India has a population of over 1.35 billion (Over 135 crore). And, Indian middle class population is the size of the entire US population with over 350 million (35 crore) in numbers. With income inequality on the rise, the middle class population will bear most of the tax and other financial burden to befall. This covid based pandemic has created much more financial stress on each and every individual in the middle class and lower segment of our economy.
To overcome the issue, An individual has to have multiple sources of income. One that provides an increased standard of living. One that provides wealth over a period of time. To have a best investment that’s well diversified into various assets and the same has to provide better return that’s over and above average inflation rate.
Factors to be considered before investing:
- Financial Literacy.
- Investment Time Horizon.
- Risk-Return Analysis.
- Wealth Goals.
- Investing Strategy.
As said, Investment into well diversified assets will provide better return over time. One has to seriously consider investing into a major tax free investment pool. Below mentioned table provides a complete list of various assets one can invest, the time horizon for investment and its risk return analysis.
Top 20 Best Investment Plans for Indian Middle Class Population:
|Sl.no||Investment asset||Return (Expected)||Risk (Expected)||Time Horizon||Tax Implications|
|1||Direct Equity Investment||Relative.||High Risk||Relative.||Exempt upto Rs.1 lakh; Excess of which is taxable at 10%.|
|2||Public Provident Fund (PPF)||7.90%||No Risk||15 Years||Deductions upto Rs. 1.5 lakh u/s 80C; Fully exempt from Tax.|
|3||National Pension Scheme (NPS)||10% – 12%||Low to Moderate||18 – 65 Years||Deductions upto Rs. 1.5 lakh u/s 80C; Additional deduction Rs. 50k u/s 80 CCD(1B).|
|4||Senior Citizens Saving Scheme (SCSS)||7.40%||No Risk||5 Years||Deductions upto Rs. 1.5 lakh u/s 80C; Interest is fully taxable.|
|5||Mutual Fund Investing||Relative.||Moderate Risk||Relative.||Deductions upto Rs. 1.5 lakh u/s 80C. Qualifies Capital Gains tax.|
|6||Sovereign Gold Bond (SGB)||2.5% (+) Relative.||Low Risk||8 Years||Only Interest is taxable.|
|7||Index Investing||Relative.||Moderate Risk||Relative.||Qualifies Capital Gains tax.|
|8||ETF Investing||Relative.||Moderate Risk||Relative.||Qualifies Capital Gains tax.|
|9||Fixed Deposit Schemes||6% – 7%||No Risk||7 Days||Deductions upto Rs. 1.5 lakh u/s 80C.|
|10||Government Securities||6% – 8%||Low Risk||5 – 40 Years||Deductions upto Rs. 1.5 lakh u/s 80C.|
|11||Unit Linked Insurance Plan (ULIP)||Relative.||Moderate Risk||5 Years||Deductions upto Rs. 1.5 lakh u/s 80C; Additionally, the returns are exempt u/s 10(10D).|
|12||Pradhan Manthri Vaya Vandana Yojana (PMVVY)||8%||Low Risk||Relative.||Not eligible for Deduction. Taxable based on slab rates.|
|13||Hybrid Funds||Relative.||Moderate Risk||Relative.||Deductions upto Rs. 1.5 lakh u/s 80C. Qualifies Capital Gains tax.|
|14||RBI Bonds||7.75%||Low Risk||7 Years||Qualifies Capital Gains tax; Interest on bonds is fully taxable.|
|15||Real Estate Investing||Relative.||Moderate Risk||Relative.||Qualifies Capital Gains tax.|
|16||Post Office Monthly Income Scheme (POMIS)||7% – 8.5%||Low Risk||5 Years||Not eligible for Deduction. Taxable based on slab rates.|
|17||Bullion Investing||Relative.||Moderate Risk||Relative.||Qualifies Capital Gains tax.|
|18||Savings Account||3% – 4%||No Risk||Relative.||Deductions upto Rs. 10,000 u/s 80TTA. Taxable based on slab rates.|
|19||Recurring Deposit Account||6% – 7%||No Risk||6 Months||Deductions upto Rs. 10,000 u/s 80TTA. Taxable based on slab rates.|
|20||Crypto Investment||Relative.||High Risk||Relative.||May not be treated under Capital Gain. But, it is taxable.|
Please note: The list is non-exhaustive, rates & returns and the tax implications may change over time.
We invest for various reason. The investment made has to provide for a sense of relief and satisfaction. We invest for Children’s education, Marriage expenses, Family tour, Own a house and much more. It’s a step closer for the fulfillment of our dreams. A goal that we seek to achieve, one that gives a right amount of safety & satisfaction.
Disclaimer: All the information on this website is published in good faith and for general information purpose only.