Posts contain affiliate links, see disclosure for more details.
There are a variety of investment options that are available in India. The risks and returns are proportional. When the risk is higher the returns are also high and vice versa.
In this article, we will discuss 7 best investment opportunities that you can consider while you are still under 30.
1.Public Provident Fund (PPF)
This is a government-supported fixed-income scheme. Investing your money here is considered a risk-free investment as the government guarantees the returns. The risk level is very low or nil. It is available at the post office and all Indian banks.
There is no age limit or restriction to open the account. If the account holder is a minor, a guardian will operate the account until the age of 18 years.The minimum amount to invest is Indian Rupees 500 per annum and the maximum amount one can invest is 1.5 lakhs per annum. In one financial year, a person can deposit between 1 to 12 times.
The current interest rate is 7.10% per annum. The interest rate keeps fluctuating changing every quarter. PPF matures in 15 years and after five years partial withdrawal can be done. Investment in public provident is tax-free and the interest that you earn on your investment amount is also tax-free.
2) Post office monthly income scheme
This is a popular scheme, especially among housewives and people earning passive income. You can open a single account or a joint account of three adults at the Indian postal service. A minor above ten years or a person with an unsound mind can also hold an account with the assistance of a guardian or a parent of a minor.
Indian rupees 1000 is the minimum investment for opening an account and the maximum balance can be between 4.5 lakhs to 9 lakhs for both single and joint accounts. The closure of the account is done after five years. There is a small percentage of charges for premature closure.
In case of premature death, the nominee can file a claim. The return on investment is 6.60% per annum which is paid monthly. The interest gets auto-credited through the electronic clearance service or to the depositor’s savings account. The interest earned is taxable.
3) National Savings Certificate (NSC)
This is a government Supported fixed income investment scheme that is considered risk-free. The certificate can be purchased at Indian public banks, even in certain private banks and also in post offices. The minimum investment amount is 1000 with no upper limit and one can invest any amount in 12 installments or the lump sum money at once.
The interest gets compounded annually and it is paid at the end of maturity. The interest rate is announced every quarterly by the Ministry of Finance and the NSC has a lock-in period of five years. But in case of the death of the certificate holder, premature withdrawal is possible.
An investment amount of up to 1.5 lakh Indian rupees is not taxable under section 80C of the Income Tax Act. The interest collected every year is considered as reinvestment and is not taxed. But it is taxable at maturity as per the regular tax slab.
4) Government Bonds
Individual investors can directly purchase government bonds. These bonds are issued by both central and state governments. It will be announced by them in advance of the date of the auction. The government bonds can be held in a demat account. The government will also announce the price of the bonds.
The rate of interest for government bonds is fixed for the entire tenure until the bond matures. The maturity period for government bonds can be one year or more. The interest received from the government bonds is taxable.
5) Sovereign Gold Bonds(SGBs)
The Reserve Bank of India (RBI) issues the SGB and they are denominated in grams of gold, the minimum investment being one gram. The central government will announce the date for the auction. A PAN cardholder can buy an SGB from post offices, banks, or stock brokerage companies.
A maximum of 4 kgs of SGBs can be purchased by individuals and 20 kgs by trusts. 2.5% is paid twice a year as a return on investment. The maturity period is eight years and can be redeemed after five years. Based on your tax slab, the interest payments are taxed and the gains from maturity are tax-free.
6) Unit -Linked Insurance plans
In ULIP plans customers can enjoy the dual benefit of investment and insurance. The premium paid is used to provide life cover and the remaining amount is invested in debt funds and equity bonds, ULIP plans can be purchased from any insurance company or bank functioning in India.
The minimum monthly amount that you can invest is 1500. To avail of tax benefits an investment of yearly 1.5 lakhs can be done. The lock-in period for ULIP plans is five years. The policyholder can make a partial withdrawal of funds after the lock-in period without any penalty.
The premium payment can be stopped after three years, but the withdrawal can be made after five years. If you withdraw before maturity, you will lose the percentage of returns.
7) Gold Exchange – Traded funds (ETFs)
ETFs are similar to purchasing gold in physical form but without holding physical gold. The investors need to open a Demat account. The gold units are held in dematerialized form just like how mutual fund units are held. A minimum of one unit that is equivalent to one gram of gold is suggested.
With a minimum of 500 rupees, an investment in gold funds can be made and there is no upper limit. When the gold price increases, the value of the unit also increases. There is no lock-in period to exit a gold ETF. The return on gold ETF depends on the market similar to equity mutual funds.
By thoroughly understanding the various investment options that are available in the market is a smart way to invest your money. With the assistance of a professional, you can choose the best investment option. You can always consult the investment company near your location for the same.