PPF

If you are in yours 20s, 30s and 40s, you must invest in PPF for four reasons. One is that the interest income is tax free. The second is that even banks are not giving an interest of 8.2 per cent currently. The third is that you get tax benefits under Sec 80C of the Income Tax Act.

And lastly, with the lock-in period of 15 years, you are building a corpus for your retirement.

SIPs

Now that you have cleared your loan, you have that extra money. Systematic Investment Plans or SIPs are schemes of mutual funds where you can invest a small sum of as little as Rs 1000 every month. If you are in 30s and 40s, you can take extra risk with SIPs that invest in shares. This could give you good returns in the long term.

Bank recurring deposits

These are not the very best option, but since you would now save on the EMI after clearing your loan, we suggest, you look at bank recurring deposits, instead of wasting the money after clearing a loan.

They are not very tax efficient, but a saving nonethless.

Cleared Your Loans Recently? Here Are Places To Invest Now

Gold prices have risen more than 20 per cent since the start of the year. If you had to invest in gold at the start of the year, you would have got more returns than shares or bank deposits. Gold jewellery schemes through monthly plans will help you to buy gold after 12 months and in most cases the jeweller pays one installment, which is a big saving. 

Take a solid term insurance policy

Now that you would save on your monthly EMIs after clearing your policy, we suggest that you buy a gold solid term insurance policy. If you are in your 30s, look at an insurance policy of at least Rs 1-2 crores.

This would prevent financial loss in case something were to happen to you. 

Take an health insurance policy

Similarly, you should look at a solid health insurance policy now that you have some extra money.

Go in for a critical health insurance cover of at least Rs 10 lakhs

Be frugal

Now that you have surplus money from the EMI, make sure that you don't spend and get back into a debt trap.