While it is true that 2020 wasn’t the best year for any human being, the year has helped us prepare better for 2021. People understand the importance of saving more than before. However, with interest rates taking a nosedive too frequently, not all investment options provide the best returns.
Grab a cosy chair and go through this article which informs you about the top-6 investment options in India for 2021.
1. Fixed Deposit
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Fixed deposits are the most common form of investment in India.
Generally, three types of financial institutions offer fixed deposit accounts – housing finance companies, non-banking financial companies, and scheduled commercial banks.
The best FD interest rates are usually offered by housing finance companies, such as PNB Housing Finance. For example, while public sector banks offer FD interest rates between 3% and 5%, the maximum interest rate offered by PNB Housing is 6.95%.
Usually, a cumulative fixed deposit account fetches higher gains than non-cumulative deposits. Fixed deposit accounts are one hundred percent liquid, and you may close the account anytime you want by paying a minor penalty.
2. Recurring Deposit
A recurring deposit is an excellent way to save money regularly and withdraw on maturity. You can invest as little as INR 500 every month.
The investment term usually ranges between 1 year and 10 years. Like a fixed deposit account, you can close an RD prematurely. You may also use it as collateral to apply for a loan.
However, before choosing the RD amount, you must analyses your financial capability and select an amount you can pay every month.
3. Government Saving Scheme
Government saving schemes come in various shapes and sizes. The maturity term ranges between 5 years and 10 years.
For example, Post Office Monthly Income Scheme (MIS) and Senior Citizen Saving Scheme (SCSS) have a five-year maturity term.
In contrast, the maturity term of Pradhan Mantri Vaya Vandana Yojana (PMVVY) is 10 years. Unlike fixed deposit accounts, government saving schemes are primarily illiquid.
4. Equity
Equity investments are primarily available in two forms – stock trading and mutual fund investments.
Unlike a fixed deposit account, the returns from equity investments are not guaranteed.
The returns might be higher or lower than FD interest rates. While stocks are mostly liquid, mutual funds can be open-ended or close-ended. For instance, Equity Linked Saving Scheme or ELSS funds have a lock-in period of 3 years.
5. Gold or Silver
With the COVID-19 pandemic still wreaking havoc, people are buying gold or silver for hedging purposes. It helps them cushion the impact of the fall in the equity market. You can invest in these precious metals in two ways – direct purchase in the form of gold and silver coins and bars or in paper form.
However, unlike a fixed deposit account, gold or silver never guarantee capital appreciation.
6. Real Estate
If you already own a property, you may consider buying another one for investment purposes. Real estate is often considered the fastest way to grow your capital.
However, before purchasing the property, you should evaluate the property location and growth potential. Buying a property in a place with all modern amenities can fetch you higher gains than otherwise.
Conclusion
There is no shortage of investment options when you want capital growth in India. A fixed deposit account must figure prominently in your portfolio if you want safety and decent capital appreciation. Some investors diversify their capital to reap more enormous dividends.
