Top 10 Best Investment Options in India 2023 – Best Investment Plans for High Returns

This post was most recently updated on November 28th, 2023

Are you looking to invest your money wisely in India? With so many investment options available, it can be overwhelming to decide which one is right for you. To make your investment journey easier, we have compiled a list of the Top 10 Best Investment Options in India. From stock investments and mutual funds to PPF and NPS, we have included all the details you need to know.

We have also covered the benefits of investing in FD, SCSS, gold, and real estate. Read on to find out which investment option suits your financial goals and risk-taking ability.

Investing involves taking on some level of risk, as the value of an investment can fluctuate based on a variety of factors, such as economic conditions, market trends, and company performance.

While choosing the best investment plan for your needs, we recommend you weigh the risks vs. returns for each of the investment options.

Use our Investment Goal Calculator to check how you can meet your investment needs.

Overview of Top 10 Best Investment Options in India: Best Investment Plans

Before you try to find out the best investment plan in India; we suggest you evaluate your investment plan and ask yourself why you want to invest and what is your goal. You must have very good financial planning done for yourself.

Consider reading: 13 safe investments with high returns in India

1. Direct Equity: The Best Investment Option in India

Equity shares, also known as stocks or shares, are a type of investment that allows individuals to become owners of a company.

When you buy equity shares in a company, you become a shareholder and are entitled to a share of the company’s profits.

Equity shares are considered a high-risk, high-reward investment option, as their value can fluctuate significantly depending on the performance of the company.

This is a popular investment option for those looking to earn higher returns in the long run and have a higher risk appetite.

Here are some benefits of investing in direct equity shares:

1. Potential for high returns: Equity shares have the potential to offer higher returns in the long run compared to other investment options such as fixed deposits or debt mutual funds.
2. Diversification: By investing in a diverse range of equity shares, you can spread risk and potentially maximize your returns.
3. Control: As a shareholder, you have the right to participate in the company’s decision-making process and can potentially influence its direction.
4. Liquidity: Equity shares are highly liquid, meaning you can buy and sell them easily on the stock exchange.

However, it’s important to note that investing in direct equity shares carries significant risks. The value of your investment can fluctuate significantly depending on the performance of the company and the overall stock market.

Here are some tips for investing in direct equity shares:

1. Start early: It’s a good idea to start investing in equity shares at an early age to take advantage of the power of compound interest.
2. Diversify your portfolio: It’s important to diversify your portfolio by investing in a range of sectors and companies to spread risk. Start with investing in good quality Blue Chip stocks.
3. Invest for the long term: Equity shares are a long-term investment option, and it’s important to have a long-term investment horizon to maximize your chances of earning good returns.
4. Keep an eye on the market: It’s important to stay informed about the stock market and the performance of the companies you are invested in.

No doubt investing in direct equity shares is the best option amongst the top 10 best investment options in India.

Consider reading: How to start investing in the Share market

2. Equity Mutual Funds: The Most Popular Investment Option in India

Equity mutual funds are investment vehicles that pool money from a large number of investors and invest it in a diversified portfolio of stocks.

These funds are managed by professional fund managers and offer investors the opportunity to earn higher returns by investing in the stock market.

Equity mutual funds are considered a high-risk, high-reward investment option, as the value of the fund can fluctuate significantly depending on the performance of the underlying stocks.

This is a popular investment option for those looking to earn higher returns in the long run and have a higher risk appetite.

Here are some benefits of investing in direct equity mutual funds:

1. Professional management: Equity mutual funds are managed by professional fund managers who have expertise in selecting stocks and managing a diversified portfolio.
2. Diversification: By investing in an equity mutual fund, you can diversify your portfolio and spread risk across a range of sectors and companies.
3. Liquidity: Equity mutual funds are highly liquid, meaning you can buy and sell them easily through the fund house or a mutual fund distributor.
4. Flexibility: Equity mutual funds offer flexibility in terms of the investment amount, with a minimum investment of Rs. 500 in most cases.
5. Tax benefits: Equity mutual funds offer tax benefits under certain circumstances, such as long-term capital gains tax exemptions on investments held for more than 1 year.

In India, there are various types of equity mutual funds available, each with its investment strategy and risk profile. Here are some common types of equity mutual funds in India:

1. Large Cap Funds: These funds invest in large and well-established companies with a strong track record of performance. They are considered a relatively low-risk investment option and are suitable for investors with a low to moderate risk appetite.
2. Mid-Cap Funds: These funds invest in medium-sized companies with the potential for higher growth. They carry higher risk compared to large-cap funds but also offer the potential for higher returns. They are suitable for investors with a higher risk appetite and a long-term investment horizon.
3. Small Cap Funds: These funds invest in small and emerging companies with the potential for high growth. They carry the highest risk among equity mutual funds but also offer the potential for the highest returns. They are suitable for investors with a high-risk appetite and a long-term investment horizon.
4. Sectoral Funds: These funds invest in specific sectors of the economy, such as technology, healthcare, or infrastructure. They offer the opportunity to benefit from the growth potential of a particular sector but also carry sector-specific risks.
5. Tax Saving Funds: These funds, also known as Equity Linked Savings Schemes (ELSS), offer tax benefits under certain circumstances. They invest in a diversified portfolio of stocks and have a minimum lock-in period of 3 years.
6. Balanced Funds: These funds invest in a combination of stocks and fixed-income securities, such as bonds, to offer a balance of risk and return. They are suitable for investors with a moderate risk appetite and a medium to long-term investment horizon.

Consider reading: Top 10 Best Mutual Funds for SIP.

Investing in equity mutual funds is one of the best investment options in India.

Looking to do SIP in Mutual funds? Consider using our SIP Calculator.

3. Debt Mutual Funds: A Great Alternative for Secure Investments

Debt mutual funds are investment vehicles that invest in a range of fixed-income securities, such as corporate bonds, government securities, and money market instruments.

These funds are managed by professional fund managers and offer investors the opportunity to earn income from the interest paid on these securities.

Debt mutual funds are considered to be less risky than equity mutual funds, which invest in stocks, as the value of fixed-income securities tends to be more stable.

Here are some benefits of investing in debt mutual funds:

1. Moderate risk: Debt mutual funds carry lower risk compared to equity mutual funds, as the value of fixed-income securities tends to be more stable.
2. Regular income: Debt mutual funds offer regular income in the form of interest payments, making them a good option for those looking for a steady source of income.
3. Tax benefits: Debt mutual funds offer tax benefits under certain circumstances, such as long-term capital gains tax exemptions on investments held for more than 3 years.
4. Diversification: By investing in a debt mutual fund, you can diversify your portfolio and spread risk across a range of sectors and credit ratings.
5. Liquidity: Debt mutual funds are highly liquid, meaning you can buy and sell them easily through the fund house or a mutual fund distributor.

Here are some tips for investing in debt mutual funds:

1. Understand your investment horizon: It’s important to understand your investment horizon and choose a debt mutual fund that aligns with it. Short-term debt funds are suitable for investors with a shorter investment horizon, while long-term debt funds are suitable for investors with a longer investment horizon.
2. Consider your risk appetite: Debt mutual funds offer a range of risk profiles, from low-risk options such as gilt funds to higher-risk options such as corporate bond funds. It’s important to choose a fund that aligns with your risk appetite.
3. Diversify your portfolio: It’s important to diversify your portfolio by investing in a range of sectors and credit ratings to spread risk.
4. Keep an eye on interest rates: Changes in interest rates can affect the value of your debt mutual fund, so it’s important to stay informed about interest rate movements.

Investing in debt mutual funds is one of the safest and best investment options in India.

Worried about debt fund problems recently? Consider reading: Are debt funds safe?

4. National Pension System (NPS): A Retirement Choice

The National Pension System (NPS) is a government-backed retirement savings scheme that allows individuals to invest in a range of investment options and earn a pension after retirement.

The NPS is administered by the Pension Fund Regulatory and Development Authority (PFRDA) and is available to all citizens of India, including self-employed individuals and corporate employees.

Consider reading: How to open an NPS account

NPS offers two kinds of investment options. NPS Tier 1 account and NPS Tier 2 account.

NPS Tier 1 account: This is mandatory as part of the NPS account creation and you can not withdraw money until the age of 60.

NPS Tier 2 account: This is an optional account that can be created by the subscriber to get the benefits of a lower expense ratio if you are planning to invest in mutual funds.

Here are some benefits of investing in the NPS:

1. Tax benefits: The NPS offers tax benefits under certain circumstances, such as deductions under Section 80CCD of the Income Tax Act.
2. Flexibility: The NPS offers flexibility in terms of the investment amount, with a minimum investment of Rs. 500 per month.
3. Diversification: The NPS offers a range of investment options, including equity, debt, and government securities, allowing investors to diversify their portfolios and spread risk.
4. Professional management: The NPS is managed by professional fund managers who have expertise in selecting investments and managing a diversified portfolio.
5. Nomination facility: The NPS offers the option to nominate a beneficiary in case of the investor’s demise.
6. Withdrawal options: The NPS allows investors to withdraw a portion of their corpus on attaining the age of 60, while the remaining amount is used to purchase an annuity to provide a regular pension.

However, it’s important to note that investing in the NPS carries some risk, as the value of the investments can fluctuate depending on market conditions.

Here are some tips for investing in the NPS:

1. Start early: It’s a good idea to start investing in the NPS at an early age to take advantage of the power of compound interest.
2. Understand your investment horizon: It’s important to understand your investment horizon and choose an investment option that aligns with it. The NPS offers a range of investment options, including aggressive, moderate, and conservative, with varying levels of risk and return.
3. Diversify your portfolio: It’s important to diversify your portfolio by investing in a range of investment options to spread risk.
4. Review your investments regularly: It’s a good idea to review your NPS investments regularly to ensure they are aligned with your investment goals and risk appetite.

In conclusion, investing in the NPS can be a good option for those looking to save for retirement and take advantage of tax benefits.

Investing in NPS is one of the best investment options in India for retirement savings.

5. Public Provident Fund (PPF): The Most Secure Investment Option

The Public Provident Fund (PPF) is a long-term investment option offered by the Government of India. It is a savings scheme that provides both safety and attractive returns, making it a popular choice among investors.

One of the main benefits of the PPF is its tax-free status. The contributions made to the PPF account are eligible for tax deductions under Section 80C of the Income Tax Act, 1961, up to a maximum of INR 1.5 lakh per year.

The interest earned on the PPF account is also tax-free, making it a suitable option for those looking to save on taxes.

Another advantage of the PPF is its flexibility. Contributions can be made at any time during the year, with a minimum contribution of INR 500 per year.

The PPF account has a 15-year tenure, but it can be extended for a block of 5 years at a time, up to a maximum of 3 blocks.

This allows investors to continue earning returns on their investments for a longer period of time.

The PPF also offers attractive returns, with the interest rate being revised every quarter.

The latest interest rate on the PPF is 7.1% per annum in 2023, making it one of the highest-yielding investment options available.

The interest is calculated on a compound basis, which means that the interest earned is reinvested, leading to higher returns over time.

However, the PPF has some limitations as well. The contributions made to the PPF account are locked in for a period of 15 years, which means that the investor cannot withdraw the money before the completion of the tenure.

In case of an emergency, the investor can make a partial withdrawal of up to 50% of the balance in the account after completing 7 years. However, this withdrawal is not tax-free and is subject to tax deductions.

The Public Provident Fund is a suitable investment option for those looking for a long-term savings plan with tax benefits and attractive returns. It offers a good balance between risk and reward, making it an attractive choice for a wide range of investors.

If you are already contributing to EPF via your salary then you must evaluate the option of VPF(Voluntary Provident fund) to get a better interest rate as compared to PPF.

Investing in PPF is one of the best investment options in India for retirement savings.

Consider reading: EPF vs PPF vs VPF vs GPF

6. Bank Fixed Deposit (FD): The Most Popular Investment Option

A fixed deposit (FD) is a type of investment option offered by banks in India, where you deposit a certain amount of money for a fixed period of time.

The interest rate on fixed deposits is usually higher than on a savings account, and the tenure of the deposit can range from a few weeks to several years.

FDs are considered a safe investment option as they are backed by the stability and reputation of the bank.

One of the main advantages of a fixed deposit is the predictability of returns. The interest rate on a fixed deposit is fixed at the time of investment, so you know exactly how much money you will receive at the end of the tenure.

Consider reading: Liquid Funds Vs FD Which is Better to Invest

This can be helpful for financial planning, as you can calculate the returns on your investment in advance.

FDs are also a good option for those who want to earn a higher interest rate on their savings without taking on too much risk.

While the returns on a fixed deposit may not be as high as some other investment options, the risk of losing your principal is low.

Another advantage of a fixed deposit is the flexibility of tenures. You can choose a tenure that suits your financial goals and needs. For example, if you need to save for a short-term goal, such as a vacation, you can choose a shorter tenure.

On the other hand, if you are saving for a long-term goal, such as retirement, you can choose a longer tenure to benefit from the compound interest earned on your investment.

FDs also offer the convenience of being able to open an account online or at a bank branch, and there is no minimum balance required to open an FD account.

Additionally, many banks offer the option to automatically renew your fixed deposit at the end of the tenure, so you don’t have to worry about remembering to reinvest your money.

There are a few drawbacks to consider when investing in a fixed deposit. One is that the interest rate on fixed deposits tends to be lower than other investment options, such as stocks or mutual funds.

Additionally, your money is locked in for the duration of the tenure, so you cannot access it until the end of the term. This means that if you need to withdraw your money early, you may incur a penalty or lose out on some of the interest earned.

A bank fixed deposit (FD) is a safe choice for investing in India. Under the deposit insurance and credit guarantee corporation (DICGC) rules, each depositor in a bank is insured up to a maximum of Rs 5 lakh for both principal and interest amounts.

As per the need, one may opt for monthly, quarterly, half-yearly, yearly, or cumulative interest options in them. The interest rate earned is added to one’s income and is taxed as per one’s income slab.

The interest rate for FD in the current situation is crashing as RBI has reduced the interest rates.

Latest Bank FD Rates in 2023

Here are the Latest Bank FD rates in 2023:

7. Senior Citizen’s Saving Scheme (SCSS): A Great Choice for Retired Employees

The Senior Citizen’s Saving Scheme (SCSS) is a government-backed investment option in India specifically designed for senior citizens.

It offers a combination of stability and potential for moderate returns, making it a popular choice for retired individuals looking to invest their savings.

One of the main benefits of the SCSS is the high-interest rate offered on deposits. As of 2023, the interest rate on the SCSS is 8.2 % per year, which is higher than many other investment options available to seniors.

The interest is paid out quarterly and is fully taxable, but seniors can claim a tax deduction on the interest earned under certain circumstances.

Another advantage of the SCSS is the flexibility of the tenure. The scheme allows you to choose a tenure of 5 years, which can be extended for an additional 3 years at the end of the original term. This allows seniors to plan their investments according to their financial goals and needs.

The SCSS is also a secure investment option, as it is backed by the government of India. This means that the risk of losing your principal is low, making it a suitable option for those who want to preserve their savings while earning a moderate return.

To be eligible for the SCSS, individuals must be at least 60 years old and have retired from a government job or a private sector job with a superannuation benefit. NRIs (Non-Resident Indians) are not eligible for the SCSS.

The minimum deposit amount is Rs. 1,000, and there is no maximum limit, although the total deposits under the SCSS cannot exceed Rs. 15 lakhs.

There are a few drawbacks to consider when investing in the SCSS. One is that the returns may not be as high as other investment options, such as stocks or mutual funds.

Additionally, the money invested in the SCSS is locked in for the duration of the tenure, so you cannot access it until the end of the term. This means that if you need to withdraw your money early, you may incur a penalty.

SCSS is one of the best investment options in India for senior citizens.

Read more about How to invest in Senior Citizens Savings Scheme

8. RBI Taxable Bonds: A Lesser Known Investment Option

The Reserve Bank of India (RBI) offers an investment opportunity known as RBI Taxable Bonds, which is especially appealing to individuals and Hindu Undivided Families (HUFs) seeking a stable and secure investment avenue.

As of 2023, RBI Taxable Bonds offer a compelling interest rate of 8.05% per annum, paid semi-annually, though this interest is fully taxable. This rate is relatively high compared to other low-risk investment options, making these bonds an attractive choice for those aiming to balance returns with security.

A notable feature of these bonds is their flexible tenure. While the standard period is 7 years, investors have the option to redeem them after 5 years, aligning with varied financial planning needs. This flexibility is beneficial for tailoring investments to specific financial goals.

Eligibility for investing in these bonds is restricted to resident Indians and HUFs, excluding Non-Resident Indians (NRIs). The investment process is accessible, with a minimum amount of Rs. 1,000 and no upper limit, although the total investment in a financial year is capped at Rs. 10 lakhs.

Despite their advantages, RBI Taxable Bonds also have some limitations. The returns might not be as high as more aggressive investment vehicles like stocks or mutual funds. Additionally, the investment is locked in for the bond’s tenure, limiting liquidity and potentially incurring penalties for early withdrawal.

In summary, RBI Taxable Bonds present a reliable and convenient investment option for those in India who prefer moderate returns with minimal risk. It’s crucial for investors to consider the bond terms, including tenure, interest rates, and potential fees or penalties, to make an informed investment decision.

9. Real Estate: The Riskiest Option

Real estate investment in India stands as a favored choice, offering the dual benefits of income generation and long-term capital appreciation. This asset class, known for its historical stability, presents multiple avenues for investment, including purchasing rental properties, exploring Real Estate Investment Trusts (REITs), or tapping into real estate crowdfunding platforms.

One key advantage of real estate investment is the potential for substantial returns. With thorough research and due diligence, investors can identify properties that not only promise a consistent rental income but also appreciate in value over time. This aspect is particularly appealing in the rapidly developing urban and suburban areas of India, where real estate often becomes more valuable as infrastructure and communities develop.

Real estate is also valued for its relatively low volatility, especially when compared to more fluctuating assets like stocks. This stability can make real estate a more comfortable choice for investors seeking to avoid the ups and downs of the stock market.

Flexibility is another hallmark of real estate investing. Investors have the liberty to choose from diverse property types — residential, commercial, or industrial — each catering to different investment goals and risk tolerances. Moreover, real estate can be a long-term investment, allowing for the benefits of compound interest over extended periods.

However, potential investors must consider the high initial costs associated with real estate. Purchasing property involves significant financial outlay, including financing, maintenance, and other related expenses. The process of property acquisition demands an understanding of the local market dynamics and legalities, which can be intricate and time-consuming.

For those considering real estate in India, it is crucial to conduct extensive research and weigh the costs, risks, and potential returns. This includes understanding market trends, property valuation, legalities, and tax implications. Real estate investment can offer lucrative opportunities, but it requires careful planning, patience, and a strategic approach.

In summary, while real estate investment in India can be a profitable endeavor providing both income and capital growth, it demands careful consideration of various factors, including market research, financial commitment, and long-term planning. This balanced approach can help in making informed decisions that align with one’s financial goals and risk appetite.

10. Gold: Every Household’s Choice

Investing in gold is a well-regarded strategy in India, offering a safeguard against inflation and adding diversity to investment portfolios. Gold’s value often increases amidst economic volatility, making it an effective tool for preserving the purchasing power of your savings against inflationary trends. This is particularly relevant in India, where gold is not only a traditional investment but also has cultural significance.

Diverse investment options in gold include purchasing physical gold, investing in gold ETFs (Exchange-Traded Funds), or engaging in gold futures contracts. Each of these methods offers its unique advantages. Physical gold, for instance, is tangible and has the added benefit of cultural value, especially in the Indian context. Gold ETFs provide a more convenient and cost-effective way to invest in gold without the hassle of storing physical gold. Gold futures contracts, meanwhile, allow investors to speculate on the future price of gold, offering the potential for significant returns.

One notable benefit of gold investment is its potential as a hedge against inflation. As currencies lose value over time due to inflation, gold usually maintains or increases in value. Moreover, gold typically has a low correlation with other asset classes, such as stocks and bonds. This means that it can behave differently from these assets, providing portfolio diversification and potentially reducing overall investment risk.

Another advantage of gold is its liquidity. Recognized globally, gold can be easily bought and sold, offering quick conversion into cash if necessary. Its various forms – coins, bars, jewelry – offer flexibility in terms of storage and transport.

However, it’s important to be aware of gold’s drawbacks. Primarily, gold does not produce any income like dividends or interest. Its value relies solely on price appreciation, which can be unpredictable. Market fluctuations, driven by economic conditions, geopolitical tensions, and investor sentiment, can lead to volatile gold prices. Therefore, there’s an inherent risk of price decline and potential loss.

For those seeking alternatives in paper gold, Sovereign Gold Bonds present an attractive option. These bonds are issued by the government, offering a fixed interest rate in addition to exposure to gold price movements.

Consider reading: Sovereign Gold Bonds Details and Calculator

In times of economic recession or market uncertainty, gold often becomes a sought-after asset. Allocating a portion of your investments to gold can be a prudent strategy to counterbalance inflation and market volatility.

In conclusion, gold stands out as a preferred investment choice in India, given its ability to counter inflation and bring diversity to investment portfolios. It’s crucial for investors to weigh the associated risks and potential rewards, and consider their individual financial goals and risk tolerance before investing in gold. Gold’s role as a traditional and cultural asset in India further underscores its significance as an investment option.

Consider reading: How to Invest in Gold in India – 5 Best Ways

Closing Thoughts on Top 10 Best Investment Options in India

We looked at the Top 10 Best Investment options in India in the above article, but there are several other investment choices available in the Indian market.

You should carefully evaluate each investment option as per your needs and invest your hard-earned money in it.

Do not look to earn quick bucks, You might be lucky initially, but in the long term, there is no shortcut to making quick money!

FAQs on Top 10 Best Investment Options in India – Best Investment Plans