Mutual funds truly seem to be one of the most preferred investment options for Indians. The facility to use the SIP route for investing has played a key role in this popularity. In fact, in the April-September 2019-20 period, the contributions due to SIPs alone stood at ₹49,361 crores, according to information provided by the Reserve Bank of India.
But financial awareness still seems to be low among the Indian population. That is one of the reasons why many don’t realize there are lots of other great investment options too, such as gold as an investment. If you are looking for the best investment options for 2020, here is a list.
1. Unit Linked Insurance Plans
Unit Linked Insurance Plans are a great mix of protection and saving. In ULIP schemes, a portion of your capital is used for investment in a life insurance policy and the rest is put into market linked assets, such as mutual funds. This means you get the benefit of wealth accumulation, along with life cover.
In addition, the premium paid towards ULIPs are tax exempt under Section 80C of the IT Act. The limit for these exemptions is ₹1.5 lakh. Even the amount received upon maturity is exempt from taxes.
Gold not only looks great as an ornament but is also one of the best investment options. One of the biggest reasons that makes gold as an investment a great idea is that this precious metal is a safe haven investment. This means that even during times of economic crisis or market volatility, the price of gold either remains stable or rises. Gold tends to hold its value remarkably well over the long term. This is why many people prefer to keep their money in the form of gold.
Another major benefit of gold is that it provides high liquidity. Neither does it have a lock-in period, nor do you need a lot of paperwork to get rid of it, such as in the case of real estate.
But what confuses many people is how to invest in the metal. Buying physical gold and storing it is not the best option, since it is open to the risk of theft. This is where sovereign gold bonds come to the rescue. They are generally priced lower than physical gold and also provide around 2.50% higher returns than physical gold.
3. National Pension Scheme
NPS is a government backed pension scheme, launched in 2004. It is a great option for those planning for retirement but have low risk appetite. The scheme provides regular pension upon retirement. So, it is great for tax saving.
4. Public Provident Fund
Another great scheme for building a retirement fund is the PPF. It has a lock-in period of 15 years, which can be extended for an additional 5 years. They can provide great returns, plus tax saving benefits. The premium paid towards PPF provides tax benefits under Section 80C, and even the interest earned is exempt from taxes.
Apart from investing in gold bonds, PPF, NPS, and ULIPs, you can also choose fixed deposits and the Senior Citizens Saving Scheme for smart investments.