related risk
· Inflation risk
· Credit risk
· Liquidity risk
· Longevity risk amongst others.
6. Why should you choose long term investment options for future saving?
Long-term investment options help to fulfill your long-term goals such as child’s education, marriage, your retirement corpus and many more and hence, they are ideal for future savings.
7. How is risk and return related in investment plans?
The risk and return is directly related to each other in investment plans in terms as the risk factor will increase and the potential return will also increase.