In previous article I have share short term investment options available in India. In this article I will share long term investments options available in India. Before that let’s see meaning of long term investments.
So what do you mean by Long Term Investments?
When an investment is done for a period of more than 5 or 6 years or even more than that, it is called long term investment. For e.g. saving money for child marriage, setting a retirement corpus that come under long term investment.
Most of, long term investments tend to give superior returns with passage of time. They are more tax efficient, as in case with certain mutual fund investments. Long term investment works only when it is untouched. However, you should always monitor your investment.
1. Invest in Stock/Shares: Shares tend to give better returns over the long term. As an investment options, investing in equity shares is considered to bring a high level of risk associated with it but if one can invest for a long term of more than 10 years, higher return is expected. Stocks can be opt as a part on the portfolio and percentage of allocation should based on the risk capacity.
2.ELSS Mutual Funds:– Mutual Fund investments are generally preferred by people who want to invest in equity and bonds with balance of risk & return. ELSS is a diversified equity mutual fund where the investors enjoy the dual benefits of capital appreciation as well as taxation benefit. In ELSS, the majority of funds are invested in equities. ELSS fund has 3 years lock in period from the date of investments i.e if you start SIP today, (July 2016) they can be redeemed in July 2019 only. This fund is best suited for investors who are willing to take risk and want to plan their long term investments.
3.Real Estate:-If you plan proper way, you can invest your savings in the real estate sector. But, you have to be very careful while choosing the right option since this involve huge investments. Moreover, one has to be patient enough to face impact of fluctuating prices in real estate sector. Your property might appreciate immediately or it might take many years for appreciation. Don’t be hurry to make investment in real estate. If required take help from experts.
4.Public Provident Fund: – Public Provident Fund is one of the best and secure long term investment option in India. It is among the few investments that not only offer you tax benefits under section 80C of the Income Tax Act, but also interest income is exempted from Tax. The current interest rate is 8.10% for F.Y.2016-17.Under this, the money will be locked for a period of 15 years & earn compound interest. A minimum yearly deposit of Rs. 500 required to open & maintain a PPF account & maximum deposit of Rs.1.5 lakh can be maintained in PPF account in financial year.
But less liquidity is a big negative for PPF. You can partially withdraw your investment only at the end of 6th year. You can also take loan on balance of PPF account.
5.New Pension Scheme: – It is best retirement scheme for long term investment. NPS is regulated by PFRDA & hence considered a safe investment option. You can choose the percentage exposure you want to equity. All individuals between age group of 18 to 60 years can join NPS.
You get tax benefit for investment upto 50000 under section 80CCD in addition to Rs.1.5 lakh under section 80 C. The minimum annual contribution is Rs.6000 that can be paid in installment or lump sum.
There are restrictions on withdrawal before retirement and minimum 40% of the corpus has to be used to buy annuity. The main disadvantage of NPS is that 60% of corpus become taxable at maturity.
6.Post Office Saving Scheme: – Post office saving scheme are also called small saving scheme. It is preferred by individuals who want to earn fixed return with n risk. Being govt. saving scheme, it has very low risk. Post office offers various scheme such as National Saving Certificate, Monthly Income Plan, Recurring Deposit Scheme, Kisan Vikas Patra. Among them NSC is good post office investment option with guaranteed return amount.
7.Long Term Bonds: – Bonds is a form of lending money to government or company. In exchange government or company pays fix amount of interest on principal. If you don’t want to any risk or if you are not comfortable with direct equity shares or mutual fund investments, then investing in bonds could be a good options. There are many good bonds which actually provide a high return on investments. You may opt for Gov.10 year bond which is currently giving an interest rate of Rs.7.7%. One can also opt for inflation index bonds as the government set interest rate on bonds based on inflation.