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5 Best Savings Investment Plans for Salaried Individuals
Posted on Tuesday, June 28th, 2022 | By IndusInd Bank
When you wish to build a strong financial portfolio, it is imperative to put the money in the right financial instrument. The best financial option is, however, dependent on four main factors – risk appetite, liquidity, time horizon and tax slab. Given the complexities of investment, it is not easy to decide where you want to park your savings. To help salaried individuals make better decisions, we list the five investment options that can be rewarding in the long run. Read on.
Fixed Deposit
Many people look at fixed deposits as a part of their retirement plan. The reason is a fixed deposit can be opened for a specific period and delivers a higher interest rate than a conventional savings account. Upon maturity of FD, the investor will receive a return that is equal to the principal amount along with the interest earned during the tenure of the fixed deposit.
Recurring Deposit
A recurring deposit is another savings cum investment option when you want to save regularly over a specific period of time and earn a higher interest rate. In a recurring deposit, a specific amount of money is deducted from the bank account for a specific tenure. Although the interest rate offered in a recurring deposit is lower than that of a fixed deposit, it is a wise investment option when you do not have a lump sum amount to invest.
Equity Mutual Fund
In an equity mutual fund, one has to invest a minimum of 65 percent of the corpus in equities. The fund allows an investor who lacks expertise or time to invest in stocks to get benefits from high growth potential equities. The good thing about equities is that they beat fixed income instruments and inflation by a wide margin over the long term, so these are apt for creating corpuses to achieve long term financial goals.
Public Provident Fund
A PPF comes with a sovereign guarantee making it one of the safest investment avenues. Also, a PPF investment qualifies for tax deduction under section 80C and its maturity, as well as interest components, are also tax-free. The maturity component and being tax-free give PPF an edge over the five-year tax-saving bank FDs and other small savings instruments. However, no liquidity and a lock-in period of 15 years are the two biggest negatives of a PPF. One can withdraw a partial amount, take a loan against PPF or close PPF prematurely depending on some pre-laid conditions.
National Savings Certificate
NSC comes with a lock-in period of 5 years and also qualifies for tax deduction under section 80C. As it is being managed by the Finance Ministry, NSC comes with a sovereign guarantee. The interest rate in NSC is reviewed quarterly and interest component is reinvested annually under section 80C.
Final Words
While there are a number of investment options available, many people prefer options that are safe and offer a steady return. So, as a salaried individual, you can choose among these five investment plans, which are safe and provide a better return. The investment options are best-suited to improve your financial portfolio.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
