Long-Term
Investment Plans
Investment Plans
Long-Term
Investment Plans
Investment Plans
What is the meaning of long-term investments?
Long-term investments refer to investments that are held for one year or more. Long-term investment plans tend to offer greater returns when held for a longer period of time. They are generally used to cater to future needs such as education expenses for your child, post-retirement goals, and more.
Best Long-Term Investment Plans in India 2024
Some of the best long-term investments you can consider in India for 2024 are given below:
ULIPs:
A Unit-Linked Insurance Plan (ULIP) is one of the best long-term investment plans that offers the dual benefit of investment to fulfil your long-term goals and a life cover to financially secure your loved ones in case of an unfortunate event. The returns from ULIPs are market-linked. They can help you earn better returns on your investments. ULIPs help you meet long-term financial goals such as buying a house, your child’s education, or marriage, starting a new venture and more.Stocks:
Stocks can be considered as a long-term investment option that can help you achieve your financial goals. They provide you with a fractional ownership in a company. This ownership comes with the potential for gains through increased stock price and dividends. While stocks are known for their potentially higher returns, they also come with market-related risks. Stocks are suitable for experienced investors or those with a high-risk appetite.Public Provident Fund:
The Public Provident Fund (PPF) is a government-backed savings scheme. It is a long-term investment that comes with a lock-in period of 15 years. On maturity, the account can be extended for an additional five years with the option to make further deposits.
PPF offers a fixed rate of return, decided by the government. It helps you save for long-term goals like retirement, starting a new venture, and more.Fixed Deposits:
Fixed deposits (FDs) are a short or long-term investment offered by banks and non-banking finance organisations (NBFCs). You can deposit a lump sum amount for a fixed tenure of your choice and earn interest on the same. FDs are risk-free investments that offer a guaranteed rate of return and are not affected by market volatility.National Pension Scheme (NPS):
NPS is one of the best long-term investments that is backed by the government of India. It is a voluntary retirement savings scheme that allows you to save for your retirement.
You can invest between 18-65 years of age and continue investing till you are 75 years old. NPS offers tax* deduction of up to ₹ 50,000 per annum under Section 80CCD(1B) which is over and above the limit of ₹ 1.5 lakh offered by Section 80CCE. While investing, you can choose to allocate your money in four asset classes – equity, government bonds, corporate debt and alternative investment funds (AIFs).Mutual funds:
Mutual funds are managed by fund houses or Asset Management Companies (AMCs). They invest money collected from multiple investors in different instruments, such as stocks, bonds, commercial papers, certificates of deposits and more. Mutual funds carry risks depending on the type of instrument your money is invested in.Child Plans
Child education plans provide the dual benefit of investment and insurance, enabling you to build a secure financial foundation for your child’s education. With these plans, you can choose to invest in equity, debt or hybrid funds as per your risk appetite and your child’s education goals. Additionally, they provide financial security ensuring a guaranteed* payout in case of an unfortunate event.
They also provide tax~ savings under The Income Tax Act, 1961. You may qualify for a deduction of up to ₹ 1.5 lakh per annum on premiums paid under Section 80C. The proceeds received are also eligible for benefits under Section 10(10D), as per the prevailing tax~ laws.Physical Gold (Bullion)
You can purchase physical gold in the form of jewellery, coins or bars. This is a valuable investment option that offers diversification to your portfolio. This helps secure your wealth against rising prices and inflation, making it a long-term investment option that offers both financial stability and wealth creation.Recurring Deposit (RD)
A Recurring Deposit (RD) is a term deposit that allows you to invest a fixed amount every month. You can open RDs for the tenure ranging from 6 months to 10 years as these are offered by banks and Non-Banking Financial Companies (NBFCs). You can choose this option, if your risk appetite is low and you want steady returns. The interest rate offered on RDs varies depending on the financial institution. However, it is decided at the time of opening the deposit, ensuring that your investment grows over time.Hybrid Funds
Hybrid funds are a type of mutual fund that allow you to invest in both equity and debt financial instruments. These funds offer the potential for growth by investing in equities and equity-related instruments. They also provide stability by investing in fixed-income securities like commercial papers, treasury bills and more. These can be an ideal choice for diversification of your portfolio while opting for investments that carry a medium level of risk.
It is important to note that hybrid funds do not qualify for any tax~ benefits.Pension Plans
Pension plans are savings plans designed to help you accumulate adequate funds for your retirement. These are long-term investment plans that provide a regular income during your golden years, helping you maintain your current lifestyle and achieve your goals. When you retire, these plans provide financial stability with a monthly pension that mirrors the income you once received. They also offer tax~ benefits under Section 80C of The Income Tax Act, 1961. You can claim a deduction of up to ₹ 1.5 lakh per annum for the premiums paid for these plans.Voluntary Provident Fund (VPF)
The Voluntary Provident Fund (VPF) is an additional option available within the Employee Provident Fund (EPF), that allows employees to contribute more than the mandatory 12% of their basic salary and Dearness Allowance (DA) towards their retirement savings. Under VPF, one can voluntarily contribute up to 100% of one’s basic salary and DA to enhance one’s savings.
VPF contributions are made through existing EPF accounts so there is no need to maintain a separate account for VPF. The interest earned on VPF contributions is the same as the interest earned on regular EPF contributions. These also provide tax~ benefits under Section 80C of the Income Tax Act, with a maximum deduction of up to ₹ 1.5 lakh per annum. This makes VPF one of the best long-term investments for building a secure retirement.Senior Citizens Savings Scheme (SCSS)
The Senior Citizens Savings Scheme (SCSS) is a government-backed long-term investment option designed for you, if you are of 60 years of age or older. However, if your age is between 55 to 60 and have retired under superannuation, you can also open an account. Additionally, if you have retired from the Defence Services, excluding civilian employees, you can open an account upon reaching 50 years of age, subject to specific conditions.
The minimum deposit amount for the SCSS is ₹ 1,000, with subsequent deposits allowed in multiples of ₹ 1,000. The maximum deposit limit under this option is ₹ 30 lakh, making it a suitable option to financially secure your golden years.Real Estate and Real Estate Investment Trusts (REITs)
You can consider investing in real estate to diversify your portfolio. It can be a good investment option as it is not directly impacted by market fluctuations. Additionally, it allows you to create passive income through rent. You can either choose to invest in residential or commercial properties. However, these are one time long-term investments.
You can also consider investing in REITs. REITs are funds that own or manage real estate properties, like malls, business parks and more. They require relatively less capital, while offering all the benefits of real estate investment.
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How to plan for long-term investment?
Long-term investments can be planned on the basis of your goals, current income, and expected returns from your investments. For instance, if you are in your 30s and saving for retirement, you have approximately 30 more years to build wealth before you retire. However, if you are saving for your child’s college, you would have a shorter investment term of 10 to 15 years. The investment plan, hence, will vary accordingly.
7 Benefits of Long Term Investments
Power of compounding:
The more time you give your investments to grow, the higher the returns will be. For instance, a small amount of ₹ 500/- invested monthly at a 15% rate can grow to ₹ 16.42 lakh after 25 years.Security from short-term volatility:
It is difficult to predict the market conditions correctly, hence in order to get maximum benefits, it is good to invest for the long term. By staying invested for a longer duration, you can overcome short-term volatility.Goal-centric planning:
As you are investing for the long-term, you can use it to plan for significant milestones like buying a house, a child’s education, retirement, and more.Convenience:
You don’t need to worry about the investment due date. You just need to send a one-time instruction to your bank to facilitate Auto-debit from the bank account or credit/debit card. In addition, you can buy long-term investment plans online with a few clicks* of the mouse anytime.Tax benefits~:
Long-term investment plans make it easy to do tax~ planning every year. All you need to do is buy a long-term investment plan and invest regularly to avail tax benefits~ as per the Income Tax Act, 1961. It means, you not only grow your money but also save tax~.Lesser effect of market fluctuations:
Small market fluctuations do not impact long-term investment plans as much as they affect short-term investment plans. Hence, you can stay worry-free with long-term investments.More time to try different funds for maximum returns:
Long-term investments give you enough time and opportunity to switch between different funds and make up for any non-performing fund.
When you buy ULIPs as a long-term investment option, you can enjoy all the above-listed benefits and much more.
Flexible investment options:
ULIPs give you the flexibility to invest in different fund options— equity, debt, and balanced funds— as per your risk appetite. They also let you switch between funds as per the market condition. Staying invested for a longer duration with a switching option can help you reap maximum benefits.Goal-oriented planning:
As there is a minimum lock-in period of 5 years, you can use ULIPs to fund your long-term goals, like buying a house, funding your child’s higher education, retirement, etc.Loyalty additions^:
By staying invested for a longer duration, you can earn loyalty additions^ which grow your money without any further investment.Partial withdrawal$:
Starting from the sixth year, you can withdraw up to 20% of your investments in ULIPs provided monies are not in the Discontinued Policy Fund to meet any future needs and let the remaining investment grow.Life cover`:
Besides growing your wealth, ULIPs are useful in securing your family’s future in your absence. In the case of your sudden demise, your nominee will get a lump sum amount to secure their future.
How to buy online?
Investing in any of the long-term investment products like ULIPs is now only a few clicks* away. You can generate free quotes for a long-term investment plan by putting in information like gender, age, mobile number and email id. Once you are satisfied with the policy quotes, click on them to reach the policy application form where you have to give details like identity proof and bank account information to buy the plan. In the case of any query, call the customer support centre or request a callback.
When to choose long-term investment above short-term investment?
Long-term and short-term investments serve two very different purposes. A long-term investment is more lucrative over time. These plans are ideal if you are saving for your long-term goals, such as your child’s education or wedding, purchase of a house, retirement, and more. They let you build a large fund over the years. They also offer tax benefits~ that further contribute to your savings.
Short-term investments, on the other hand, can be used to meet short or medium-term goals, such as buying a car, travelling or paying off debts. Short-term investments can offer rewards in a short span of time, but they can also lead to higher taxes.
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