With a control free economy, supported by expert banking facilities, Indian capital market offers a plethora of investment options both for residents and NRIs. As per the investment plan an investor should thoughtfully select the best option available in the capital market that meets his requirements.
Top Investment Options
While some plans accrue short term profits some are long term deposits. The first step towards investing in Indian market is to evaluate individual requirements for cash, competence to undertake involved risks and the amount of returns that the investor is expecting. Below are Top 10 Investment Options in India which assure safe and satisfactory returns.
(Last Updated on 12/15/2011)
- Investments in Bank Fixed Deposits (FD)
Fixed Deposit or FD is accrues 9.25% of annual returns for non-senior citizen, depending on the bank's tenure and guidelines, which makes it's widely sought after and safe investment alternative. The minimum tenure of FD is 15 days and maximum tenure is 5 years and above. Senior citizens are entitled for exclusive rate of interest on Fixed Deposits, current rate of return is average 10% annual.
- Investments in Insurance policies
Insurance features among the best investment alternative as it offers services to indemnify your life, assets and money besides providing satisfactory and risk free profits. Indian Insurance Market offers various investment options with reasonably priced premium. Some of the popular Insurance policies in India are Home Insurance policies, Life Insurance policies, Health Insurance policies and Car Insurance policies.
Some top Insurance firm in India under whom you can buy insurance scheme are LIC, SBI Life, ICICI Prudential, Bajaj Allianz, Birla Sunlife, HDFC Standard Life, Reliance Life, Max NewYork Life, Metlife, Tata AIG, Kotak Mahindra Life, ING Life Insurance, etc.
- Investments in National Saving Certificate (NSC)
National Saving Certificate (NSC) is subsidized and supported by government of India as is a secure investment technique with a lock in tenure of 6 years. There is no utmost limit in this investment option while the highest amount is estimated as ` 100. The investor is entitled for the calculated interest of 8% which is forfeited two times in a year. National Saving Certificate falls under Section 80C of IT Act and the profit accrued by the investor stands valid for tax deduction up to ` 1, 00,000.
- Investments in Public Provident Fund (PPF)
Like NSC, Public Provident Fund (PPF) is also supported by the Indian government. An investment of minimum ` 500 and maximum INR. 100,000 is required to be deposited in a fiscal year. The prospective investor can create it PPF account in a GPO or head post office or in any sub-divisions of the nationalized bank.
PPF also falls under Section 80C of IT Act so investors could gain income tax deduction of up to ` 1, 00,000. The rate of interest of PPF is evaluated yearly with a lock in tenure of maximum 15 years. The basic rate of interest in PPF is 8%.
- Investments in Stock Market
Indian Stock market is very fluctuating. A smart portfolio positioned for long-term growth includes strong stocks from different industries. Before investing in stock market one should be prepared to assume risk equivalent to sum invested in the market. Investing in share market yields higher profits. Influenced by unanticipated turn of market events, stock market to some extent cannot be considered as the safest investment options. However, to accrue higher gains, an investor must update himself on the recent stock market news and events.
- Investments in Mutual Funds
Mutual Fund firms accumulate cash from willing investors and invest it in share market. Like stock market, mutual fund investment are also entitled for various market risks but with a fair share of profits. One should select mutual fund schemes based on all or some of the following criteria:
Long term and Short Term Performance
Consistency in Returns
Performance during bullish and bearish phases
Fund Managers performance with the fund's operations
A simple way to select a mutual fund scheme to invest in is to select a 5 star or 4 star rated fund from one of the following rating agencies:
Value Research Online
- Investments in Gold Deposit Scheme
Controlled by SBI, Gold Deposit Scheme was instigated in the year 1999. Investments in this scheme are open for trusts, firms and HUFs with no specific upper limit. The investor can deposit invest minimum of 200 gm in exchange for gold bonds holding a tariff free rate of interest of 3% - 4% on the basis of the period of the bond varying with a lock in period of 3 to 7 years.
Moreover, Gold bonds are not entitled of capital gains tax and wealth tariff. The sum insured can be accrued back in cash or gold, as per the investor's preference.
- Investments in Real Estate
Indian real estate industry has huge prospects in sectors like commercial, housing, hospitality, retail, manufacturing, healthcare etc. Calculated realty demand for IT/ITES industry in 2010 is estimated at 150mn sq.ft. around the chief Indian cities. Termed as the "money making industry", realty sector of India promises annual profits of 30% to 100% through real estate investments.
- Investments in Equity
Private equity is a type of asset consisting of equity securities in private companies that are not publicly traded on stock exchange.
A private equity investment will generally be made by a private equity firm, a venture capital firm or an angel investor.
Private Equity is expanding at a fast pace. India acquired US $13.5 billion in 2008 under equity shares and featured among the top 7 nations in the world. In 2010, the total equity investment is predicted to increase upto USD 20 billion. Indian equities promise satisfactory returns and have more than 365 equity investments firms functioning under it.
As ranked by the PEI 300, the 10 largest private equity firms in the world are:
2.Goldman Sachs Principal Investment Area
3.The Carlyle Group
4.Kohlberg Kravis Roberts
5.The Blackstone Group
6.Apollo Global Management
8.CVC Capital Partners
9.First Reserve Corporation
10.Hellman & Friedman
- Investments in Non Resident Ordinary (NRO) funds
Investing in domestic (NRO) is one of the best investment alternatives for NRIs who wish to deposit their income accrued abroad and maintain it in Indian rupees. The deposited amount along with the interest is completely repatriable. Investment can be done in Indian financial institutions including the Non Banking Finance Companies which are listed with RBI. The interest returns accrued on in this account is entitled under IT Act and is subject to 30% tax reduction at source including the appropriate surcharge and education cess.
The NRI investor can repatriate upto USD 1 million every year, for genuine reasons, by forfeiting valid tariffs.