First-time investors should consider these factors. Identify your investment plan goals: You can define your financial goals according to the objective, budget, and tenure.
It is possible to build an investment plan in India in various ways. However, a successful investment decision depends largely on the financial goals you have in mind and the level of risk you can take, and you should have the best fixed deposit rates in India. The following are some investment options you can make in India for Rs 2–3 lakh:
- This is the traditional investing method, where a fixed return is guaranteed regardless of economic conditions.
- People who have no appetite for risk and need money in the short term (within one to two years) can consider FDs.
- There is a range of 5%-7% interest on FDs (variable according to the bank).
- Taxes are imposed on the best fixed deposit rates in India. You will have to pay a 30% tax on the interest you earn if you fall in the 30% tax bracket. For example, an FD at 6% will earn you Rs 12,000 in interest if you invest 2 lakh for a year. In this case, you would need to pay Rs 3.6k as tax if you fall in the 30% tax bracket. Thus, you would receive an effective return of Rs 8,400 after tax.
- Exit loads apply to premature withdrawals.
National Pension Scheme
- The Government of India is undertaking an initiative to help private workers and business owners build pension funds.
- You can choose among the various NPS categories depending on your risk appetite. For example, it is possible to allocate 25% in debt and 75% in equity, or 50:50 in equity and debt, or 25% in equity and 75% in debt, for example.
- Before 60 years of age, you cannot withdraw money. It would help if you only consider this option when building a retirement fund.
- Under section 80D, you can also reduce additional income tax up to Rs. 50,000 with NPS. There is an additional tax reduction of 1.5 lakh under 80C over and above this.
- In India, this is another very popular investment category. The high liquidity of gold is one of its major advantages. It is easy to sell gold in an emergency.
- Gold has averaged an 8.5% return over the last 30 years. Returns like this are decent.
- Consider investing in gold through digital channels like gold mutual funds, gold ETFs, digital gold, or sovereign gold bonds. By doing this, you would be able to avoid the high making charges on gold.
Public Provident Fund
- You can invest Rs 1.5 lakh annually in this scheme run by the Government of India.
- A 7.1% interest rate is currently being paid on PPFs.
- In addition to enjoying EEE status, PPF offers many other advantages. In other words, if you invest your money in PPF, you can claim a tax deduction of up to 1.50 lakh under section 80C. Moreover, you are also tax-free on your best fixed deposit rates in India from PPF. Lastly, you will not be taxed on your final investment amount.
- Only the lock-in period of 15 years is a disadvantage. Therefore, you cannot withdraw your money until 15 years have passed. However, after 7 years, you can make partial withdrawals. Therefore, it is useful if you plan to invest your money in a long-term investment plan.
- This is also a popular category in India due to the dual benefits of life insurance and investment.
- Mixing life insurance and investment comes with several disadvantages, including low returns (even lower than FDs), poor liquidity (you cannot withdraw money at any time), poor transparency, and high commissions.
- It is not a good idea to mix insurance and investments. You must, however, take out a family medical plan and a term plan.
- In addition to generating wealth, it requires a lot of knowledge and continuous monitoring.
- As well as patience, discipline, and the ability to control greed and fear require some qualities as well. This is the most rewarding option but also the most volatile.
- Therefore, not everyone will enjoy it. Additionally, investors should know how to avoid all stock market traps.
- Paytm Money, Upstox, Zerodha, etc., are some of the companies you have available.
- Cryptocurrencies are digital currencies. There are no material coins or bills – everything is online. With cryptocurrency, you can transfer money online without going through a mediator, such as a bank.
- Cryptocurrencies like Bitcoin and Ether are well-known, but new ones are constantly being created.
- Despite generating huge returns in the past, this category is extremely volatile. Of course, it is possible to invest in cryptocurrency, but only a small portion of your investment should be in cryptocurrency.