How to invest money in India

There are many options through which you can invest and increase your wealth. Though there is risk of losing your hard earned money in investments, but if done wisely, the potential to gain money is higher than if you never invest. Long-term investments are best way to earn good returns with minimum risk of losing your money.

The best way to find right investment option is to determine the tenure, return and risk you are ready to take. Here are some of important low-risk investment options:

1. Gold

Gold is one of the oldest and favourite investment options in our country. The return in gold has far surpassed of the equity market or real estate as seen for the last 10 years. The conventional way to invest in gold was to buy physical gold, in form of bars, coins, or jewellery. But with time, more evolved forms of investment emerged like gold deposit scheme, gold ETF, Gold mutual fund etc.

2. Direct Equity or Share purchase

Investment through Direct Equity or Share purchase is for those investors who know how to analyse a share stock before purchasing it. If you buy right stock at right time and keep the investment for a long time, for example, more than 15 years, it is somewhat sure that there will be higher return.

3. Initial Public Offerings

An initial public offering (IPO) is the very first sale of the stock of company offered to the public. It happens only once in every company. It can be highly profitable if launched by the good and reputed company, but there are some unique risks associated with them. It is a good option for long term investment with low risk.

4. Mutual Funds

Mutual funds are best for those who want to invest in equities and bond with a balance of risk and return. The best way to invest in a mutual fund is to do through systematic investment plan. The SIP plan will give a much better return compared to any other investment options in the market.

5. Public Provident Fund or PPF

Public Provident Fund is long-term investment plan and is considered safest amongst all other investment options available in the country. The best part of PPF is that profits earned are tax-free. It has a locking period of 15 years and you can earn compound interest from this account. At the end of locking period, you can also extend the time frame for next five years. The only drawback of PPF is that investors are allowed to withdraw investment only at the end of 6th year.

6. Unit Linked Insurance Plans

A Unit Linked Insurance Plans (ULIPs) invests in debt and equities markets. It is offered by insurance companies that gives investors both insurance and investment under a single integrated plan. ULIPs can be considered a more reliable wealth creation solution over the long term, keeping in mind the returns, protection and tax savings, all combined in one product.

7. Bonds

Bonds have low risk and the interest from Government of India bonds and infrastructure bonds are tax-free. There are many types of bonds, and the zero-coupon bond is ideal for those who can afford to let their money lie for a long time. The interest accumulates and is compounded over the tenure, and is paid at the end along with the principal, and thus is a good savings and reinvestment option.

8. Post Office Saving Schemes

Post Office Saving Schemes is a government supported saving scheme. It does not have any risk-related factor but the interest is quite low. The monthly income plan of Post Office Saving Schemes is suitable for retired people with regular income requirements.