Guide to Best Investment Options in India. Where and How to invest?

Personal Finance

Everyone who is a beginner struggles to find an investment option suitable for them. They want minimal risk with maximum profit, which is extremely difficult to find because the risk is directly proportional to the probability of profit/ loss when investing.

For example, Fixed deposits are safer than buying stocks, but offer lower returns.

What Makes an Investment Option Good For You? 

Before deciding where to invest your money, you must clear your goals and needs. This helps you to decide what factors you should consider while choosing the best investment options.

There are several factors to consider while choosing an investment option, out of which the most important are:

  • The ability to invest and withdraw funds at any time
  • Flexibility to invest any amount of money
  • Risk-to-profit ratio
  • The time of the investment 

Why do you need to make Investment plans?

Investment plans help you lay out a proper path and strategy to fulfil your future goals, needs, and emergency funds. 

You should invest your money in different investment options depending on your risk appetite. For example, if you’re young and can take big risks you should invest in stocks, mutual funds, or maybe crypto currency along with some portion in safe investments like bank Fixed Deposits. 

Following are some of the best investment options you can choose from:-

  • ELSS

ELSS funds or Equity Linked Saving Scheme are equity funds. ELSS funds invest majorly in equity or equity-related instruments. The best part of this investment option is you can get tax exemption of up to a limit of Rs. 1,50,000 on the invested amount.  

It has a lock-in period of 3 years, so the tax levied would be LTCG which will be around 10% depending on your income slab.

To invest in ELSS you can directly ask your bank if they offer such services. Or you can apply through various online investment service providers.

  • Bank Fixed Deposit

Fixed deposits or FDs are offered by various Banks and NBFCs to their customers. You can ask your bank for an FD, and they’ll tell you the procedure.

FD has a lock-in which is pre-decided as well as a fixed rate of return.

The lock-in period can be as long as ten years or as short as a month. 

You can choose whether the interest is paid periodically or at maturity. You have to pay a penalty if you want to withdraw money before maturity.

  • Public Provident Fund

PPF or Public provident fund is a long-term investment option. It pays you high interest but stable returns. 

In PPF, the money is invested every month and interest is compounded. 

Many big banks offer PPF accounts. You can check with your bank as well. There’s even an option to open a PPF account online these days.

  • National Pension Scheme

The National Pension System (NPS) is a retirement savings plan in which employees and employers can make regular contributions. Your savings are pooled into a pension fund and the money collected is then invested by professional fund managers in a diversified portfolio of government bonds, bills, corporate debt, and shares per PFRDA guidelines.

Subscribers have the option of purchasing life insurance from a PFRDA-approved life insurance company at the time of their normal exit from the scheme, as well as withdrawing a portion of their accumulated pension wealth as a lump sum if they so desire.

  • Senior Citizen Savings Scheme

Senior Citizens’ Saving Scheme (SCSS) is made to cater to senior citizens who are residents of India. It is a government-backed retirement benefits programme, in which lump-sum investment can be done either individually or jointly.

Senior citizens get regular income and tax benefits.

SCSS is a good investment option for senior citizens above 60 years. You can get this scheme through post offices or certified banks across India.

  • Sovereign Gold Bonds 

If you’re interested in investing in gold, you should check out SGBs.

They are government securities denominated in grams of gold. You have to pay the issue price to buy the SGBs.

The bonds will be redeemed in cash on maturity. The bond is issued by the Reserve Bank on behalf of the Government of India.

You are sure of the periodical interest and the market value of gold at the time of maturity. There is no hassle of storing gold, paying the making charges, or having purity issues like in the case of gold jewellery. 

You can invest in SGBs through your bank, online services, or brokers. 

  • Direct Equity

In direct equity investment, you pick stocks, make your strategies and invest directly into the companies. You receive shares of a company you’ve bought from the stock market in your Demat account. 

There can be both profit and loss in the stock market. But in the longer horizon on average, the return beats the inflation.

  • Mutual Fund

A mutual fund can consist of a portfolio of stocks, bonds, or other securities, depending on the type of mutual fund. The fund is managed by a fund manager, and the mutual fund houses charges for the services offered. The fund can be actively managed or passively managed which tracks some index.

Some different mutual fund types are Equity Funds, Money Market Funds, Debt Funds, etc.

Tax Implications on Investment Plans in India

Great, now that you’ve found a suitable investment plan, you should also consider the tax implications associated with investment options as they can affect the overall return.

For example, if the interest income in a financial year on your Fixed Deposit exceeds Rs. 40,000, deposits are applicable for TDS. The Mutual Fund, Debt fund, and stock profits are governed by different tax regulations.

The taxation is based on the period of investment. It can be short-term capital gains tax or long-term capital gains tax. The time frame is different for different investment options

Some tax-free investment options are NPS, PPF, pension, Life Insurance, SCSS, etc. 


You should invest in securities/ bonds/ schemes after going through all the details. You should set your future goals, and based on your age you can decide the amount of risk you’re willing to take in your investment options. You can consult with professionals like Piramal Finance to avail of their financial services.