14 Best Investment Options in India 2021 [Safe & High Returns]

When it comes to investing people think in different ways. But everyone wants only one thing i.e good returns.

A lot of people look for investment options that can double their money in few months.

But, if you ask me – I would say it’s realistically impossible to get that kind of return so quickly.

I was a beginner looking to invest and someone recommended me to invest in stocks.

I watched certain videos of how Penny stocks can make you rich. I quickly opened my Demat Account and started looking for penny stocks to invest in.

I got lucky in the share market once and invested in a penny stock at its growth stage that yielded me a 126% return in one month.

I felt like investing is so easy. I know everything about investment. I tried my luck again with another penny stock without any research, hoping for the same outcome.

So what happened to my second penny stock?

Well, I lost 80% of my investment amount and the stock is still in the lower circuit. This gave me an important lesson about setting realistic goals on returns and doing proper research before investing.

Sure, you might get lucky in the Share market once or twice. But, that doesn’t mean you should expect such quick returns on every bet.

After that, I started working towards a more realistic approach. I researched all the investment options available to an investor.

Later on, I narrowed down my list to the 14 best investment options for Indians.

I did my research so that you don’t have to.

Best Investment Options to invest in 2021

Every investment option has a different appeal to an investor. You just gotta find which are the right investment options for you.

1. Public Provident Fund

Public provident fund is a long-term investment scheme launched by the Central Government. It is the safest investment option that offers great returns over a period of time. 

Apart from investing, a person can claim huge tax benefits. Tax benefit up to 1.5 lakh per year can be claimed under section 80C of the income tax act.

Idle time to invest in PPF

A person can invest in PPF any time of the year. Generally, people invest in lumpsum amounts in March.

Why?

Well people invest in March to claim the tax benefits. But, if you do this you are losing interest for the entire year.

So what’s the ideal time to invest in PPF?

If u invest monthly, then you should invest before the 5th of every month.

However, I advise you to Invest at the beginning of the year in a lump sum to maximize the interest.

Pros

• Investment starts from a minimum of Rs 500
• Tax-free returns on principle and interest amount both
• Better interest than Fixed deposits
• Risk-free returns as it is backed by the central government
• You can take loans on your PPF account 

Cons

• Lock-in period of 15 years
• A maximum of 1.5 lakh can be deposited in a year
• Joint accounts are not permitted except for minors

2. Shares

Investing in the share market is the most lucrative investment option available in India. Shares have the capacity to multiply your investment.

People who invested in shares like Infosys, Wipro, Nestle are currently sitting on their sofa and watching their money grow.

You can simply earn 20-25% on an annual basis if you invest in the right stocks.

If you are a beginner in the share market and looking to gain some knowledge then do check out my guide on Share market.

Pros

• High Liquidity
• Steady returns if you invest in quality stocks
• Enjoy Rs 1 Lakh tax free profit for long term investments

Cons

• Investment is considered risky due to market volatility

3. Mutual Funds

A mutual fund is an easy option for investing in the stock market. It works best for people who don’t have the time to monitor the stocks constantly.

I can simply invest in mutual funds in lumpsum or Monthly SIP and let the professionals do their job. 

How does it work? 

A mutual fund is nothing but a pool that is built by taking money from investors like us. The money that is collected is invested into securities on our behalf.

Various professionals are appointed to manage mutual funds. These professionals allocate the funds in such a way that provides steady returns over a period of time.

Now I don’t recommend investing in mutual funds based purely on historical data. But, Some mutual funds have shown tremendous one-year growth.

• ICICI Prudential Technology Direct Plan-Growth – 108% Annual return
• Axis Small Cap Fund Direct-Growth – 88% Annual return
• Parag Parikh Flexi Cap Fund Direct-Growth – 57% Annual return

Pros

• Invest as low as Rs 500 
• Steady returns ranging from 15% – 20%
• Funds are managed by professionals with superior knowledge

Cons

• High expense ratio and Operational cost
• Too much diversification might result in fewer profits

4. Unit Linked Insurance plans

Insurance plans are the most underrated assets in India. A unit-linked insurance plan gives me the benefit of an investment along with a life cover policy. It is suitable for investors looking for stable returns. I can easily claim tax benefits under 80C for the ULIP premium.

How ULIP works?

A ULIP policy is a combination of both investment and insurance. The investment portion is invested in the market securities like Debt, Equities, or Hybrid Funds. I can choose the combination of funds according to my preference. The returns of these investments also vary according to my chosen fund.

The insurance portion of the policy contains certain death benefits. The nominee is entitled to these benefits in case of my uncertain death.

I am also entitled to the insured sum mentioned in the policy if the ULIP policy matures before my uncertain death.

Pros

• Avail tax benefits
• Life coverage benefit 
• High rewards by investing in securities

Cons

• Lock-in period of 5 years
• High premium allocation charge levied on the first premium (up to 20%).
• Policy surrender charges ranging from Rs 1,000 to Rs 3,000.

5. Wint Wealth

Wint Wealth is a newly launched platform by IIT pass-outs who came up with an inventive way to invest in debt.

Wint wealth helps people like us to invest in structured debt assets. Usually, these assets are not available for retail investors like us because it requires huge investment.

Currently, Wint wealth is the only platform that offers a 9-11% return on investing in these structured debts.

Their idea is simple i.e. not everyone has the risk-bearing capacity to trade securities in the share market. Fixed Deposit on the other hand provides a low return that barely beats inflation.

So, Wint wealth offers the benefit of good returns at low risks.

Pros

• Invest as low as Rs 10,000
• Offers better retuns than Fixed deposit and Debt fund

Cons

• Long Term Capital Gain Tax of 10% is applicable on holding.

6. Smallcase

Smallcase is a consumer-oriented investment option that most of us would be tempted to invest in.

Smallcases are currently dominating the market by their sectoral theme smallcases. Yup, that’s right. With smallcase you can invest in theme-based stocks like EV, Technology, or anything you like.

Smallcase has certain readymade portfolios that are curated by experts. You can invest in these portfolios or create your own personal portfolio depending upon your risk capacity.

Pros

• Better than Mutual Funds
• Portfolio’s are made by professionals
• No Lock in period

Cons

• Extra – charges are to be paid to the curator of the portfolio in case you decide to use his portfolio.

7.Initial Public Offer

IPO is an Initial public offering through which a company invites the public to subscribe to its shares for the first time.

Why you should invest in an IPO?

Investing in an IPO is a great way to make quick gains without blocking your capital for the long term. While applying for IPO funds are blocked for around 10-12 days before you receive the allotment of shares.

I think many of us know about Zomato. Well, Zomato came up with an IPO and provided listing gains of 58% to the investors.

A 58% return in 10-15 days is not bad, right?

There has been a rally of IPO’s in 2021 and some of the best listings gain IPO’s were :

Company	Listing Gains
Clean Science IPO	95%
GR Infraprojects	104%
Tatva Chintan IPO	95%

Now I don’t expect all IPO’s to have such outstanding listing gains. But, you can perform your own analysis and apply for an IPO according to your choice.

Pros

• Quick Gains in the short term
• High Growth potential to grow your wealth in Long Term

Cons

• Does not always guarantee listing Gains
• Stock listing depends on the market movement

8. Real Estate

Everyone wants to own a house right?

Well, I guess that is the reason why investing in real estate has always been a priority for people like us.

Real estate can provide a steady rental income to tackle inflation. Also, we all know that the value of land always appreciates in the long term.

However, the property’s location and surrounding infrastructure play an important role in appreciating the value of your real estate.

The government provides easy housing loans to promote investing in real estate and improve the standard of living.

Pros

• Steady rental Income
• Interest against a home loan is eligible for a tax deduction

Cons

• Appreciation of land and capital depends upon the location of the property.
• Long Term capital gain tax of 20% on selling the property
• High maintenance cost.

9. Equity Linked saving scheme

An ELSS is a type of mutual fund that is eligible for a tax dedication. They have a short-term lock-in period of 3 years.

An ELSS provides you with an opportunity to create wealth and reduce tax liability. Almost 65% of the capital is invested in equity for yielding higher returns.

Pros 

• Stable performance with consistent returns
• Only mutual funds offering tax benefits

Cons 

• No provision to redeem amount before 3 years
• Attracts a LTCG Tax on profits above Rs 1,00,000

10. Senior citizen’s saving scheme

At the age of 60, you don’t have a risk-bearing capacity. You look for options that provide steady returns with minimum risk exposure.

That’s where the senior citizen’s scheme comes into the picture. SCSS offers protection of capital and fixed quarterly interest to the investors. It’s risk-free as the scheme is backed by the government.

Pros 

• Offer better returns than FD = 7.5% P.a

Cons

• The maximum investment limit is Rs 15 Lakh
• Interest received is taxable.

11. Fixed Deposits

Bank FD’s are financial instruments provided by the bank that has a higher interest rate than a savings bank account.

You can invest in FD’s in lumpsum or for a specific tenure as per your preference.FD’s offer guaranteed returns.

I prefer FD’s when I have idle cash that I won’t be using for at least a year. So, I simply go for an FD to get guaranteed returns

Pros

• FD’s are not affected by market fluctuations
• No risk of losing capital
• You can take a loan against your FD

Cons

• Interest earned on FD is taxable.
• Penalty on withdrawing money before maturity

12. National Savings Certificate

A national savings certificate is an investment scheme that provides a fixed source of income to the investor. These certificates have a lock-in period of 5 years. 

It is basically a savings bond that encourages people to invest more. Currently, these bonds carry an interest rate of 6.8% annually.

Pros

• Interest earned gets compounded and is reinvested to maximize gains.
• Easily take a loan against the NSC’s

Cons

• Interest earned is not tax-free
• Lower returns as compared to Public Provident Fund

13. Gold

Gold has a history of maintaining its value over the years. Investing in Gold bonds, Gold ETFs is a smart choice to diversify your investment portfolio. It has been considered a great hedging instrument against the rising cost of living.

The safest bet would be to invest in Gold sovereign bonds issued by India’s reserve bank. These bonds carry an annual return of 2.5%. 

These bonds carry a lock-in period of 8 years but you can go for early encashment after 5 years

Pros 

• A safe instrument for beating inflation
• Annual return per year = 12%

Cons

• Management Fees of Gold ETF’s is very high
• US Dollar plays a crucial role in the market fluctuation of Gold.

14.National Pension Scheme

The National Pension Scheme is an initiative organized by the central government. Anyone can invest in the pension scheme voluntarily. It is beneficial for investors looking for a retirement pension.

Under the national pension scheme, a small portion is invested into Equity, Government Securities, or Corporate bonds. The choice of allocation of these funds depends on whether I choose the Auto choice option or the Active choice option.

Save huge tax with NPS

NPS falls under section 80C of the Income-tax. I can claim tax benefits up to 1.5 lakh under this scheme. Additionally, I can claim Rs 50,000 under section 80CCD.

That gives me the total tax benefit of Rs 2 Lakh. It’s great, isn’t it?

Pros

• Annualized return upt 8-10%
• Easily change your fund manager if not satisfied with the annual returns

Cons

• Only 75% of the amount can be invested in equity.
• At the age of 60, you can withdraw only 60%  of the corpus amount if it is greater than 5 lakh.

I will keep on adding more investment options. You can also comment and share where you invest 🙂