Discover the Best Investment Plans for Different Investor Types: Short-term, Long-term, Retirement, Child's Future, and More!
The optimal investment strategy varies for each investor, as their goals, financial circumstances, and risk tolerance levels differ. Although investors are distinct individuals, we have classified them according to their goals, investment timeframes, and financial situations. Presented below are several top investment choices in 2023 tailored to various investor types.
Best Short Term Investment Option
| Investment Options | Rate of Return (in % p.a) |
| Liquid Funds | 5% |
| Corporate Deposits | 5%-7% |
| Bank Fixed Deposit | 3.5-7.25% |
| Recurring Deposits | 4.25-7% |
| Post-Office Time Deposits | 5.5-6.7% |
NOTE
- Mutual fund returns are determined by historical growth rates.
- Returns from Bank Deposits and Post Office Deposits are estimated averages based on prevailing rates.
Who Should Invest?
- Short-term investment options provide foreseeable returns and offer good liquidity.
- They are suitable for investment durations ranging from three years to five years, such as saving for a vacation or a vehicle purchase.
- These options are ideal for risk-averse investors seeking stable returns.
- They also provide good diversification for portfolios already focused on equity investments.
Best Investment Plan for 5 Years
| Investment Options | Rate of Return (in % p.a) |
| Large Cap Mutual Funds | 12.00% to 15.00% p.a. |
| ELSS Mutual Funds | 12.00% to 15.00% p.a. |
| Arbitrage Funds | 4-5% |
| Fixed Maturity Plans | 8-9% |
| Dynamic Bond Funds | 7% |
| Income Funds | 6-7% |
| Corporate Bond Funds | 5.5-7.5% |
| Tax Saving Fixed Deposit | 5-6% |
| Recurring Deposit | 4.25%-7% |
| Post Office Time Deposit | 6.80% to 7.50% p.a. |
| Post Office Monthly Income Scheme | 7.40% p.a. |
| National Savings Certificate (NSC) | 7.70% p.a. |
NOTE
- Mutual fund returns depend on historical growth rates.
- Returns from Bank Deposits and Post Office Deposits are estimated averages of the current rates.
Who Should Invest??
- National Savings Certificate, Tax Saving FD, and ELSS Funds are recommended for tax-saving purposes.
- Investments in these schemes qualify for tax deductions under Section 80C of the Income Tax Act.
- Some of these investment options have a lock-in period of 5 years, making them suitable for long-term goals like purchasing a house or a vehicle.
- If you have a moderate to low-risk appetite, you can consider investing in any of these schemes.
- Ensure that the risk level of the scheme aligns with your own risk tolerance.
Best Investment Plan for 3 Years
| Investment Options | Rate of Return (in % p.a) |
| Liquid Funds | 4.50% to 7.50% p.a. |
| Short Term and Ultra Short Term Funds | 6-8% |
| Low Duration Funds | 3-6% |
| Fixed Deposits | 3.50% to 8.50% p.a. |
NOTE
- Mutual fund returns rely on past growth rates.
- Returns from Bank Deposits are approximate calculations of the current rates.
Who Should Invest?
- If you prefer lower risk and want predictable returns, the 3-year investment plans are a good choice.
- These investment options are primarily focused on debt and carry relatively lower risk.
- Large-cap funds and ETFs/index funds, categorised as equity funds, provide relatively stable returns compared to other equity schemes.
- These investment options are well-suited for goals such as paying off loans/debts, funding travel expenses, or making home improvements.
Best Investment Plan for 1 Year
| Best for 1 Year Investment | Highest Rate of Return (in % p.a) |
| Liquid Funds | 4% |
| Ultra-Short Term Funds | 3-5% |
| Low Duration Funds | 3-6% |
| Fixed Deposits | 7.25% |
| Recurring Deposits | 4.25-7% |
NOTE
- Mutual fund returns depend on historical growth rates.
- Returns from Bank Deposits are calculated based on average estimates of the prevailing rates.
Who Should Invest?
- Highly liquid investment options are the best investment plan for 1 year to create an emergency corpus.
- These options serve as good alternatives for holding liquid cash or money in a savings bank account.
- Debt schemes, although they do not guarantee returns, offer stable or foreseeable returns, allowing you to plan your investments and goals in advance.
- Creating an emergency fund is crucial for both risk-takers and risk-averse investors.
- Investing in one of the aforementioned schemes will assist in building a solid emergency fund.
Best Investment Plan for Monthly Income
| Investment Options | Rate of Return (in % p.a) |
| Monthly Income Fixed Deposit | 3.50% to 8.50% p.a. |
| Post Office Monthly Income Scheme | 7.40% p.a. |
| Senior Citizen Savings Scheme | 8.20% p.a. |
| Long-Term Government Bonds | 3.89% |
| Pradhan Mantri Vaya Vandana Yojana (PMVVY) | 7.40% p.a. |
| FD Annuity Scheme | 6% |
| Mutual Funds – Systematic Withdrawal Plans | Depends on your mutual fund investments. |
NOTE
- Mutual fund returns depend on historical growth rates.
- Returns from Bank Deposits and Post Office Deposits are estimated averages of the prevailing rates.
Who Should Invest?
- Monthly income schemes are suitable for retired individuals, freelancers, or anyone looking for regular monthly income.
- These schemes provide a consistent flow of income and are typically debt-based, offering guaranteed or stable returns.
- As the primary objective of these schemes is capital protection, the returns are generally lower compared to equity funds.
- The associated risk with these schemes is minimal, making them an ideal option for risk-averse investors.
Best Investment Plan for Child’s Future
| Best for Child Future | Rate of Return (in % p.a) |
| Children’s Mutual Funds | 10-15%, market-linked |
| Mid Cap Funds | 10-15%, market-linked |
| Large and Mid-Cap Funds | 10-15%, market-linked |
| Multi-Cap/ Flexi Cap Funds | 10-12%, market-linked |
| Gold Funds | 7-8% |
| International Mutual Funds | 10-15%, market-linked |
| Public Provident Fund (PPF) | 7.10% p.a. |
| Sukanya Samriddhi Yojana (SSY) | 8.00% p.a. |
NOTE
The performance of mutual funds relies on the growth rates observed in the past.
Who Should Invest?
- Child plans assist in saving for your child’s future.
- These schemes are ideal for individuals seeking a secure future investment for their child.
- Planning for a child’s future is typically a long-term goal spanning 10-15 years.
- Equity investments can generate significant returns for long-term goals.
- Low-risk and guaranteed income schemes can help build a substantial corpus over the investment period.
- Choosing the best option to secure your child’s future depends on your risk appetite.
Best Investment Plan for a Salaried Person
| Investment Options | Rate of Return (in % p.a) |
| SIP in ELSS tax-saving funds | 10-15%, market-linked |
| SIP in equity mutual funds | 10-15%, market-linked |
| Hybrid mutual funds | 10-12%, market-linked |
| Debt mutual funds | 7-9%, market-linked |
| Tax-saving fixed deposits | 6.80% |
| Recurring Deposits | 4.50% to 7.30% p.a. |
| National Pension Scheme (NPS) | 9.00% to 12.00% p.a. |
| Public Provident Fund (PPF) | 7.10% p.a. |
NOTE
- Mutual fund returns rely on historical growth rates.
- ELSS, equity, and hybrid funds have a tenure of 5-7 years.
- Recurring deposits have a tenure of 3-7 years.
- Debt mutual funds have a tenure of 1-3 years.
Who Should Invest?
- The mentioned investments are suitable for individuals who want to invest small amounts regularly.
- Tax saving is a significant objective for the salaried class. To achieve tax-saving and investment goals, one can consider investing in ELSS funds, PPF, NPS, and tax-saving FDs.
- The recommended investment horizon for the aforementioned investments ranges from 1 to 15+ years. For debt funds, the ideal investment horizon is 1-3 years, while PPF and equity funds require a long-term investment horizon.
Best Investment Plan for Senior Citizens
| Investment Options | Rate of Return (in % p.a) |
| Debt Funds | 7-9%, market-linked |
| Senior Citizen Fixed Deposits | 7.50% |
| Senior Citizen Savings Scheme (SCSS) | 8.20% p.a. |
| Post Office Monthly Income Scheme (POMIS) | 7.40% p.a. |
| Pradhan Mantri Vaya Vandana Yojana (PMVVY) | 7.40% p.a. |
NOTE
- Historical growth rates determine the returns of mutual funds.
- Debt mutual funds typically have a tenure of 1-3 years.
- Senior Citizen FDs are typically considered to have a tenure of 1-5 years.
- PMVVY, with a tenure of 10 years, offers an average return of 8%.
Who Should Invest?
- The mentioned investments are suitable for senior citizens who seek to generate consistent income through their investments.
- The recommended investment horizon for these investments is 3-10 years. However, you have flexibility in choosing the tenure for investments such as fixed deposits.
- These investments are characterised by low risk and are well-suited for investors with a limited understanding of risk.
Best Investment Plan for Girl Child
| Investment Options | Rate of Return (in % p.a) |
| Child mutual funds | 10-15%, market-linked |
| Equity mutual funds | 10-15%, market-linked |
| Gold funds | 7-8% |
| Sukanya Samriddhi Yojana (SSY) | 8.00% p.a. |
| Public Provident Fund (PPF) | 7.10% p.a. |
NOTE
- Historical growth rates determine the returns of mutual funds.
- Equity and child funds typically have a tenure of 5-7 years.
- Gold funds are generally considered to have a tenure of five years.
Who Should Invest?
- If your objective is to accumulate sufficient wealth to fulfil your girl child’s future aspirations, then the mentioned investments are well-suited for you.
- These investments necessitate a minimum investment horizon of 7+ years. Therefore, if your investment timeline aligns with this requirement, it is advisable to consider investing in the aforementioned options.
- Certain investments, such as mutual funds, entail a greater risk tolerance. If you possess a higher understanding of risk, investing in mutual funds may be suitable for you. Alternatively, you can opt for low-risk investments like PPF or SSY.
Best Investment Plan for Retirement
| Investment Options | Rate of Return (in % p.a) |
| Mid-cap mutual funds | 10-15%, market-linked |
| Large and Midcap mutual funds | 10-12%, market-linked |
| Multi-cap mutual funds | 10-12%, market-linked |
| Gold funds/ETF | 7-8% |
| Public Provident Fund (PPF) | 7.10% p.a. |
| National Pension Scheme (NPS) | 9.00% to 12.00% p.a. |
| Tax-free bonds | 5.5%-6.5% |
NOTE
- Mutual fund returns rely on historical growth rates.
- The tenure for large-cap, mid-cap, multi-cap funds, and gold funds is set at five years.
Who Should Invest?
- Retirement is a long-term objective that necessitates a longer investment timeframe of 10-15+ years.
- If your investment horizon aligns with this, consider investing in PPF, NPS, and mid-cap funds.
- Mid-cap funds are suitable if you have a high risk tolerance.
- If you tend to panic even during minor market corrections, opt for low-risk securities such as PPF, which provide guaranteed returns.
- The aforementioned investments are also well-suited if your goal is to accumulate wealth for a worry-free retirement.
Best Investment Plan for Beginners
| Investment Options | Rate of Return (in % p.a) |
| Large-cap mutual funds and multi-cap funds | 10-12%, market-linked |
| Debt mutual funds | 7-9%, market-linked |
| Gold funds | 7-8% |
| Fixed deposits | 3.50% to 8.50% p.a. |
| Public Provident Fund (PPF) | 7.10% p.a. |
| National Pension Scheme (NPS) | 9.00% to 12.00% p.a. |
| National Savings Certificate (NSC) | 7.70% p.a. |
NOTE
- Mutual fund returns are determined by historical growth rates.
- Large-cap, mid-cap, multi-cap, and gold funds typically have a tenure of five years.
- Debt mutual funds generally have a tenure of 1-3 years.
- Fixed Deposits (FDs) typically have a tenure ranging from 1 to 10 years.
Who Should Invest?
- To make an appropriate choice, beginners should take into account their goals, risk tolerance levels, and investment horizon.
- Initially, it is advisable to invest in low to medium-risk options to gain a better understanding of investing.
- For the purpose of accumulating wealth for medium to long-term goals, consider investing in large-cap funds, PPF, fixed deposits, and NPS.
- If your goal is to secure guaranteed returns, PPF and fixed deposits are highly recommended.
- For returns higher than those provided by fixed deposits, debt mutual funds can be considered.
- If you desire returns that outperform the market, investing in mutual funds is a suitable option.
Best Investment Plan for Long Term Investment
| Investment Options | Rate of Return (in % p.a) |
| Equity mutual funds | 10-15%, market-linked |
| Gold funds | 7-8% |
| Public Provident Fund (PPF) | 7.10% p.a. |
| National Pension Scheme (NPS) | 9.00% to 12.00% p.a. |
| Tax-free bonds | 5.5%-6.5% |
NOTE
- The investments mentioned above typically have a tenure ranging from 5 to 10 years.
- Mutual fund returns are determined by historical growth rates.
Who Should Invest?
- Long-term investments require a minimum investment horizon of 10-15 years.
- To achieve goals such as retirement, funding a child’s education, or paying off a mortgage, you can explore the aforementioned investment options.
- PPF and tax-free bonds are examples of low-risk investments, whereas the remaining options carry higher risk levels. Choose investments based on your risk understanding and tolerance.
Things to Consider While Choosing the Best Investment Plan
Investment Objective: Understanding the purpose behind an investment is crucial for investors. This could include goals such as building a substantial savings pool, establishing a retirement fund, or repaying an existing loan. By knowing the investment objective, one can determine the target amount and identify the appropriate assets to help achieve those goals.
Investment Period: The investment duration can be categorised as short-term, medium-term, or long-term. Short-term investment objectives may involve generating funds for specific purposes like loan repayment or taking a vacation abroad. The short-term investment period typically spans up to 3 years. Medium-term goals may include purchasing a house or paying off a loan within a timeframe of up to 7 years. Long-term investment goals encompass plans for retirement and building a fund for a child’s education or marriage.
Tax Efficiency: Certain investment plans offer tax exemption benefits under specific sections of the Income Tax Act. For instance, ELSS, PPF, NPS, ULIPs, and tax-saving FDs provide tax advantages. Additionally, it is important to consider the taxation of returns. Returns from PPF are completely exempt from taxes, while returns from ELSS are partially taxable. On the other hand, earnings from tax-saving fixed deposits are fully taxable.
Investment Methods: It is crucial to explore the available investment methods. Online investment methods offer speed, convenience, and a paperless experience. In contrast, offline methods are time-consuming and involve extensive paperwork. An option for investing in mutual funds online is utilising an online mutual fund investment platform like Scripbox. This platform enables you to select mutual fund schemes, invest, track, manage, and even redeem your mutual fund investments, all from a single account.
Investment Flexibility: Some investment plans, such as tax-saving fixed deposits, require an upfront lump sum investment. In contrast, mutual funds offer the Systematic Investment Plan (SIP) method, allowing investors to contribute a small amount at regular intervals. This provides flexibility in managing cash flow and maintaining financial discipline simultaneously.
Comparison Between Best Investment Plans
Before making an investment decision, it is essential for every investor to compare various investment plans based on factors such as liquidity, risk, return on investment, and more. Below is a comparison of the best investment options in India to assist you in formulating your investment strategy:
| Investment Plan | Lock-in Period | Liquidity | Risk | Return | Recommended for |
| Public Provident Fund | 15 years | Offers liquidity through loans and partial withdrawals | Capital protection and risk-free return | 7.10% p.a. | Investors with long-term financial goals |
| Unit-Linked Insurance Plans | 5 years | Liquid after lock-in period completion | Market volatility dependency, impact on net asset value | 12.00% to 15.00% p.a. | Investors with long-term financial needs |
| NPS | Until age 60 | Not considered liquid | Market and tenure-dependent risk | 9.00% to 12.00% p.a. | Individuals planning early retirement, low-risk appetite |
| Fixed Deposit | Varies | Liquid with penalty | Interest rate risk, locked-in at potentially lower returns | 3.50% to 8.50% p.a. | Risk-averse investors |
| Short Term Debt Mutual Fund | No lock-in | Better liquidity than other instruments | Medium risk investment | Average 7%-8% | Investors seeking returns better than fixed deposits |
| Gold ETF | No lock-in | Highly liquid | Less risky compared to physical gold | Average 8-10% | Diverse range of investors |
| Debt Mutual Fund | No lock-in | High liquidity | Credit risk and interest rate risk | Average 7-8% | Investors with lower risk tolerance |
| Equity Mutual Fund | 3 years | Not redeemable before lock-in period | Higher risk due to equity investments | 10-12% | Investors comfortable with higher risk |
| Hybrid Mutual Funds | No lock-in | Highly liquid | Moderate risk with equity and debt instruments | 7-9% | Investors seeking portfolio diversification |
Selecting an investment option that aligns with your objectives, time horizon, and risk understanding is essential to effectively grow your wealth and achieve your goals and aspirations. It is crucial to exercise prudence when making investment choices.
FAQs
Which mutual fund is best for long term investment?
Equity funds are considered excellent options for long-term investments due to their potential to outperform other asset classes over extended periods. Within the realm of equity funds, there exist sub-categories such as large-cap, mid-cap, multi-cap, ELSS, and index funds. Depending on your goals and risk tolerance, you can select suitable investments. For instance, large-cap and index funds are preferable for a five-year investment horizon, while mid-cap funds offer better prospects for a seven-year investment horizon.
Which investment plan doubles your money?
While every investment has the potential to double your money, the speed at which this occurs depends on the returns generated. Higher returns can facilitate a faster doubling of your investment. High-risk investments have the potential to double your money at a quicker pace. For instance, stock investments may double your money in 3-5 years, while mutual funds may achieve this in 5-6 years. In contrast, low-risk investments require more time for doubling. PPF investments typically take around 8 years, while FDs may take approximately 8-9 years to double your investment.
Where to invest money to get a good return?
Determining what constitutes a good return is subjective. However, as a general guideline, it is advisable to invest in schemes that have the potential to generate returns higher than the inflation rate. Over time, equity investments have demonstrated the ability to deliver the highest returns, but they also come with considerable risks. If you are comfortable with taking risks, investing in equities may be suitable for you. Conversely, if you prefer a more cautious approach, debt instruments or government-backed schemes can provide stable returns
What is the impact of tax on my Investment?
Taxation represents an expense that can diminish your overall investment returns. Therefore, it is crucial to carefully evaluate the pre-tax and post-tax returns of any investment before committing to it. Opt for investments that either provide tax-free returns, such as PPF, or involve lower tax liabilities. For equity funds, long-term capital gains (LTCG) are subject to a 10% tax on gains exceeding ₹ 1,00,000. However, you can potentially reduce your tax burden by employing tax harvesting strategies.
Which investment scheme gives the highest return?
The primary objective of investing is to generate returns. The returns on an investment are influenced by various factors, including the type of investment, portfolio composition, investment terms, and prevailing market conditions. Certain investments offer fixed returns, while others are subject to fluctuations based on market dynamics.
What is the best investment for the next five years?
The financial market provides numerous investment options that offer varying investment tenures and levels of risk. A tenure of 5 years is typically categorised as a medium to long-term horizon. Within this timeframe, investors can choose from a range of options such as fixed deposits, recurring deposits, equity mutual funds, debt mutual funds, corporate bonds, government bonds, and government securities like National Savings Certificate (NSC). However, it is important to note that each investment option differs in terms of potential returns, liquidity, risk factors, tax implications, and other relevant factors.
What is the safest investment with the best return?
Risk and return share a direct relationship, meaning that higher returns typically correspond to higher levels of risk. However, it is important to note that taking on more risk does not guarantee higher returns. If an investor's risk understanding is lower than the level of risk associated with a particular investment, it is advisable to avoid it. If even a minor change in the investment portfolio has a negative impact on an investor, it indicates a reluctance to accept additional risk. In such cases, low-risk investment options like fixed deposits, recurring deposits, debt securities such as debt funds, and government bonds are better suited.
How lock-in period works for ELSS mutual funds?
ELSS, also known as equity-linked mutual funds, require a compulsory lock-in period of 3 years. During this time, the invested amount cannot be redeemed. However, once the 3-year lock-in period has ended, investors have the flexibility to redeem the units of ELSS at any point.
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