Savings acts as a financial cushion for the future. Many people start savings from their first paycheck and build a strong financial backbone for their future. Here are some investment options for salaried people that would help them to manage their investments and expenses. Let's check them out:
Best 5 Investment Options for Salaried Individuals
1. PPF (Public Provident Fund)
Initiated by the Indian Government, the Public Provident Fund is a long-term investment option for those individuals who want to earn high but stable returns. Investing in PPF is an excellent option for the salaried class. It involves making an investment in a public government fund, which provides accumulated returns at the end of the tenure that usually lasts for 15 years. However, an investor can choose to extend this tenure if required. The rate of interest payable on the public provident fund scheme is decided and paid by the government of India.
- An individual can annually invest a minimum of Rs. 500 and a maximum of Rs. 1.5 Lakh in a provident fund scheme.
- Any individual can avail loans against PPF investment amount. However, a loan is granted if it is taken at the beginning of 3rd year till the end of the 6th year from the date of activation of the account.
Note: Only 25% or less of the total amount available in the account can be claimed for the loan.
2. Fixed Deposits
Being one of the most popular investment options available in India, fixed deposits offer greater returns on the principal amount when compared to the returns generated from a regular savings account. An investor saves a lump-sum amount and deposits it in a bank. A fixed deposit account offers a fixed interest rate on the principal investment. At the time of maturity, the investor gets the principal amount as well as the interest earned over the duration of the fixed deposit.
- Ranging from 7 days to 10 years, investors can opt for maturity periods as per their preference and needs.
- You can choose from cumulative or non-cumulative FDs. In a cumulative fixed deposit, interest is compounded every year and paid at the time of maturity. In a non-cumulative FD, interest is paid out monthly, quarterly, half-yearly, or annually (as per the investor's choice).
- There is no fixed rate of interest in FD investments, and it solely depends on the banks offering the investment option. Each bank provides different interest rates on deposits.
3. SIP (Systematic Investment Plans)
Systematic Investment Plan (commonly known as SIP's) is a method of investing in mutual funds, where an investor chooses a mutual fund scheme and invests a fixed amount at fixed intervals. Once you apply for a SIP Plan, the amount automatically gets deducted from your bank account and is invested in the mutual funds.
- Investing in SIP is one of the most convenient investment tools. Submit an application form to initiate an auto-debit or submit post-dated cheques to start the SIP.
- With a minimum amount of Rs. 500, one can start investing in a mutual fund scheme with SIP.
4. Life Insurance
When planning for personal finances, life insurance plays an important role in a salaried person's life. It acts as a safety net, which provides financial protection to your family in your absence.
- Having life insurance ensures that your family doesn't have to deal with financial liabilities in case of your unfortunate demise.
- Once the policy tenure is completed, the money invested in the policy will fetch good returns.
Some of the popular life insurance plans that you can invest in are:
- Aegon Life iTerm Plan
- Bajaj Allianz Life Smart Protect Goal
- SBI Life e-shield
- ICICI Prudential iProtect Smart
- HDFC Life 3D Plus Plan
5. Investment in Gold
Gold is one of the most preferred investment options in India. Apart from the profitable return, individuals invest in gold for occasions like marriage, anniversary, etc. Gold investments can be done in different ways such as physical gold, Gold ETFs, Sovereign Gold Bonds & Gold Funds.
Let’s learn more about them:
- Gold ETFs (Exchanged Traded Funds): Gold Exchange Traded Funds are open-ended mutual fund schemes that can be bought and sold only in the stock exchanges. Investing in Gold ETF's saves the trouble of keeping physical gold.
- Sovereign gold bonds: Issued by the Reserve Bank of India, it is one of the safest ways of buying digital gold. With a maximum investment of 4 kgs, the tenure for these bonds lasts for eight years with an exit option from the fifth year onwards.
- Gold Funds: Gold Funds invest in various forms of gold, be it in a physical form or stocks of gold mining companies. Gold funds, which invest in physical gold offer investors the convenience of buying pure gold at a low cost without any possibility of theft. Moreover, you can also sell these units anytime at market-linked prices.
Some of the top gold funds are given below:
- Axis Gold Fund
- DSP World Gold Fund
- SBI Gold Fund
- HDFC Gold Fund
- Kotak Gold Fund
While selecting your ideal investment option, review your needs and consider the amount you are willing to invest to get adequate returns.