In today’s world, we all seek instant gratification. Despite knowing that patience and discipline can yield better rewards, we want to achieve all our goals in the shortest possible time. We want to earn the highest return in the shortest possible time. It is why we are always on the lookout for the best investment plans that can double or triple our money.
While specific investment plans can help you multiply your money, finding those investment products can be a tricky task. Plus, they may take longer than you think to yield the desired results. Therefore, to successfully grow your wealth, you need to align the available investment plans with your investment horizon and the risk you are willing to take.
One way to select the best investment plans for your portfolio is to divide your financial goals into 3 buckets: long-term, medium-term, and short-term. By doing so, you will get an idea about the time you have in your hand to achieve the goal. After this, you can choose among the available options per your risk appetite.
This blog will look at some of India’s most popular investment options that fit into these 3 buckets, i.e., long-term, medium-term, and short-term. More importantly, we will explain how you can combine multiple investment options to create the best investment plan for yourself.
Best Investment Options For Long-Term
Long-term goals are the ones that you would want to achieve in the next 7-10 years. Therefore, when you look to pick the best investment plans for the long term, you may go for the options which are volatile but have the potential to deliver high returns over the long term.
That said, you need to decide what kind of volatility you can ride through and choose your investment options accordingly. Let’s look at some of the investment options that can fit your long-term investment objectives, the risks they carry, and the returns they can deliver.
1. Direct Equity
One of the best ways to create wealth for your long-term goals is to invest in equities. There are many examples of stocks that have multiplied investors’ wealth over time. For example, Indian non-banking financial company Bajaj Finance has delivered an annualized return of over 41% in the last 15 years.
To put this return in perspective, an investment of Rs. 10,000 in Bajaj Finance in Jan 2007 would have become more than Rs. 18 lakh in Jan 2023. It means your investments would have grown 180X times.
There are many more stocks like Bajaj Finance that have emerged as wealth creators for investors. But at the same time, there are many companies that turned out to be wealth-destroyers. Take, for example, Reliance Communications. Its stock prices tanked by 98-99% from their peak in January 2008. And investors in these stocks witnessed an erosion of their wealth.
To sum up, while stocks have immense potential to multiply your money in the long term, the risks of investing in stocks are also significant.
You can invest directly in stocks of companies. But the real challenge is to find the right stocks. And given that there are over 5,000 stocks listed on Indian Stock Exchanges, picking the right stocks is certainly an uphill task.
2. Equity Mutual Funds
One way to reduce the risk of avoiding the wealth-destroyers is to take professional help and diversify your investments across multiple stocks. This is where Equity Mutual Funds come into the picture.
Equity Mutual Funds primarily invest in stocks. But they don’t concentrate your money on just 1 or 2 stocks. These funds diversify your investments across multiple stocks. More importantly, professional fund managers run these funds. So they invest your money only after adequate research. As a result, it increases your chances of earning good returns over the long term.
3. Real Estate
It is certainly one of the most popular investment options among Indians. Nevertheless, while property investments have delivered stunning returns in the past, it has its own set of risks and limitations. One of the major risks with real estate is that you may not be able to liquidate it in a short period. And in a rush to sell the property, you may have to sell at a deep discount.
Further, even if the money you need is smaller than the property, you will have to sell the entire property to get the money.
Gold has been a symbol of wealth since ancient times. And even now, it has not lost its shine as an investment option that can beat inflation.
Physical gold has been the traditional way to buy the yellow metal. But it comes with limitations like extra making or designing charges or storage expenses. To overcome these limitations, you can buy gold through Mutual Funds and ETFs. We have a blog that explains various Gold Investment Options in India. Give it a read to find out which one is best for you.
As far as returns from Gold are concerned, historically, Gold hasn’t delivered as high returns as equities in the long term.
5. Small Saving Schemes Like PPF
The government has introduced many small saving schemes for people who want to invest in highly safe investment options. These schemes offer assured returns to investors with little volatility. But you earn lower returns than market-linked products like NPS, Mutual Funds, or stocks.
That said, small saving schemes typically beat inflation and FDs by a decent margin. Examples of small saving schemes for the long term include investment options like Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS), the Sukanya Samriddhi Scheme, and the Kisan Vikas Patra.
The following table shows some of the small saving schemes suitable for long-term investment and the returns you can earn from them.