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Top Investment Options for Beginners in India

The most important thing that guarantees high returns on your assiduous earnings is safety

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Time and Money
"Money can't buy happiness". A group of researchers believes the opposite with scientific backing. Pixabay

Investing your savings is a good idea. You just cannot keep saving money because of two main reasons.

Firstly, the savings will not grow. Most of the times they stay the same unless you count the nominal savings account your bank keeps adding half-yearly or yearly. Secondly, some need or the other arises, and you will be inclined to spend the money out of your savings than going for a loan.

We cannot stop some need. Now and then, some appliance in your house needs a repair or replacement, same goes good with your vehicles, kids, spouse and so on.

So locking away your savings so that you will not use them at convenience and letting them grow in the meanwhile is a good strategy.

Only if you knew how, when and where?

Most of us are good at working hard, slogging it out and earning the few extra bucks, but when it comes to investing and make money grow, we have neither the expertise nor the time for it.

As the famous billionaire and investor, Warren Buffet put it – “Unless you are making money while you are sleeping, you will keep working till you die”.

Safety First

Let us explore some of the investment options for people who are planning to invest.

  1. Public Provident Fund (PPF)

For a change, the Public provident fund or PPF as it is more popularly known as needs no introduction. Every employee working in a limited company or a governmental organization knows of this.

PPF is also one of the main reasons behind most of the Indians growing lazy and not trying to look for other investment options unless your wall in the above average or the top bracket. At an interest rate of 7.9% and dual contribution from the employee and the employer, PPF is the lifeline for all employees, especially if they keep contributing until retirement without withdrawing.

There is a facility to withdraw the money if you are jobless for a particular time or you can even avail three-year loans. However, mostly PPF is looked at as a post-retirement benefit than an investment option during your working years.

But an investment nonetheless.

You can save anywhere between ₹ 500 to ₹ 1.5 lakhs a year, and we all know why it is the favorite – These savings exempt from tax, However, if you choose to invest more than ₹ 1.5 lakhs a year in your PPF, the excess amount will neither earn interest or tax benefits. Minimum lock-in period is 15 years.

Fixed Deposit Scheme, India
Fixed Deposits are one of the more common and preferable investment schemes in India. Pixabay
  1. National Savings Certificate (NSC)

At an interest rate of 8% per annum, backed by the Government of India and the convenience of obtaining one (your nearby post office), a National savings certificate or an NSC can be not ignored.

Though it has a minimum lock-in period of 5 years, (the other option is 10-year lock-in period), the guaranteed good yields make it a preferred investment option by quite a few. But this is also the most ignored option by many for some reason.

Investment up to ₹ 1.5 lakhs is exempted from tax. The interest rate is revised quarterly, and the amount is compounded annually.

Another advantage is that the investments in NSC are accepted as collaterals by many banks and NBFCs (non-banking finance corporations). However, you cannot touch your amount for a minimum period of 5 years.

  1. Equity Linked Saving Scheme (ELSS)

Shorter lock-in periods and high-interest rates are the USP of the equity-linked saving schemes (ELSS).

In the ELSS, the minimum lock-in period is three years, and you can choose to make your earnings as regular dividends through the three years or receive a lump sum at once after your lock-in period ends. Therefore, this is a plan that lets you draw the amount within your investment period and gives you a chance to earn more than the rest – 15-18% returns. A near 11% interest offered by NPS (the national pension scheme) is a distant second. In addition, you do not need to invest the entire amount at once. You have an option called SIPs (systematic investment plans) by way of which you can invest as low as ₹ 500 a month.

Investments up to ₹ 1.5 lakhs are exempt from taxation, but returns are taxable. The LTCG or long-term capital gains from ELSS are taxable if they are above ₹ 1 lakh.

There is a fair amount of risk involved, and your investment may not end profitable every time. However, you can take the help of fund managers (or mutual funds) and play it safe.

  1. Recurring and Fixed deposits

Most of the nationalized and private banks offer you this facility at different interest rates and deposit lock-in periods.

In a fixed deposit (FD) scheme, you make a deposit lump sum, which will mature at the end of the pre-determined period, and if you do not have the capital to start with, you can choose a recurring deposit (RD), where you can add a fixed amount every month, which can be withdrawn at the end of the maturity period.

The interest earned with a recurring deposit may be less than that of a fixed deposit, but in case of an RD, you are creating an investment with your savings. Not all of us may have the luxury of investing a lakh or five lakh rupees to start with.

Again, investments up until ₹ 1.5 lakhs in 5 years fixed deposits are exempt from taxation, but returns are taxable. Recurring deposits and fixed deposits for a period of less than five years are not exempt from income tax.

  1. National Pension Scheme (NPS)

Many, after the introduction of 2-tier system, look upon another government-backed scheme, NPS, as a useful option.

Under the Tier I NPS, one has to contribute a minimum of ₹ 6,000 per year to keep the account active. The money cannot be withdrawn till you reach 60 years of age (partial withdrawal allowed in exceptional cases) and if you choose to exit the scheme mid-way, 80% of your savings have to be invested in an annuity plan (which will be returned to you as monthly pension payments after retirement).

The Tier II NPS is a non-retirement scheme, which is more like a savings account and allows you to withdraw money when you want. There is no lock-in period, but government employees can avail tax exemption if they lock-in their savings for a minimum period of 3 years. You need to have an active Tier I account to open a Tier II account. However, this scheme is not looked at as a long-term investment due to certain limits on investments, as you cannot invest more than 50% of your savings in stock markets, etc.

Interest rates are high at 12-14% and investments up to ₹ 1.5 lakhs a year and an additional ₹ 50,000 per year can be exempted under subsection 80 CCD.

Also Read: Online Games: What Risks Do They Pose To Children?

Though there are many more private and non-governmental schemes whit flexible options which offer you a lot of conveniences and promise higher returns, it is always wise to think about safety first when it comes to investments.

It is hard-earned money, and we cannot earn it again. So, it is always safer and wiser to go with a trustworthy scheme which may offer fewer returns than a fancy scheme which gives you a lot more.

The most important thing that guarantees high returns on your assiduous earnings is safety.

Next Story

Adobe Photoshop on iPad Provides New Opportunities to Youngsters in India

Adobe has also made it possible to import photos directly from your SD card or USB drive into the iOS version of Lightroom

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Adobe
Although Adobe Photoshop on iPad was completely done in the US, the incremental syncing part was achieved in India. IANS

Thirty years and still going strong, Adobe Photoshop remains the most loved design tool for creators and professional designers. Now, iPad lovers in India are thrilled to try their hands on the software tool and let their imaginations fly.

Photoshop on iPad allows young users to craft composites with fingers and retouch images with Apple Pencil. Your PSDs will remain the same, whether you’re working on desktop or iPad.

Adobe Photoshop that arrived on iPads globally in November brings core compositing and retouching workflows to iPad.

For the millennials, this is a great opportunity to become a creative pro as Photoshop on iPad is an intuitive, more accessible entry point to the Adobe tool for new users.

It features full PSD (Photoshop document files) interoperability, a touch-based user interface (UI), Cloud document access, and the power to work on real-world, multi-layered creations.

“We’re excited to push the frontiers of creativity to make everyone more productive and express their creative vision — not only seasoned professionals, but also the next generation of designers, photographers, filmmakers and illustrators,” Scott Belsky, Chief Product Officer and Executive Vice President, Creative Cloud, Adobe, told the gathering at the recently-concluded Adobe Max conference in Los Angeles.

Adobe
Thirty years and still going strong, Adobe Photoshop remains the most loved design tool for creators and professional designers. Now, iPad lovers in India are thrilled to try their hands on the software tool and let their imaginations fly. Pixabay

Open up full-size PSDs on your desktop or iPad and store them in the cloud – no conversion necessary.

You get the same fidelity, power, and performance no matter what device you’re working on, even when you’re designing with thousands of layers.

“Use quick gestures and touch shortcuts to make edits directly on your canvas and speed up your workflow. With context-aware user interface (UI), you display only the core tools and panes you need, so you can focus on your canvas, not the clutter,” says Adobe.

Next up is Adobe Illustrator which is slated to arrive on iPad next year. The teams at Adobe’s Noida R&D centre and Apple’s Cupertino-based headquarters in the US are busy finalizing and preparing for the final release of the much-anticipated product.

“We are already doing complete R&D for Illustrator and InDesign. The upcoming Illustrator on iPad, which has received rave reviews, is entirely being done at our Noida R&D centre,” Shanmugh Natarajan, MD and VP of Product at Adobe India, told IANS recently.

The company has previewed Adobe Illustrator’s future with a reimagined touch-based app that brings the precision and versatility of the desktop experience to iPad.

Although Adobe Photoshop on iPad was completely done in the US, the incremental syncing part was achieved in India.

Adobe has also made it possible to import photos directly from your SD card or USB drive into the iOS version of Lightroom. Previously, users had to import images to their camera roll, then copy them over into Lightroom’s library.

Adobe
Adobe Photoshop on iPad allows young users to craft composites with fingers and retouch images with Apple Pencil. Your PSDs will remain the same, whether you’re working on desktop or iPad. Pixabay

Here are the plans for Indian lovers who want Adobe experience on their iPads. The “Photography (20GB)” plan with Lightroom, Lightroom Classic, and Photoshop is available for Rs 676 a month (excluding GST). If you purchase this plan by January 31, you get Photoshop on iPad for free.

In the “Adobe Photoshop Single App” plan, get Photoshop on desktop and iPad as part of Creative Cloud for Rs 1,420.

ALSO READ: Use of Information Technology Can Save Police Personnel from Death in Line of Duty

For the “All Apps” plan, get Photoshop on desktop and iPad, plus the entire collection of creative apps for Rs 3,585.

Students and teachers can save over 60 per cent on the entire collection of Creative Cloud apps for just Rs 1,353. (IANS)