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Long Term Investment Plans

Long Term Investment Options in India
May 07, 2024

Table of Content

 

Here is a list of top long term investment options.

1. PPF and EPF

2. Stocks

3. Mutual funds

4. Real Estate

5. Bonds

6. Gold

7. ULIPs

8. Equity Funds

9. Fixed Deposits

10. National Pension Scheme (NPS)

Many of us strive to achieve financial security. One of the best ways to do so is by investing in saving schemes or long term investment plans. The investment plans assist in attaining a better financial future and avail tax benefits.

Are you willing to be patient with your investments for at least the next 5 years? If yes, then long-term investment plans are best for you. Let's see which is the best long term investment option in India. 

How to plan for long term investment?

To make effective long-term investment plans, it's crucial to consider several factors

  • Your financial goals
  • Your current income
  • The returns you are expecting from the investment.

For example, those in their 30s saving for retirement can afford to take a more aggressive investment approach due to the long time horizon. On the other hand, if the goal is to fund a child's college education within the next 10 to 15 years, a more balanced investment strategy may be appropriate. It's also important to assess risk tolerance and diversify investments to manage risk effectively. Staying updated on market trends can further enhance decision-making and strategy adjustments.

Long Term Investment Options in India

Let’s check some of the best investment plans for high returns in 2024:

S.no

Best Long Term Investment Options

Tax Benefits Offered

Ideal For Below Mentioned Goals

1

ULIPs (Unit Linked Insurance Plan)

Under Section 80C and Section 10 (D). (Maximum deduction that can be claimed is Rs 1.5 lakhs.)

Useful in meeting a range of financial goals like retirement planning, child's education/marriage, down payment for a house, etc.

2

Equity Funds

Under Section 10(D). (Maximum investment of Rs 1.5 lakhs.)

For tax benefits, opt for tax-saving mutual funds, also called ELSS or equity-linked saving scheme

3

PPF (Public Provident Fund)

Under Section 80C (Maximum investment of Rs 1.5 Lakhs)

It is relevant for individuals with a low-risk appetite to save money over the long term for retirement planning/financial goals.

4

Stocks

-

Investments based on high risk capacity

5

Mutual funds

Under Section 80C (Maximum investment of Rs 1.5 Lakhs)

For Both High and Low risk investors

6

Bonds

Under Section 80 C

For less risky investments

7

Gold

-

-

8

Real Estate

-

 People who have received huge cash benefits from prior investments

9

NPS (National Pension System)

Eligible for deductions up to Rs 1,50,000 under Section 80CCD(1) and an additional Rs 50,000 under Section 80CCD(1B).

 Ideal for retirement planning with an additional tax benefit.

10

Fixed Deposit

Under Section 80C (Maximum investment of Rs 1.5 lakhs.)

 Suitable for risk-averse investors looking for guaranteed returns.

Top 10 Long Term Investment Options

In long term investment plans, you need to follow a disciplined investment strategy for a longer period of time. There are multiple long term investment options available to invest as per your risk appetite and objectives. Here are the top 10 long term investment options in India which help you create wealth-

1.PPF and EPF

Public Provident Fund (PPF) is considered one of the best long term investments in India, with an investment tenure of 15 years. It is the first go-to option for investors with low-risk appetites who are planning for retirement or to fulfil a particular financial goal. The interest rate of PPF is fixed by the Finance Ministry every quarter. Currently, investors can invest and avail of a 7.1% interest rate on PPF investments. One can invest any amount ranging between Rs 500 to Rs 1.5 lakhs.

This long term investment plan has tax benefits u/s 80C (Income Tax Act, 1961) and the interest income is also exempted from tax. 

Employee Provident Fund (EPF) is one of the popular long term investment plans in India for private sector employees to generate wealth for retirement. This option carries tax benefits where the maximum investment of Rs 1.5 lakhs under section 80C of the Income Tax Act, 1961 is allowed for claiming benefit.  

2.Stocks

As a long-term investment option, stocks have historically provided significant returns, outperforming most other investment types over the long period. It is partly due to the concept of compounding, where the returns on your long term investment generate their own returns. For young investors, it means that investing in stock market can be an effectual way to grow wealth over time, especially if they reinvest dividends. 

Additionally, holding stocks for the long term can reduce the impact of short-term market volatility, as stock markets have shown a tendency to rise over longer periods despite temporary downturns. 

3.Mutual funds

Mutual funds invest in stocks and debt instruments and are considered as long term investment plans. Mutual Funds in India are one of the best investment plan which are managed by a fund manager, and there are many types of funds to invest in according to your risk appetite and financial goal. 

The investment can be done in a lump sum manner, where a large amount is invested once, or it can also be done through SIPs (Systematic Investment Plans), where a specific amount can be invested at regular intervals. 

4. Real Estate

Real estate is one of the most popular long-term investment option that requires acquiring, owning, renting, managing, or selling assets to experience profit over time. If you've had prior investments done or have any guidance, it'll be an easier and a great return option. 

You can invest in real estate via REITs (real estate investment trusts), which you can invest in real estate (commercial and residential properties) for just Rs 10,000. 

5. Bonds

Bonds are slowly becoming popular as long-term investment options in India as they offer predictable returns. Bonds are debt instruments that have a maturity of more than one year and are issued by the government, corporations and financial institutions. The returns on the bond will depend on the issuer, maturity date and the current interest rate scenario.  

6. Gold

India is known for its preference towards gold. You can invest in gold digitally through options such as Gold ETF, gold mutual funds, gold deposit schemes and sovereign gold bonds. 

7. ULIPs

Unit Linked Investment Plan (ULIP) is a mixture of insurance and investment plans. In simpler terms, it is a long term insurance plan with dual benefits of investing as well as providing life cover. A portion of your investment will be invested in the stock market according to your chosen option. 

The remaining portion of your premium will be used to cover your unexpected demise. 

8. Equity Funds

Equity fund is a type of mutual funds, which invest in companies' stocks. This long term investment plan invests in diverse stocks from various sectors, leading to portfolio diversification and, hence, reducing the risk for individual investors. To experience long term gains, it's best to go for well-diversified equity funds and give it a 5-year period horizon. 

You can also expect tax benefits by going for tax-saving mutual funds, which is also called the Equity Linked Saving Scheme (ELSS). It has a three-year lock-in period and a tax benefit for a maximum investment of Rs 1.5 lakhs u/s 80C of the Income Tax Act. 

9. Fixed Deposits

Fixed Deposit (FD) is the traditional investment vehicle in India known to every household as the safest investment option. 

Tax Saving FD that has a maturity period of five years can help them save tax up to Rs. 1.5 lakhs every year under Section 80C. 

Fixed Deposit is suitable for investors with a conservative risk appetite, and it can also be the best option for senior citizens. 

10. National Pension Scheme (NPS)

The Nation Pension Scheme (NPS) is a social security initiative by the government of India in which the government wants everyone’s retirement to be financially secured. 

NPS encourages you to invest in a pension account regularly during your employment period. After retirement, the investors can gain a certain percentage of the corpus. 

If you are an NPS account holder, you can redeem 60% of your corpus as a lump sum after your retirement. The remaining 40% of the corpus is used to buy an annuity plan and receive a fixed amount as a monthly pension. You can get multiple tax benefits by investing in NPS. 

Financial Goals or Objectives for a Long Term Investment Plan?

Long term investments are backed by several reasons and objectives. It’s answering this simple question- Why are you opting to invest for a long term? 

Below are some of the primary reasons why you should opt for the best saving plans-  

  • Buying your dream house

  • Paying your debts

  • Paying for your children's education/marriages

  • Saving up for retirement

For Non-Resident Indians (NRIs),  Investment Plans for NRI can address additional objectives such as:

  • Managing currency exchange risks

  • Complying with international tax regulations

  • Planning for potential return to India

The biggest benefit or advantage of investing for the long term is financial freedom. Achieve long-term goals where your expenses are all met from the accumulated wealth, and you can live with financial security for the rest of your life. 

Benefits of Long Term Investment Plans

  • Compounding- The more years you invest, the more profit. This is called the power of compounding. For example, if you invest ₹ 1000/- monthly at a 15% rate, it can grow to ₹ 30.84 lakhs after 25 years.

  • Less volatility- No matter how volatile the market is for a short period, it will be stable enough with less volatility risks if you go for a long term.

  • Tax Benefits- These options are best to avail tax benefits as per the Income Tax Act, 1961. But it is only up to a total limit of ₹ 1.5 lakh. 

  • More time to learn and explore- You can choose the best option as per your goals and try different securities before settling on your portfolio. 

  • Financial freedom- When you have wealth after a certain period of time, it will give you a sense of financial freedom to not to think about active income sources and work on things you have never dreamt of, like travelling the world, doing a startup, running an NGO, and so on

How to buy a long term investment plan online?

Buying a long-term investment plan online is now super easy, with just a few clicks and swipes. The most important step is to shortlist the type of investment options. Carefully consider which investment is best for long term, keeping your financial goals in mind.

Suppose after carefully considering different long term investment options you want to opt for the ULIP — HDFC Life Sampoorn Nivesh Fund for added financial security. Here is what you can do:

  • Check out what the plan offers and where it is investing in equity funds, mutual funds, hybrid funds, and debt funds.
  • Customise your combination of funds to align with your long term goals.
  • Decide your premium payment by opting for one out of the single, limited or regular payment options.
  • Add riders for enhanced benefits and coverage.
  • Use a ULIP Calculator to check out the premium and potential returns on your investment.
  • Check your eligibility.
  • Compare with other long term investment options.
  • Once you have made up your mind, click on ‘Buy Now’ to complete the process.

FAQs on Long Term Investment Options in India

Q. Which investment is the best for the long term?

Ans. PPF, Mutual Funds, Stocks, Gold, and Real Estate are some of the good options. There's nothing called the best investment. You have to choose the option that aligns with your financial goals and investment horizon. 

Q. What are Long Term Investment Plans?

Ans. These are investment options that tend to generate reasonable returns over the long term or have a maturity period of over five years. 

Q. What investment options are available for the long term?

Ans. Mutual Funds, Public Provident Funds, Fixed Deposits, Gold, National Pension Schemes, etc, are some of the available options.

Q. Are long term investment plans safe?

Ans. Yes, investments that offer a fixed interest rate can be considered as safe as they are not volatile in the short run. 

Q. Which long-term investment gives the highest return?

Ans. The PPF tends to give the best return if you’re considering a safe investment option. On the other hand, investment in stocks gives the highest return over a longer period if you are willing to take risks. The returns are based on your risk capacity. 

Q. When to choose long-term investment over short-term investment?

A: You must choose long-term investments when you want to achieve substantial financial goals like retirement, buying a home, or funding a child's education. Long term investment options usually bring higher returns either through market appreciation or through compound interest. These investments fare above market volatility over time to offer significant returns to meet big financial goals.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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Note - Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions. Tax Laws are subject to change from time to time. The customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.

18. Save 46,800 on taxes if the insurance premium amount is Rs.1.5 lakh per annum and you are a Regular Individual, Fall under 30% income tax slab having taxable income less than Rs. 50 lakh and Opt for Old tax regime.

** The past 5 year fund performance of HDFC Life Discovery Fund (SFIN: ULIF06618/01/18DiscvryFnd101) as on 30th November 2024. The benchmark taken into consideration here is is Nifty Mid Cap 100 which as a return of 26.77% as on 30th November 2024. HDFC Life Discovery Fund is available with HDFC Life ULIPs which comes with a life cover. Please note past fund performance is not indicative of future performance.

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