Keeping your funds locked up in your savings account offering a paltry interest income is never the wisest decision you could ever take. The primary reason is that such a low-interest rate cannot cover inflation and lead to purchasing power loss. Instead, investing in stocks and other investment options that bear high returns can positively affect your corpus and easily yield inflation-beating returns.
Before searching for the best investment instruments with high returns, it is imperative to understand that risk and rewards go together, i.e. the higher the risk, the higher the chance to earn more. So, it is vital to understand your risk profile before zeroing on the investment type.
Investment options with high returns
Stock market investment or equity shares represents buying part ownership of a company. These are market-linked instruments that give you a chance to generate significant returns in a short period. Here, returns can be in capital appreciation or dividend income. A stock investing platform can let you invest in stocks with ease.
2) Equity mutual funds
Are you looking to invest in equity but want to curb your overall risk factor? Then, investing in equity mutual funds can be the way forward for you. These funds invest up to 95% of the money they receive in equity and offer the investors a chance to earn significant returns.
3) ELSS (Equity Linked Savings Scheme)
ELSS are tax-free funds that invest over 60% of the money they receive in equities. These funds come with a lock-in period of three years, post which they become open-ended. Given these are dependent on the performance of the underlying assets, a majority of which are stocks, these carry a high risk, high reward tag.
4) Debt mutual funds
Debt mutual funds are an excellent option for those wary of losing their capital but still want to earn a steady return on their money. These funds invest significantly in bonds issued by government or corporations, treasury bills, commercial papers, and other instruments where the risk of losing your corpus is nil.
5) Treasury bills
Treasury bills are secure, government-issued instruments that are short-term in nature. These usually carry a gestation period of 91 days, 182 days, and 364 days and are issued at a discount to interested investors. These are redeemable at face value on maturity, which is considerably higher than the issue price.
6) PPF (Public Provident Fund)
If you are one of those who want to keep your capital safe and yet earn good returns, PPF is the way forward for you. These are investment schemes with guaranteed returns, and your investment can range anywhere between INR 500 and INR 1,50,000 in a financial year. Moreover, these come with a lock-in period of 15 or 20 years and carry an interest rate of 8.5% or more annually.
7) Real estate
Real estate is one of the fastest-growing sectors in India. With the population multiplying rapidly, the sector is expected to gain traction and generate good returns in the coming years. If you do not have the funds to buy a property, you can consider investing in REITS which invests in many properties on your behalf.
In most cases, your risk appetite is the primary driver deciding the level of returns your portfolio can generate. While it is excellent that you aim to earn high returns, having a mix of high-risk and low-risk instruments is often the best way forward.
Also Read: How To Make Sound Investment Decisions