Long term investments offer you several advantages. The first is that they tend to compound interest as in the case of bank fixed deposits. The second is that they are more tax efficient, as is the case with certain mutual fund investments. Long term investments are those that are held for more than three years. These kind of investments need commitment despite the fact that you might face financial obstacles.
Here are a few great long term investment options in India.
If you are looking at up to 5 year tenures, KTDFC FDs is the best and safe long term investment option.
The interest rate offered is 8 per cent with monthly compounding. Banks compound only every quarter, which means your yield improves tremendously with the KTDFC Deposit.
There is also the quarterly and monthly interest payment option as well.
The 5-year deposit gives a yield of 9.80 per cent, while senior citizens get a yield of as much as 10.17 per cent over 5 years.
The deposits are backed by the government of Kerala and are hence very safe. Go for these deposits if you are looking at safe high yields.
Invest in PPF and EPF
The Public Provident Fund is one of the most popular long term investments in India. The reasons for the same are several. One is that with interest rate of 7.6 per cent, it remains the best bet.
It is among the few investments that not only offer you tax benefits under Sec 80C of the Income Tax Act, but also the interest income is exempted from tax. The other advantage is that it helps to build a long term investment corpus for retirement. Not a bad bet at all from an interest and tax perspective. However, the only flaw is that there is a lock-in period, which could be a big hindrance.
Interestingly, EPF with a high rate of 8.55% for FY 2017-18 is another good bet but can be maintained only by the salaried workforce. The account comes with several other advantages such as allowed for deduction u/s 80C, nonetheless the interest earned on it is taxable in the hands of investor upon maturity of the account.
SBI Bluechip Fund
If you are willing to take a slight risk, SBI Bluechip Fund may not be a bad long term investment bet.
In the last 5 years the fund has generated a return of 18 per cent, while in the last 10 years the fund has generated a return of close to 11.61 per cent.
Being an equity oriented fund there is an element of risk in this investment, though investors who hold may tend to gain. The current net asset value of the fund is Rs 38.86 under the growth plan and Rs 22.108 under the dividend plan. Go for this plan if you have a long term investment objective in mind.
The scheme tracks the benchmark S&P BSE 100 Total Return Index.
Reliance Top 200 Fund Retail plan
This is another mutual fund scheme that we are recommending to investors. This is largely an equity oriented mutual fund scheme, which means the returns are expected to be volatile.
The Reliance Top 200 Fund Retail plan has generated a return of 18.07 per cent in the last 5 years, while the returns in the last 10 years has been 11.36 per cent.
The fund has holding in most bluechip stocks including names like ICICI Bank, State Bank of India, HDFC Bank and Axis Bank. The current net asset value of the fund is Rs 32.2139 under the growth plan and Rs 16.043 under the dividend plan.
The scheme benchmark is S&P BSE 200.
Invest in Real Estate
Investment in real estate is an ideal investment option for those who have huge cash as the returns from previous investment are encouraging. However, the real estate market lately has been giving very dismal returns and we do not expect the trend to change.
The de-monetization impact has played a part and superlative returns cannot be expected because there is plenty of supply at the moment, especially in cities like Bangalore and Hyderabad. Buy into real estate only if you are a long term investor.
It is worth noting that as per the Real Estate Property Index data from 2009-2017, the average return across all cities in India has just been 7- 8 per cent per annum.
Also the rental yield from the investment is barely 3-4% on an annual basis.
Another great long term investment bet would be company FDs. For example, PNB Housing Finance offers you a yield of more than 10 per cent on a 10 year deposit.
This is not bad at all. The company is backed by the government owned Punjab National Bank and hence the deposits are very safe. You can go for these king of deposits for a longer duration.Among the great long term investment bets in India for 2017.
Thus, in order to garner high return from your long-tern investment you need to factor in parameters such as time frame of your investment, diversification and risk- bearing capacity in order to lower down the associated risk.
Past track record over last few years though does not guarantee your investment returns from the financial instrument should also be checked. Also, to avoid any major value depreciation of your investment, it is suggested that you diversify your portfolio and not concentrate on one investment type. And at best bet only on the investment product for a longer horizon with which you are comfortable.
Invest in Bonds
One can lock in money if they feel investing in stock market is very risky and they expect the market to see a downfall. Government 10 Year Bond which is currently giving an interest rate currently it is 7.70 per cent.
One can also opt for Inflation Indexed bonds as the government sets the interest rates on bonds based on the inflation. However, bond prices tend to rise when interest rates fall and vice versa.
Government bonds are not only the best long term investment options, they also come with a great degree of safety. However, interest rates on these tend to be a little low.
This article is strictly for informational purposes only. It is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author of this article do not accept culpability for losses and/or damages arising based on information in this article.