Even though there are many investment options available for long term investment, such as Mutual Funds, bank FDs, and equities, industry experts say one should understand one's investment tool first before investing.
When going for long-term investments, people always look for the best return on their investments within a specified time. Having said that, the need for such investments returns varies from person to person and depends on the investor’s financial goals such as their investment horizon, risk appetite, and liquidity.
Even though there are many investment options available for long term investment, such as Mutual Funds, bank FDs, and equities, industry experts say one should understand one’s investment tool first before investing. For instance, investing in equities and stocks is riskier than investing in a bank FD. The risk appetite of an investor denotes the magnitude of risk they can take based on their goals and expected returns.
For long-term savings here are some investment options that investors can look at;
Fixed Deposits (FDs)
Fixed deposits offered by the different banks almost always give out fixed returns on the investments. Note that the returns on the investments could be comparatively low, but the popularity of this investment option is because it provides financial stability and is considered as one of the safe investment tools. They are easy to renew and they are less volatile, which makes them a popular long-term investment option.
Public Provident Fund (PPF)
Another safest investment option Public Provident Funds (PPF) is an ideal choice for long-term investors as they offer a solid return on the investments. PPF comes with a fixed tenure of 15 years which could also be extended by a block of 5 years. However, PPF offers liquidity in the form of partial withdrawals from the 7th year. Along with the safe and secure nature of PPF, the triple tax break – EEE (Exempt, Exempt, Exempt) also lures investors to this scheme.
National Pension Scheme (NPS)
Experts say NPS is another ideal investment option for investors looking for long-term investments, as it offers flexibility by allowing the investor to choose between the auto and the active schemes. Having said that, the lock-in period of this investment option varies depending on the investor’s age. Another advantage of investing in NPS is that it offers investors to make partial withdrawals from their investments.
Owing to their higher returns on long-term investments, mutual funds are considered one of the best options for many investors. With this market-linked investment option, an investor gets to diversify their portfolio through various instruments like equity, money market funds, debt funds, etc. Additionally, there are experienced fund managers that guide investors in making their investment decisions. Along with that, ease of investment, transparency, and tax savings are some of the other advantages of investing in mutual funds.
People know that investment in equities is risky, however, the higher the risk the higher the returns. With this investment option, there is no minimum period for investment. Industry experts say, even though this is a risky investment option, many investors consider direct equity, to be an ideal long-term investment option, especially due to the higher rewards that they offer. Due to market volatility and the high risks involved, it is suggested to analyze the stock markets before investing in them.