A salaried person is always looking for tax saving investment opportunities, as it not only helps save money, but also multiplies the investment over a period of time. There are plenty of options to choose from when it comes to investments. However, the choice depends on the financial goals and risk appetite.
Want to know more on Tax Planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.
Given below are 6 ideal investment options for salaried people which yield good returns and provide inflation-beating returns.
Investing in stocks doesn’t suit all investors, as these are extremely volatile and returns depend on the market conditions. You must have sound knowledge on investing in equities and pick the right stocks as well as know when to enter the stock market and when to make an exit.
As equities are able to deliver much higher returns than other investment options, aggressive investors could take a try. Investment in direct equity is rewarding if you are a long term investor. If you are a beginner, then try investing a small amount in stocks/equity to understand how they work.
Debt mutual funds mainly invest in a mix of fixed-income securities like government securities, corporate bonds, money market instruments, treasury bills and other forms of debt (Fixed Income). Debt securities come with a fixed maturity period and pay a fixed rate of interest. Debt securities are less volatile than equity and have less risk. You can opt to invest in debt mutual funds if you want steady returns.
The senior citizen savings scheme (SCSS) is a saving scheme, which offers retirees with a risk-free investment. It is a must-have investment option for retirees with capital protection along with interest payments. The interest paid on SCSS does not depend on the market conditions. A retiree can invest a lump sum and earn income on a quarterly basis from the investment.
SCSS is offered by India Post and only senior citizens may invest in the scheme. You can invest in SCSS for a minimum of 5 years, which can further be extended up to 3 years on maturity. The money invested must be in multiples of Rs 1,000 and the maximum amount that can be invested is Rs 15 lakhs. The SCSS scheme can be availed easily at the post office or public sector banks and requires minimal documentation. Currently, the interest rate offered for senior citizen saving scheme is 8.7% which is paid on a quarterly basis and is fully taxable.
A taxable bond refers to a debt security, where interest is taxed. The taxable bonds have maturity of 7 years and offer interest of 7.75% a year. The interest is paid on a half-yearly basis. The interest on these deposits is added to the investor’s income and is taxed according to income tax slabs he/she falls under.
The bonds are issued in the electronic form and an investor must have a DEMAT account for making an investment in government bonds. Investing in government bonds is profitable as there’s less risk. However, before investing it is important for an investor to evaluate the final income after the payment of taxes.
Gold is a popular investment in India. Investment in gold ensures safe returns and liquidity. Gold is a hedge against inflation. Investing in gold is a good option, as it helps stay afloat, when other investment options like stocks crash.
Investment in gold balances an investor’s portfolio. You can invest in physical gold, gold ETFs and gold funds. Physical gold and coins can be purchased from jewellery shops. Gold ETFs can be availed through stock exchanges like NSE and BSE in electronic format.
Owning or buying real estate is a good investment for people with long term investment plans. Land in most cities appreciates with time. Real Estate has always been a traditional form of investment in India. If you own a house, buy a second house and give it on rent.
You can either rent your second property to earn monthly rentals or sell it for a price higher than your purchasing price to earn a profit. However, the location of the property is an important factor in deciding the value or the rent you can get.
ULIP is a good investment option for a young earner who is looking for systematic investment opportunity and has the ability to take risk. ULIP or unit linked insurance plan offers insurance + investment.
Unit linked insurance plans aim to offer return on investment with life cover. When you invest in ULIP, the insurer invests a part of it in equity/ fixed income/mix of both. The investment is managed by fund managers.
The main benefit of investing in ULIP is that it provides insurance cover at crucial times as well as tax benefits under Section 80C. ULIPs help meet long term financial goals as the money gets compounded with time. These schemes are designed in such a way that investors have the option to switch between debt and equity to balance the portfolio during market fluctuations and minimize risk.
Endowment life insurance plans are best suited for individuals who are looking for insurance + savings. Endowment plan is a life insurance policy that offers insurance cover as well as savings. An endowment plan helps individuals accumulate a corpus and save money over a specific period of time. On the maturity of the endowment policy, the policy holder gets a lump sum along with accrued bonuses.
An endowment policy helps build a corpus over a period of time. This results in higher payout on maturity. It is a safe investment option as the money is not invested in equity. The policy holder avails riders like critical illness rider, total permanent disability rider, and accidental death benefit rider to the base plan to enhance life cover. You get tax deduction under Section 80C up to Rs 1.5 Lakhs a year on endowment life insurance premiums.
The employee provident fund scheme was introduced in the year 1995 to cater to the pension requirements of the employees in the organized sector. All employees registered under the EPFO can avail the employees’ pension scheme provided they complete 10 years of service.
There are a host of other benefits covered under the EPS scheme, that extends to the spouse/ nominee and dependent children. The EPS is clubbed with the EPF scheme, which gives a lump sum at retirement.
PPF stands for public provident fund, a scheme started to encourage savings and investment. This scheme offers decent returns and is one of the best investments in the market today. The investor earns attractive interest at 8% a year. The scheme is backed by the government of India and offers tax benefits of up to Rs 1.5 Lakh a year on investments in PPF account under Section 80C. However there is a 15 year lock-in. PPF is one of the best options among fixed income investments.
A fixed deposit is an investment that offers investors the option of depositing idle money lying in their savings bank account. The fixed deposit allows this money to earn interest provided the money is locked in till maturity. It is a safe investment compared to other risky investments like stocks or mutual funds. The money can be deposited for a specific period ranging from 7 days to 10 years. Once the money is invested with a bank or NBFC, it earns interest based on the duration of the deposit. FD interest rates at banks are in the range of 6.6% to 7.4% a year.
Fixed deposit offers a sound investment avenue for investors looking for safe investment, as the returns are guaranteed and do not depend on market fluctuations. You can get the interest income on a monthly basis, quarterly basis or cumulative basis. There are various types of options to choose from. You can opt for fixed deposits at banks, NBFCs, company fixed deposits and post office fixed deposits.
NSC is one of the safest investment options that help individuals get decent returns and reduces tax liability. National saving certificate is a fixed income saving scheme offered by the Indian postal service. The scheme is backed by the government of India and mainly encourages the small and the mid level investors to invest while saving taxes. This scheme has a lock in period of 5 years and is a secure and low risk deposit.
Currently NSC offers an interest of 8% on the deposits. This is a government backed scheme and you can invest in multiples of 100. NSC enjoys tax benefits under Section 80C.
You May Also Watch:
Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.
Have a complaint against any company? IndianMoney.com's complaint portal Iamcheated.com can help you resolve the issue. Just visit IamCheated.com and lodge your complaint. If you want to post a review on any company you can post it on Indianmoney.com review and complaint portal IamCheated.com.
Be Wise, Get Rich.
This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.