Introduction
Good returns mean different things to different people. For someone chasing a one-year goal, a 7.5% to 8% return can feel good. A long-term investor may want to earn over 12%. Some conservative investors are happy keeping up with inflation. Others want to beat it and build long-term wealth. So we can say that the idea of ‘good returns’ changes based on your goals, investment horizon, and your risk appetite. Here, we’ll look at popular investments that offer good returns when used for the right goal.
1. Equity Mutual Funds
As the name suggests, equity funds invest mainly in stocks. For example, a large-cap fund invests at least 80% of its assets in shares of large-cap companies. While these funds carry higher risk in the short term, the risk reduces over a long-term horizon. Equity funds are an excellent option for long-term investors seeking growth. Check out some of their key features:
- These are professionally managed vehicles, with experienced fund managers handling your investments. These pros aim to deliver higher returns than the fund's benchmark.
- You spread your money across a number of stocks to reduce risk.
- Returns are market-linked, so they offer the potential for higher growth.
- There’s a vast variety of options to choose from. You can go for relatively safer large-cap funds, moderately risky flexi-cap funds, or high-risk, high-reward sectoral funds.
- One can easily start investing with SIPs. A regular investment option makes mutual funds perfect for salaried individuals with long-term goals.
- There’s no need to time the market when taking the SIP route. They help average out the total cost of the investment.
- AMCs charge a small fee, called the expense ratio, to manage the fund.
- ELSS funds offer deductions under Section 80C.
2. Stocks
Investing in direct equities means buying shares of listed companies. While shares offer high growth potential, they also come with higher risks. Features include:
- They allow investors to have full control over their portfolios. Investors decide which companies to buy, when to buy, and when to sell.
- You earn returns in the form of dividends or capital appreciation.
- When chosen well, stocks can offer excellent returns over the long term.
- Stock investing demands research and effort. Investors must be willing to study company financials and follow market trends regularly.
- Spreading investments across sectors and companies can reduce risk.
- Stocks offer very high liquidity.
- They're a good option for knowledgeable investors with a high risk tolerance and long-term horizon.
3. Hybrid Mutual Funds
Hybrid funds invest in a mix of equity and debt assets. While the debt component makes them more stable than pure equity funds, it also lowers the return potential. There are many types of hybrid funds to choose from, such as:
- Conservative Hybrid Funds: The debt component outweighs the equity portion significantly. They are suited to conservative investors looking for moderate returns.
- Balanced Advantage Funds: The fund manager dynamically adjusts equity and debt exposure depending on market conditions. These funds have emerged as a popular category in recent years. Someone looking for medium to short term investment plans with high returns can consider them.
- Equity Savings Schemes: Here, the focus is on capital preservation. These funds offer some equity exposure to generate better returns than debt funds.
- Arbitrage Funds: The fund manager follows an arbitrage strategy, that is, making a profit from price differences.
- Multi Asset Allocation Funds: The fund invests across three or more asset classes. The manager must allocate at least 10% of the portfolio in each asset class.
The taxation of hybrid funds depends not just on the holding period but also on the equity-debt composition. Equity-oriented hybrid funds (where at least 65% is allocated to equities) enjoy equity taxation. Debt-oriented hybrid funds follow the taxation rules for debt funds.
4. Debt Mutual Funds
Debt funds invest in instruments like T-bills, government bonds, CPs, CDs, and corporate bonds. While their returns are market-linked, they are much safer compared to equity funds. They also depend on interest rate changes and credit quality. The predictable returns and low volatility make debt funds a great option for conservative investors. Those seeking to create a regular income can also benefit from them through Systematic Withdrawal Plans.
If your goals are about one year away, you can choose from:
- Liquid funds
- Ultra-short duration funds
- Money market funds
If you have a low risk appetite for goals that are 3 to 7 years away, you can consider:
- Medium duration funds
- Medium to long duration funds
- Long-duration funds
Other types of debt funds, like corporate bond and banking and PSU funds, also offer potentially better post-tax returns than traditional options.
A debt fund SWP is one of the best investment plan for monthly income, too. It allows you to withdraw a fixed amount every month while the remaining amount continues to grow.
5. Post Office Schemes
The government backs post office schemes, making them some of the safest investments. They offer numerous options, each with its own benefits, eligibility rules, purpose, and tax advantages. Some popular choices you can consider are:
Public Provident Fund
- PPF offers a fixed interest rate. Currently, it stands at 7.1% per annum.
- It’s an EEE instrument, meaning the principal, interest, and maturity amount are all exempt from tax.
- PPF comes with a lock-in period of 15 years, which can be further extended by the investor.
- You can invest only up to Rs. 1.5 lakh in a financial year.
- It's often chosen by long-term investors for retirement planning and availing tax benefits.
Senior Citizens Savings Scheme
- This scheme aims to provide retirees with a regular income.
- As of FY 2025/26, the interest rate is 8.2% per annum, paid quarterly.
- You can invest a maximum of Rs. 30 lakh.
- The investment is locked in for 5 years. (Like PPF, it can be extended by the investor.)
- Suitable for senior citizens seeking a safe way to generate a regular income.
Post Office Monthly Income Scheme
POMIS provides a fixed monthly payout on your investment. It’s one of the best investment for monthly income for conservative investors who want steady income without market risk.
6. Gold and Silver
Gold and silver are good choices for diversifying your portfolio. Nowadays, you can easily invest in these metals through digital means like mutual funds and ETFs. While there’s much debate about gold vs silver investment, both can play a useful role in a portfolio. The right choice depends on your goals, budget, and how much volatility you can handle.
7. Unit-Linked Insurance Plans
If you’re looking for investment, tax benefits, and life cover in one product, ULIPs have your back.
- Insurance companies offer these products.
- A portion of your premium goes towards insurance, while the rest gets invested in a fund.
- You can choose the type of fund you want, depending on your goals and risk appetite.
- Most ULIPs also allow you to switch between funds, so you can adjust your strategy as things evolve.
- ULIPs are Section 80C instruments. You can claim a deduction of up to Rs. 1.5 lakh per year by investing in them.
- Suitable for long-term investors.
How to Pick the Best Investment for Your Goals
Keep these four factors in mind when selecting investments:
1. Your Financial Goals
You should clearly define why you’re investing.
- Do you want to preserve your capital?
- Are you looking to create long-term wealth?
- Is this money for a short-term goal?
- Do you need a regular monthly income?
- Are you investing to save tax?
Questions such as these can help you choose investments that fit your needs.
2. Your Risk Appetite
Don’t just choose investments that have delivered high returns in the past. The higher the return potential, the higher the risk you must be ready to take on. Your tolerance depends on factors like:
- Income: A higher income usually allows one to handle more risk.
- Age: For most, risk tolerance tends to get lower as they age. Younger investors can afford more volatility as they have more time to weather market fluctuations. As you get older or closer to major goals, capital safety becomes more important.
- Emergency Fund: If you don’t have a safety net to fall back on, taking high risks can be problematic when unexpected expenses pop up.
- Family Responsibilities: The more dependents you have, generally, the lower your risk tolerance.
- Experience: New investors can find it hard to jump straight into complex equity products.
- Comfort with Risk: Some people are naturally more open to risk. Others feel safer with a slow and steady approach.
Diversifying the portfolio reduces risk, so make sure to select a healthy mix of assets. Also, keep an eye on your portfolio and adjust your asset allocation when your goals or market conditions change.
3. Your Investment Horizon
This refers to how long you need to stay invested. For short-term goals, you should go with safer options because you don’t have enough time to recover from volatility. For distant goals, you can consider equity products. Some investments have a lock-in period, so make sure your horizon matches the product.
4. Understand What Makes a Product Good
And of course, you have to assess the fundamentals of the product before investing. For example, when selecting mutual funds, you can analyse factors like:
- Historical returns
- Performance consistency
- The fund manager’s track record
- AMC’s reputation and AUM
- Portfolio composition
- Expense ratio
- Risk-adjusted returns
Assessing these will help you pick quality funds that match your goals and risk appetite. You should also consider taking professional advice. A financial advisor will give you personalised guidance on investments and help you stay focused on your financial goals.
Conclusion
The best investments are those that are fundamentally strong, aligned with your goals, and suitable for your risk tolerance. Equity funds and stocks can help create long-term wealth, while hybrid and debt funds can provide stability and income. Gold and silver are good for diversification and act as a hedge. Post office schemes offer safe returns.
To succeed, you must understand these products and select those that match your risk appetite and goals. Once you’ve made your investments, review your portfolio regularly and make adjustments whenever needed. Also, don’t forget to consider the tax implications, as they can impact your returns.
FAQs on Investing for Good Returns in India
Q: What are some safe investments with good returns?
A: If you prioritise capital preservation, you’ll need to accept modest returns. Fixed deposits, post office schemes, and government securities are good options for this. If you can take some risk for higher returns, you can consider debt or conservative hybrid funds as well.
Q: Which is the best investment plan for monthly income?
A: There are many different ways to generate a monthly income from investments. Some pay out guaranteed amounts, while others offer market-linked returns.
- Fixed Deposits
- SWPs from mutual funds are considered some of the best investment for monthly income.
- Post Office Monthly Income Scheme
- Senior Citizens Savings Scheme (Only for seniors)
- Dividends from stocks (Depends on company profits)
- IDCW option mutual funds (Only when there is a distributable surplus)
- Rental income
Q: What is the difference between an equity fund and a stock?
A: Equity funds are vehicles that pool money from many investors and invest it in a diversified portfolio of stocks. A professional fund manager handles all buying and selling here. On the other hand, a stock gives you direct ownership in a single company. You make the decisions yourself and take on higher risk because your returns depend on one company.
Q: What are the best short-term investments for higher returns?
A: There aren’t many short term investment plans with high returns, as safety and liquidity are the main focus here. Still, you can look at options like short-duration funds and money market funds for better returns than a savings account. If you’re okay with moderate volatility, conservative hybrid funds can also be worth it. For conservative investors, FDs and liquid funds should do the trick.
Q: How can salaried employees earn good returns?
A: Salaried employees can earn good returns by selecting products that match their goals and risk tolerance. You can start SIPs to invest a fixed amount every month and let compounding do the work. For faraway goals, consider equity funds for more growth. For medium-term goals, hybrid or debt funds can do the job. You can also increase your SIP amount each year (through the step-up option) as your income rises, and build wealth faster.
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