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Best Investment Options in India

Best Investment Options in India
December 27, 2023

Best investment plans play an essential to make an informed decision when investing your hard-earned money in order to reach your short-term and long-term objectives. You can fulfil numerous financial goals with different types of investments, which can be confusing. In this article, we will help you to identify the best investment options in India for your needs and to gain financial security.

Top Investment Options in India

The following are some of the best investment options in India that you may want to consider adding to your financial portfolio:

Investment Options

Period of Investment (Minimum)

Who Can Invest?


Returns Offered

Investment Amount Limit

Tax Benefits

Unit Linked Insurance Plan (ULIP)

5 years

For investors who want both life insurance and wealth creation


10-24% p.a. (depends on your choice of plan)

Rs. 1000—No Limit

Available u/ IT Act, 1961, Section 80 C and Section 10

Capital Guarantee Plans

5 years

Suitable for investors who prefer stability of returns over high risk tolerance


5 – 18% p.a. (depends on your choice of plan)

Rs. 1000—No Limit

Available u/ IT Act, 1961, Section 80 C and Section 10

Pension Plans

5 years

Suitable for long-term investors who are risk-averse


12 – 22% p.a. (depends on your choice of plan)

Rs. 1000—No Limit

Available u/ IT Act, 1961, Section 80 C and Section 10

Child Plans

5 years

Those who wish to save for their children's future


14 – 22% p.a. (depends on your choice of plan)

Rs. 1000—No Limit

Available u/ IT Act, 1961, Section 80 C and Section 10

Senior Citizen Savings Scheme (SCSS)

5 years (extendable by 3 years)

Senior Citizens (over 60 years old) OR Superannuated/Voluntary Retired/Retired Defence Personnel (55-60 years old)


8.2% p.a.

Rs. 1000-- Rs. 30 lakh**

Available u/ Section 80 C of the IT Act, 1961

National Pension Scheme (NPS)

Up to the age of 60-70 (extendable by 5 years)

Residents/NRIs/OCIs/ PIOs between 18-70 years of age*


Market-linked (9-15% p.a.)

Tier I: Rs. 500 – No Limit (Rs. 1000 per year)

Tier II: Rs. 250 – No Limit

IT Act, 1961, Section 80 CCD(1), (2), and (1)B.

Post Office Monthly Income Scheme (POMIS)

5 years

Indian Citizen


7.4% p.a.

Single Life: Rs. 1000-- Rs. 9 lakh Joint Life: Rs. 1000—Rs. 15 lakh***


Public Provident Fund (PPF)

15-year lock-in period (extendable by 5 years)

Indian Citizens with long-term investment goals


7.1% p.a.

Rs. 500-- Rs 1.5 lakh yearly

Available u/ IT Act, 1961, Section 80 C and Section 10

RBI Saving Bonds

6 years

Citizens of India: Individuals, HUFs, Charitable Institutions, and Universities. Not available to NRIs


8.00% p.a.

Rs. 1000—No Limit

Exempt from Wealth Tax under Wealth Tax, 1957, income earned is taxable under IT Act, 1961

Fixed Deposits

7 days to 10 years

Investors who do not want to take the risk of market fluctuations


4-9% p.a.

Rs. 500-- Rs. 5 Crore

Deductions available u/ Section 80C only for Tax-Saver FDs

Initial Public Offerings (IPO)

As per your investment Profile

The investor should have a Demat-cum-trading account


8-15% (depending on performance of IPO)

Decided by the investor

Taxable for LTCG and STCG gains

Stock Market Trading

As per your investment Profile

An investor who knows how to balance risk and return

Very high

7- 20% (depending on performance of the assets)

Decided by the investor

Taxable for LTCG and STCG gains

Mutual Funds

For ELSS Scheme: Minimum 3 years

Medium-to-high-risk investors


8-20% p.a.

Rs. 500—No Limit

ELSS scheme is exempt from tax under Section 80C of the Income Tax Act.


As per your investment Profile




Decided by the investor

Taxable for LTCG and STCG gains

Real Estate

As per your investment Profile



6-12% p.a.

Decided by the investor

Taxable for LTCG and STCG gains

Real Estate Investment Trusts (REITs)

As per your investment Profile



10-15% p.a.

For REITs: Rs. 10,000

Taxable as per rules specified for REITs

Crypto currencies



An investor who knows how to balance risk and return

High risk & High returns


Profits earned are taxable at a rate of 30% p.a.

*Government of India (GoI) increased entry age for NPS Scheme to 70 years in 2021. **The Government of India increased the SCSS investment limit to Rs. 30 lakh from Rs. 15 lakh in Budget 2023. ***POMIS Scheme investment limits were raised in Union Budget 2023 from Rs. 4.5 lakh to Rs. 9 lakh in Single Life Accounts and from Rs. 9 lakh to Rs. 15 lakh in Joint Life Accounts.

Features of best investment options

Below are the key features and benefits of the best investment options with high returns in India:

1. Unit Linked Insurance Plan (ULIP):

A ULIP stands for a unit-linked insurance plan. Investing in these offers you the benefits of both life insurance and safe investment options.

The following are the features of a Unit Linked Insurance Plan (ULIP):

  • Premium Distribution: A portion of the premium is allocated to life insurance coverage and the remainder is invested in market-linked investment funds of your choice.
  • Choose from a variety of investment funds, including:

- Equity funds

- Index funds

- Hybrid funds

- Debt funds

New Fund Offerings (NFOs)

  • The lock-in period is a minimum of 5 years for long-term investment options.
  • Minimum investment amount is Rs. 1000 per month or Rs. 1.2 lakh per year.
  • With free fund switching, you can change funds without additional costs.
  • There is an option to withdraw funds after the 5-year lock-in period in ULIP plans.
  • Your premium can be paid in a lump sum or regularly as follows:

- Monthly

- Quarterly

- Half-yearly

- Annually

  • The Income Tax Act, 1961 provides tax benefits for ULIPs up to Rs. 1.5 lakh under section 80C. Also, policy payouts are tax-free under Section 10(10D).

2. Capital Guarantee Plans:

In a Capital Guarantee Plan, the investor gets a guarantee that his or her initial investment will be returned to him or her, regardless of the market conditions.

The following are the features ofa Capital Guarantee Plan:

  • Premiums are invested in low-risk funds that guarantee fixed returns at the end of the policy term.
  • For higher potential returns, the remaining premium is invested in market-linked funds.
  • Provides capital protection as well as potential market returns.
  • A small portion of your premium provides life insurance for your family's financial security.
  • The choice of market-linked funds depends on your risk appetite and investment objectives.
  • Individuals who are looking for a balance between safety and potential returns should consider this product.
  • The Income Tax Act, 1961 allows tax benefits for capital guarantee plans (Section 80C and Section 10(10D)).

3. Pension Plans:

Pension plans are an insurance-based investment approach that provides both retirement savings and life insurance coverage. They are an ideal way to secure a steady income after retirement when you are no longer employed.

The following are the features ofa Pension Plan:

  • Provides a guaranteed income following retirement, either immediately or deferred.
  • Provides you with the means to maintain your standard of living after retirement.
  • This plan allows regular contributions for a lump sum or annuity payout.
  • An investment period of 5-30 years is recommended.
  • There is a flexible vesting age between 55 and 65 years.
  • Income Tax Act of 1961, Section 80C permits deductions up to Rs. 1.5 lakh.
  • Under Income Tax Act, 1961, Section 10(10D) provides tax benefits.

4. Child Plans:

Child plans are a great way to ensure your child's financial security by combining life insurance and investment. When the plan matures, your child will receive a lump sum payout that can be used for financing their education, marriage, or business venture. In the event of your premature death, your child will also receive a death benefit.

The following are the features of a Child Plan:

  • Assists in building a corpus for long-term financial goals like your child's education or marriage, and provides financial security for your family.
  • Depending on your financial planning, you can choose the premium amount, fund options, and policy term.
  • A 5-year lock-in period promotes disciplined savings with these long-term best investment options.
  • For potential higher returns, the investment portion of your premium is invested in equity, debt, hybrid, or index funds.
  • In cases of financial emergency, child plans allow partial withdrawals.
  • Tax deductions are available under Section 80C and maturity proceeds are tax-free under Section 10(10D) of the Income Tax Act, 1961.

5. Senior Citizens’ Savings Scheme (SCSS):

The Senior Citizens’ Saving Scheme is a secure, tax-advantaged investment option for Indian citizens aged 60 or over. It is an excellent way for seniors to save for their future, providing them with a steady source of income.

The following are the features of a Senior Citizens’ Savings Scheme:

  • As a government-backed program, SCSS offers seniors a safe investment option
  • Rs. 1,000 is the minimum investment amount, and Rs. 30 lakh is the maximum investment amount.
  • It offers a high interest rate of 8.2% p.a. from November 2023 onwards.
  • There is a five-year maturity period, which can be extended by three years.
  • Premature withdrawal is permitted with a penalty fee.
  • Post offices and banks across the country offer the SCSS scheme.
  • A deduction of up to Rs. 1.5 lakh can be claimed under the Income Tax Act, 1961, Section 80C.

6. National Pension Scheme (NPS):

NPS is a government-sponsored investment plan that offers assured pension benefits. It invests your money in various assets, including bonds, government securities, equities, and other instruments linked to the market, as per your preference.

The following are the features of the National Pension Scheme (NPS):

  • An NPS is a voluntary retirement savings plan that provides financial independence after retirement.
  • There are two types of NPS accounts:

- The Tier I account is a mandatory long-term savings account that cannot be withdrawn prematurely.

- The Tier II account an optional account with more withdrawal flexibility

  • The National Pension Scheme (NPS) offers two types of funds:

- The Auto Choice Funds allocate assets according to your age automatically.

- The Active Choice Funds customizes asset allocation across equity, debt, and government bonds.

  • Provides a variety of investment options, such as equity, corporate bonds, government securities, and alternative investments.
  • Under Section 80CCD(1) and Section 80CCD(1B) of the Income Tax Act, 1961, you are eligible to claim tax deductions on your contributions.

7. Post Office Monthly Income Scheme (POMIS):

The Post Office Monthly Income Scheme, sponsored by the government, is one of the best investment options in India that guarantees a consistent monthly income. It is a popular choice among retirees and other investors looking for a reliable income source.

The following are the features of a Post Office Monthly Income Scheme (PO-MIS):

  • POMIS is the Post Office's fixed-income investment option.
  • Suitable for minors (>10 years of age), individuals, and joint accounts with two or three people
  • Provides for a fixed tenure of 5 years that can be extended up to 15 years at a time
  • Monthly income calculated at 7.4% per annum interest
  • The minimum investment is Rs. 1,000 and the maximum is Rs. 15 lakh for an individual account and Rs. 30 lakh for a joint account.
  • You can claim up to Rs. 1.5 lakh of tax exemption under Section 80C even though interest is taxable.

8. Public Provident Fund (PPF):

In India, the Public Provident Fund (PPF) is the best long-term investment option. PPF provides guaranteed returns, which are declared by the Government of India every quarter.

The following are the features of Public Provident Fund (PPF):

  • A PPF is a government-sponsored investment scheme that offers secure and reliable returns.
  • PPF interest rates are currently 7.1% per annum.
  • A PPF account must be held for a minimum of 15 years, and it can be extended indefinitely in five-year blocks.
  • The minimum investment is Rs. 500 per year, and the maximum is Rs. 1.5 lakh per year.
  • Investments can be made in lump sums or in instalments.
  • From the 6th policy year, partial withdrawals are permitted
  • In addition to tax-free contributions and interest, withdrawals are also tax-efficient.

9. RBI Savings Bonds:

All Indian citizens, except Non-Resident Indians (NRIs), can invest in RBI bonds which offer high returns with a safe investment option. The profits gained are transferred to the investor's Bond Ledger Account (BLA) in Demat form.

The following are the features of RBI taxable bonds:

  • Its bonds are issued at a face value of Rs. 1000 and in multiples thereof.
  • Investing in these options is not transferable, tradable, or refundable.
  • On 1 January and 1 July, interest is paid at an annual rate of 8%.
  • Senior citizens age 75 and older may withdraw prematurely under certain circumstances.
  • Under the Income Tax Act, 1961, interest earned is taxable.
  • Under the Wealth Tax Act, 1957, bonds are exempt from wealth tax.

10. Bank Fixed Deposits (FDs):

Bank Fixed Deposits are a reliable and secure form of investment that guarantees a fixed rate of return for a given period. FDs offer some of the highest rates of return in India.

The following are the features of Bank Fixed Deposits (FDs):

  • FDs offered by banks offer stability due to their fixed interest rates and predetermined maturities.
  • Tenure options for FDs range from seven to ten years.
  • If needed, loans and overdrafts are available against FDs.
  • Interest can be paid at maturity or regular intervals (annually, half-yearly, quarterly, or monthly).
  • Special rates of 0.25-0.75% are available to senior citizens.
  • The DICGC insures FDs up to Rs. 5 lakh per depositor per bank.
  • Tax-saving FDs can be deducted up to Rs. 1.5 lakh under Section 80C.

11. Initial Public Offerings (IPO):

An Initial Public Offering (IPO) is when a private company sells shares to the public for the first time, thus transitioning from private to public ownership. Through IPOs, firms gain access to capital that can be used for business development, enlargement, or debt reduction.

The following are the features of an Initial Public Offering (IPO):

  • Companies can raise capital by selling shares to the public through IPOs.
  • You can use the raised capital to grow your business, pay back your debt, or acquire another company.
  • A company's shares are listed on a stock exchange for public trading when it goes public.
  • An IPO can offer a high return, especially for successful companies.
  • Stock exchanges provide liquidity through the trading of IPO shares.
  • IPO investments carry risk and volatility since post-public listing success is uncertain
  • A company's IPO allows founders, angel investors, and venture capitalists to invest early in the company.

12. Stock Market Trading:

Investing in the stock market involves buying and selling shares in publicly traded companies or commodities. These companies are listed on secondary markets, such as the NSE, BSE, and NASDAQ. Stock market trading is done through these exchanges and the prices of the shares are determined by the forces of supply and demand.

The following are the features of Stock Market Trading:

  • You own a small unit of a company when you buy a share.
  • The stock market is highly liquid, making it easy to buy and sell stocks.
  • Investments in the stock market are volatile, influenced by economic news, corporate earnings, and investor sentiment.
  • It is possible to make significant profits by trading in the stock market if the stock price rises.
  • To trade on a stock exchange, you need a Demat account.
  • There is no guarantee that stock prices will rise when you trade stocks on the stock market.

13.  Mutual Funds:

Mutual Funds offer investors a lucrative opportunity to invest in a diversified portfolio of market-linked instruments like equity, debt, and money market funds. These funds are managed by experienced fund managers who make decisions on your behalf. Such investments are beneficial as they have the potential to provide high returns.

The following are the features of Mutual Funds:

  • Investments in mutual funds are diversified baskets of securities that can provide high returns over time.
  • Investment options include equity, debt, and hybrid funds in India
  • Because mutual funds pool funds, they are relatively affordable.
  • As you can redeem your fund units at any time, these are highly liquid investment options.
  • Each mutual fund portfolio is managed by a professional fund manager.
  • Under Section 80C of the Income Tax Act, 1961, equity-linked savings schemes (ELSS) mutual funds offer tax benefits.

14.  Gold:

India has a deep-rooted cultural connection to gold, viewing it as a symbol of opulence, success, and fortune. This cultural significance makes gold and gold-related assets a desirable investment for many Indian citizens.

The following are the features of Gold:

  • In India, you can invest in gold in the following ways:

- Gold funds

- Physical gold

- Gold bonds

- Gold ETFs

  • A gold investment can easily be pledged for instant loans, making it a great option for instant borrowing.
  • Markets and stock exchanges make it easy to buy and sell.
  • Depending on international factors and market sentiment, gold prices can fluctuate.
  • Since its price rises when currency values fall, it is a hedge against inflation.  
  • Long-term and short-term capital gains taxes apply to gold.

15. Real Estate Investment Trusts (REITs):

Real Estate Investment Trusts, or REITs, are an attractive investment opportunity in India that offer potential for high returns. This allows investors to gain indirect exposure to a range of real estate assets. REITs may be easily bought and sold on stock exchanges, making them a highly liquid asset.

The following are the features of Real Estate Investment Trusts (REITs):

  • Real estate investment trusts allow both small and large investors to invest in real estate without having to worry about property management
  • The properties are managed by professional teams, which reduces the need for hands-on management
  • The minimum investment in REITs is Rs. 10,000.
  • The REIT is required to distribute at least 90% of its taxable income to shareholders as dividends
  • REITs are subject to strict regulations requiring regular disclosure of financial information
  • Since it is a market-linked product, there are no tax exemption benefits

16. Real Estate:

Real estate encompasses holdings such as land, residential dwellings, and commercial structures. Over time, this type of investment can generally gain value, offering the potential for a lucrative return on investment in India.

The following are the features of Real Estate:

  • India's real estate prices have historically appreciated, making them a great long-term investment.
  • Renting it out can generate passive income
  • It is tangible property that can be used for personal or commercial purposes.
  • The optimal investment horizon is long-term.
  • Unlike gold mutual funds, these are less liquid investment options
  • In the long run, it is considered a safe asset with high returns in 2023
  • An investment of high value
  • Under Income Tax Act, 1961, the Indian government offers real estate investors the following tax benefits:

- Deduction of home loan interest under Section 24(b)

- Deductions for principal repayment of a mortgage under Section 80C

- Section 54: Capital gains tax exemptions for residential property sales

17. Cryptocurrencies:

Cryptocurrency is a digital or virtual form of currency that is stored utilizing a ledger or blockchain technology. It is actively traded across the world now. Cryptocurrencies have become one of the most popular investment options in the present day since they are decentralized, meaning the transaction cannot be managed by any government, financial institution, or external entity. Even though crypto-trading is not illegal, the regulatory environment is still vague in India.

The following are the features of Cryptocurrency investments:

  • As of 1 April 2022, cryptocurrencies and Virtual Digital Assets (VDAs) will be taxed at 30% per year.
  • A cryptocurrency is an investment option that is available 24/7, worldwide.
  • As all transactions are recorded on a blockchain, these assets are transparent.
  • A cryptocurrency's price can fluctuate wildly because it is a volatile asset.
  • A cryptocurrency holding's safety is crucial since they are vulnerable to theft and hacking.
  • There is no guarantee of returns when investing in cryptocurrencies.
  • As the cryptocurrency market evolves, new coins and tokens enter the market, requiring research and due diligence.

18.  Corporate Bonds:

Investing in corporate bonds in India offers people the chance to loan money to businesses in return for periodic interest payments. At the end of the bond's maturity, the original amount invested is returned.

The following are the features of Corporate Bonds:

  • Bonds issued by corporations provide a fixed income through interest payments.
  • The issuer must return the principal amount on maturity of these bonds.
  • It typically takes 1-10 years to invest in these options.
  • There are a variety of maturities and credit ratings available for corporate bonds, so they offer flexibility.
  • There is a potential for higher returns with these bonds than with other fixed-income investments, such as government bonds.
  • Bonds issued by corporations are subject to credit risk, with a chance of default by the issuer.

19. Government Bonds:

Government bonds, or sovereign bonds, are debt instruments issued by the Indian government to fund public expenditure and regulate economic deficits. They are generally seen as reliable and optimum investment choices with substantial returns in India due to their offering of dependability along with regular income.

The following are the features of Government Bonds:

  • You can purchase government bonds directly or through authorized intermediaries, depending on the tenure of the bond
  • In return for interest payments, you receive a fixed income
  • Secondary market trading of government bonds provides liquidity
  • Since the government is unlikely to default on its debt obligations, these are considered low-risk investments
  • Bonds from the Indian government are available in a variety of maturities and features
  • Compared to stocks and corporate bonds, they are considered low-risk investments

20. Peer-to-Peer Lending:

Peer-to-peer lending is a form of debt financing that connects individual lenders and borrowers through online platforms. P2P lending platforms provide a space for investors to review borrower profiles, evaluate creditworthiness, and choose loans according to their investment goals.

The following are the features of Peer-to-Peer Lending:

  • By bypassing traditional intermediaries, peer-to-peer lending allows individuals and small businesses to borrow directly from one another.
  • Compared to savings accounts or fixed deposits, these are the best investments.
  • To ensure transparency, fair practices, and investor protection, P2P lending in India is regulated by the Reserve Bank of India (RBI).
  • For convenient investing, P2P lending platforms are easily accessible online.
  • Borrowers can be selected based on their risk appetite and lending preferences.
  • By supporting small businesses or individuals seeking loans, you are contributing to financial inclusion.

To sum up, it is important to educate yourself on various investment options available before deciding to invest. It is also important to distinguish between your savings and investments, as they both serve different purposes. Ultimately, seeking the advice of a professional and understanding your risk tolerance and goals can help you make an informed decision.

FAQs on Investment Options

Q. What is the best option to invest now?

Ans. To ensure you have a strong and diverse portfolio, it is important to first map out your financial goals and identify both long-term and short-term investment options that are suited to your individual profile.

Q. Which scheme is best for investment?

Ans. A life insurance plan, a PPF, a fixed deposit, a ULIP, and an ELSS are some of the best investment options in India that will provide tax benefits as well.

Q. What's a good investment option?

Ans. There is no single "one size fits all" investment option for everyone. It varies based on one's financial situation, investment objectives and risk tolerance. There are multiple short and long-term investment options available in India that can meet the needs of all kinds of investors. Short-term investments can be used to fund short-term goals, while long-term investments are best for long-term goals like retirement.

Q. What types of investment options in India are suitable for an average person?

Ans. Above, we have outlined the different investment options available in India. It is essential to have a goal in mind when deciding on where to invest. A mix of long-term and short-term investments can be a beneficial way to diversify your portfolio.

Q. Why should I check my risk tolerance before investing money?

Ans. Risk tolerance is about how much risk you are comfortable with taking. Understanding it is essential when selecting investment options, as it can help you avoid any potential financial burden resulting from your investment decisions.

Q. What do you mean by a diversified investment portfolio?

Ans. Diversifying your investments means allocating your funds into different asset classes. This helps minimize any losses that may occur if any of those assets decline in value. There are various investment options available, such as stocks, bonds, and mutual funds, which you can choose based on your objectives and risk tolerance.

Q. Is It Good to Choose a Long Term Investment Option?

Ans. Deciding on whether to invest in the long run or the short run depends on how much risk you are willing to take. Long-term investments promise reliable profits while decreasing risk. It is therefore important to understand your investment choices and set realistic expectations.

ARN - ED/12/23/7200

Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Author Profile Written By:
Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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