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Best Investment Options in India 2024 based on Risk Categories

stock market
24 Sep 20246 mins readBy MOFSL

Investments are the lifeblood of many wealthy families in India and around the world. Today, there is no option but to invest money, as it is the only way to make your money grow while you sleep.

Investment is one of the most important decisions you will make during your financial journey. The good thing is that there are plenty of options for you to choose from. But, before you do that you need to be clear about your risk-taking ability and the time horizon at which you can stay invested.

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Investing will help you plan your savings for retirement, your child's education, and buying a home. With so many options available, you must choose the one that aligns with your risk appetite the best.

Here's a breakdown of the best investment options in India for 2024:

Investments based on Risk-Level

 

Low-Risk Investments

Low-risk investments offer stable returns and minimal risk. While these options may not offer high returns, they provide safety and predictable growth. It is ideal for conservative investors.

Fixed Deposits

Fixed Deposits are one of the safest and most popular investment options in India. Banks offer FDs with fixed tenures and interest rates. Returns on FDs generally range from 6.5% to 7.5% depending on the tenure.

Interest earned on FDs is taxable.

Public Provident Fund

PPF is a long-term savings scheme backed by the government and offers a guaranteed interest rate (currently 7.1%).

PPF has a lock-in period of 15 years, and investors can extend it in 5-year blocks. It falls under the EEE (Exempt-Exempt-Exempt) tax category which means that the investment, interest earned, and maturity amount are tax-free.

Senior Citizens Savings Scheme (SCSS)

SCSS is a government-backed scheme specifically designed for retirees. It offers 8.2% annual interest, which is paid quarterly.

SCSS allows a maximum investment of Rs 30 lakh, and the interest earned is taxable. It is a safe asset class because it's backed by the government.

Medium-Risk Investments

Medium-risk investments offer a balance between risk and returns. These options offer a moderate risk-reward ratio. If you are someone who can handle a little bit of risk, these options are for you.

Debt Funds

Debt mutual funds invest in fixed-income bonds like government bonds, corporate bonds, and overnight money market instruments. They have lower volatility compared to equity funds and offer moderate returns.

They provide better returns than FDs, with lower risk compared to equity investments, and can be a good choice for investors seeking stable returns with liquidity.

National Pension System

NPS is a retirement scheme that offers flexibility to investors by allowing them to choose how much to invest in different asset classes (equity, corporate bonds, and government securities).

Hybrid Funds

Hybrid funds invest in a mix of equity and debt and offer a blend of growth potential and stability. Equity-oriented hybrid funds provide higher returns but with higher risk, while debt-oriented hybrid funds offer more stability with moderate growth.

High-Risk Investments

High-risk investments offer high returns but are also accompanied by high risks. These investments are linked to the market and come with volatility, but they also have the potential to deliver significantly higher returns over time.

Direct Equity

Investing directly in stocks can generate substantial returns but comes with high risk. Stocks offer growth through both capital appreciation and dividends but require extensive knowledge of the market.

Investors need to carefully select stocks and monitor them regularly. Long-term investments in companies with strong fundamentals can yield exceptional returns, but the risks include market fluctuations and potential losses.

Equity Mutual Funds

Equity mutual funds invest in a portfolio of stocks picked by fund managers. They are less risky compared to investing in direct equity. They are managed by professional fund managers.

These funds aim to deliver long-term capital appreciation. Equity funds are classified into various categories like large-cap, mid-cap, and small-cap, depending on the type of stocks they invest in.

They are ideal for long-term investors who want to benefit from the growth of the stock market without actively managing their portfolios.

Conclusion

Choosing the right investment depends on your financial goals, risk appetite, and time horizon. If you are looking for stability with low-risk you can go for options like FDs and PPF.

If you want growth with medium-risk options you can go for debt funds and NPS. If you are seeking high returns with equity and mutual funds, diversifying your portfolio is key to successful investing in 2024.

Remember to regularly review your investments to ensure they align with your evolving financial objectives.

 

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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