Finance

Five Best Investment Schemes in 2020

9:03 PM John Evans 0 Comments


Different investment schemes are available in the market today. Some of them help you to meet your short term investment goals whereas some ensure that your long term objectives are fulfilled. Some investment options enable you to earn better through tax savings.

Therefore, you will have to choose the investment options that are suitable for your investment profile. Some of the popular investment schemes include mutual funds, fixed deposit plans, recurring deposits, PPF, etc. We will be discussing the most popular investment schemes that you can avail in this year:

Mutual Funds

Mutual Funds are lucrative because they provide higher returns than some of the other investment instruments. There are different mutual fund types such as equity mutual funds, debt mutual funds, hybrid mutual funds, etc.


The returns of mutual funds are dependent on market performance as your invested amount is further invested in stocks, bonds, and other market-linked instruments. Since the market is volatile due to the ongoing economic crisis, you must be careful before investing in mutual funds.

POMIS

POMIS i.e. Post Office Monthly Investment Scheme is a popular and safe investment option since it is a government backed scheme. You need to invest a particular amount every month and the entire savings can be withdrawn along with the interest after a tenor of 5 years.

Currently, an interest rate of 6.60% is offered on this scheme and you can start investing with as little as Rs. 1500. However, it does not provide any tax rebate on the returns and therefore, it is not an ideal option if you are looking for tax-saving instruments.

Recurring Deposits

A Recurring Deposit or RD is an investment scheme that provides returns without any risks. You can deposit a fixed amount every month in your recurring deposit account and the tenor for these deposits can be set between 1 to 10 years as per your convenience.

The interest rate offered on RDs ranges from 6 to 6.5% depending on the bank in which you have opened an RD account. 

The interest earnings of an RD are lesser as compared to an FD. This is because the interest on an FD is calculated on the entire deposit whereas the interest rate on an RD is calculated only on the progressive monthly deposits.

Public Provident Fund

Public Provident Fund is an excellent option for the salaried individuals since it allows them to invest a part of their income every year. The entire amount can be invested at once or can be invested in installments up to 12. 

It is a government-backed scheme and its interest is revised after every quarter. Currently, an interest rate of 7.10% is offered on PPF which means that your savings will grow at a steady rate. 

The interest earnings of PPF are tax-free. However, it is only suitable if you are interested in long term investments since its maturity period is 15 years.

Fixed Deposits

Investing in the fixed deposit will ensure that your savings grow at a faster rate and that too in a risk-free way as it is not a market-linked instrument. 

Banks have slashed down the interest rate on the fixed deposit plans owing to the current economic crisis. However, non-bank FDs can still help you to earn better returns.

For instance, Bajaj Finance FD is offering interest rates up to 7.60% for regular customers and the senior citizen FD rates are as high as 7.85%. Also, instead of depositing your funds in a single FD, you can invest in fixed deposits of different tenors and types to ladder your investments and gain maximum returns if the interest rates tend to fluctuate over a period of time. The option of depositing in multiple FDs through a single cheque is provided by the multi-deposit feature from Bajaj Finance FD. Also, these deposits are safe since they have received high ratings for stability and safety by credit rating organizations like ICRA and CRISIL. You can also estimate your returns by using the online FD maturity calculator.

Unlike most other fixed income investments, a fixed deposit offers ease of investment with a 100% online FD account opening process. Also, you get unmatched flexibility as you can choose the investment tenor, interest payout frequency as per your convenience and even go for premature withdrawal of funds or avail loan against FD in times of financial emergencies.

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