From when you start earning money, you should focus on building an investment plan so as to secure your present, as well as future financial needs. Long-term investment options are an important component of such an investment plan. You should include options that let you save for your needs such as your child’s education, purchase or renovation of a house, and expensive medical treatments. In this regard, there are a host of options you can choose from, including mutual funds, FDs, gold, etc.
Investing in the right option provides security, will yield high returns, and give you financial freedom to improve your quality of life. Especially if you are an early investor, you should invest in an FD for long-term benefits. On the other hand, you can use funds from your matured PF after retirement to invest in FDs as they are considered safe investment options for retirement. Fixed Deposit is one of the best FDs in the market, as it offers 8.40% as interest that goes up to 8.75% for senior citizens.
But, before investing your hard-earned money in any instrument, take a closer look at 5 long-term investment options that do it justice.
Public Provident Fund (PPF) :- It is one of the most common and oldest investment options in India and since the government backs it, it is a safe long-term investment that offers interest of up to 7.6%. It has a tenor of 15 years, and it offers tax benefits under Section 80C of the Income Tax Act as well. You can open a PPF account in any bank or post office as per your convenience.
Mutual funds :- Mutual funds have gained popularity among investors in the recent past, and you can choose from 3 types of mutual funds: debt, equity and hybrid. Each type of mutual fund comes with its own pros and cons and you can choose the one that suits the goals in your investment plan the best.
You can either invest amount in a lump sum or in instalments, through a systematic investment plan, based on your affordability. When you choose the latter route, you stand to benefit an average of 12–15% as interest. Also, the longer you stay invested, the better your returns are. This is because of rupee cost averaging.
Fixed deposit :- Fixed deposits are a popular option as there is no risk involved and you earn higher returns as compared to other instruments, especially if you choose a cumulative fixed deposit. Once you deposit the money, interest will be compounded until the time of maturity. While it doesn’t have a fixed tenor, it is easy to see how you will benefit more from compounding if you choose a long tenor. Also, when you pick an FD from an NBFC, your gains will be higher. This is because NBFC FDs offer a higher interest rate as compared to bank FDs.
Real estate :- Investments in real estate are witnessing a boom, so choosing this option can be beneficial too. Even if you have your own house, investing in real estate is a good decision as it will appreciate over time, add to your assets, and offer substantial returns via rent as well. However, since this investment involves a substantial sum of money, be very cautious about the property that you invest in. Choose the right builder and locality, as this is key to the return on investment that you will be able to generate.
Tax-free bonds :- These bonds are issued by various government organisations to raise money for public infrastructure. They offer an interest rate of around 6.5–7%, depending on the bond that you choose, and are tax-free too. The government secures these bonds, making them a reliable option to park your money in. Typically, tax-free bonds carry a tenor of 10, 15 or 20 years.
With these tips in mind, ensure that you create a diverse investment portfolio that comprises a good mix of long-term and short-term investments as well as high- and low-risk ones.