Which Scheme is Best for Long-Term Investment?
When you are investing for your retirement or to buy a house - it would definitely be for the long term. When you are investing for your retirement - you would mostly start in your 20s and 30s and then get it over with by the time you are sixty. Your investment will go on for all those years, and guess what - they will keep multiplying all through that. But, if you are in it for the long term, you might want to make the right kind of decision.
What is the Meaning of a Long Term Investment?
On the asset side of a company's balance sheet, a long-term investment account represents the company's investments, which include stocks, bonds, real estate, and cash. Long-term investments are assets that a corporation plans to keep for at least a year.
The long-term investment account does differ in a big part from the short-term investment account. In the short-term investment - it will almost certainly be sold, whereas long-term investments will likely not be sold for years, if ever.
Long-term investing entails accepting a certain level of risk in exchange for possibly bigger returns, as well as the ability to remain patient for a longer length of time. It also implies that you have enough cash on hand to commit to a specific sum over an extended period of time.
The Top Long Term Investments for You
Here are some of the best long term investment vehicles for you:
1) PF and EPF
The Public Provident Fund or PPF - which is one of the most popular investment alternatives in the country, continues to be the best bet, with an interest rate of 8.7%. It has tax benefits under section 80C, as well as income tax exemptions on interest income (which is exempted from tax.).
Individuals with a low-risk appetite who want to save money for retirement or any other long-term financial goal might consider PPF. Investors with a higher risk appetite can also use it to diversify their portfolios.
PPF and EPF (Employee Provident Fund) contributions both qualify for tax benefits. For the purpose of claiming Section 80C benefits, a maximum investment of Rs 1.5 lakhs is allowed. The individual can invest more, but no tax benefits are available.
The PPF's interest rate is market-linked and changes once a year. The PPF takes 15 years to reach maturity. After six years, you can withdraw up to 50% of your amount at the conclusion of the immediately preceding year, whichever is lower.
2) FDs
When there were quite a few options in the country - this was the most simple type of investment. A predetermined deposit that was given by banks is known to be the most safest. Since the money can be invested for longer periods of time, such as three, five, or even ten years - with a fixed rate of return, these returns will range from 3% to 6.5% every year. You can withdraw it once the term has ended. The interest rates here are much higher than savings accounts and RDs, and early withdrawal is possible but with a penalty.
3) NSC
In India, the post office and a few public sector banks offer another safe long-term investment alternative. The investment tenure here is five years - and you can begin saving in the NSC with as little as 100 Rupees, making it a viable choice for persons in the unorganized sector to start saving. The current interest rate is 6.8% for every year of investment, and the Indian government - just like the PPF, sets the rates every year.
4) ULIP
If you're seeking a long-term investment that combines insurance with investing, look no further. Then a ULIP maybe your best option, as one element of the premium that you pay is utilized for safeguarding your life while the other is invested in stock markets to generate quite a huge amount of returns. These returns are likely to be around 8% - but that is just because it invests in equities; prices are likely to fluctuate. Their premiums and their administrative costs are likewise costly for the same reason.
5) Stock Market Assets
Stocks are the finest way to earn high profits over a long period of time. You can either invest directly in long-term investment equities or set up a SIP in mutual funds. In any case - you should be expecting 12% to 16% returns, with 20% or 30% returns possible when the economy is performing well. Large-cap and mid-cap funds that have a proven track record of giving exceptional rewards and so are some of the top mutual funds for your long-term investment.
6) Real Estate
Investing in a booming sector - let's just say real estate - is one of the best long-term investment options that require a lot of money upfront but guarantees some great returns, but also - only if kept for a long period of time. Houses, farmhouses, plots, commercials, hotels, restaurants, and other properties can be bought.
7) Corporate FDs
Corporates compile these deposits to fund broad and operative activities. Though it is similar to a bank's FD, there is a risk, and it is higher in comparison to other options. But, the interest rates here are a little higher. They also offer an annual interest rate of 6% to 8%.
Conclusion
Finally, any search that begins with the word "best" is unlikely to yield the top results. Always pick a strategy that fits your investing goal, time horizon, and risk profile. So, make sure you choose schemes that align with your financial goals.
