Investment Plans : 25 Best Investment Plans for High Long Term Returns in 2024

What is an Investment Plan?

An investment plan helps you grow your savings in a disciplined and systematic manner, in line with your financial goals, according to your risk profile, and according to your asset allocation requirements. The financial goals could be either long, mid, or short-term, and an investment plan can be aligned to achieve each specific goal. An investment plan¹⁹ could be in a single asset class or a mixture of multiple asset classes, i.e. equity, debt, gold, money market instruments, fixed income, real estate, etc., which needs to be picked based on your financial situation, risk appetite and investment goals.

However, each type of investment plan has its underlying risks, which need to be understood carefully before investing and then monitored from time to time to track the progress and assess its effectiveness towards fulfilling your financial goals!

Types of Investment Plans

Here's a table containing types of investment plans, their brief descriptions, and their tax implications. The plans have been divided into high-risk and low-risk categories to facilitate understanding.

High-risk investment plans

Type of plan	Brief description	Tax implication
Equity shares	These are stocks issued by companies listed on the stock exchange. Buying a share means getting part ownership in the company	Selling within 12 months – 15% short-term capital gain tax Selling after 12 months – Returns up to ₹1 lakh are tax-free. Excess returns are taxed at 10%⁵
Equity mutual funds	Mutual funds that allocate at least 65% of their capital to equity are called equity mutual funds. These funds have a high-risk, high-return profile²⁰	Selling within 12 months – 15% short-term capital gain tax Selling after 12 months – Returns up to ₹1 lakh are tax-free. Excess returns are taxed at 10%⁵
ULIP equity funds	These funds are available under ULIPs, which invest primarily in equity. These funds have a high-risk, high-return profile.	Premiums paid qualify for tax deduction under Section 80C up to ₹1.5 lakhs, subject to specific terms and conditions⁶ The death benefit is tax-free⁷. On maturity, the benefit received is tax-free if the premium paid is up to 10% of the capital sum assured for policies bought on or after 1^st April 2012^{8 and 6}. For policies bought before 1^st April 2012, the premium should be up to 20% of the capital sum assured^{8 and 6} For policies bought on or after 1^st April 2013 by individuals suffering from a disability or a disease specified under Section 80DDB or 80U, the premium should be up to 15% of the capital sum assured^{8 and 6} For policies issued on or after 1^st February 2021, the annual aggregate premium should be up to ₹2.50 lakh. If the annual aggregate premium exceeds ₹2.50 lakh, ULIP/ULIPs would attract long-term capital gain taxation⁸
Equity funds in the National Pension System (NPS)	This is a market-linked retirement-oriented scheme which helps to build a retirement fund	Investment in the NPS scheme qualifies for income tax deduction under Section 80CCD (2). Additional deduction on investment is also allowed under Section 80CCD (1B)¹⁷. On maturity, 60% of the commuted corpus is tax-free, from remaining 40% amount annuity policy needs to be purchased and annuity received is taxed at your applicable slab rates¹⁷

Low-risk investments

Type of plan	Brief description	Tax implication
Fixed deposits (FDs)	Fixed deposits offer guaranteed returns on your investment²¹. You can save a lump sum amount for a fixed tenure.	Investment in 5-year FDs qualifies for income tax deduction under Section 80C up to ₹1.5 lakhs⁹. Interest earned is taxable¹¹. Senior citizens can enjoy tax deduction on interest income under Section 80TTB up to ₹50,000¹⁰
Public Provident Fund (PPF)	It is a government-backed small-saving scheme offering assured returns with a tenure of 15 years¹²	The investment made is tax deductible under Section 80C up to ₹1.5 lakhs⁹ Interest earned and maturity proceeds are also tax-free¹²
National Savings Certificate (NSC)	NSC is also a government-backed fixed-income scheme offered by the post office²².	The investment made and interest earned in the first four years are allowed as a deduction under Section 80C. The interest earned in the fifth year are taxed at your income tax slab rates¹³
Kisan Vikas Patra	This is a small-saving scheme offered by the government with assured returns²³.	Investments made are eligible for deduction under Section 80C¹⁴. However, the interest earned is taxable in your hands at your income tax slab rates¹⁴
Sukanya Samriddhi Yojana (SSY)	This scheme is a fixed-income scheme for the financial security of a girl child²⁴.	The investment is eligible for deduction under Section 80C. The interest earned and the maturity benefit paid are also tax-free¹⁵
Employees’ Provident Fund (EPF)	A retirement-oriented, fixed-income avenue for salaried employees, EPF creates a corpus over the employee’s active working life²⁵.	Investments made are allowed as a deduction under Section 80C up to Rs.1.5 lakhs subject to specific limits⁸. The interest earned is also tax-free, subject to specific conditions¹⁶
Debt funds under mutual funds and ULIPs	Debt mutual funds invest primarily in debt instruments and help you build a stable corpus. They have a low-risk, low-return profile²⁶ as compared to equity funds³¹. In ULIPs, the policyholder can choose the type of investment based on his risk appetite and investment goals²⁷.	For ULIPs – Premiums paid qualify for tax deduction under Section 80C up to ₹1.5 lakhs, subject to specific terms and conditions⁶ The death benefit is tax-free⁷. On maturity, the benefit received is tax-free if the premium paid is up to 10% of the capital sum assured for policies bought on or after 1^st April 2012^{8and 6}. For policies bought before 1^st April 2012, the premium should be up to 20% of the capital sum assured^{8 and 6} For policies bought on or after 1^st April 2013 by individuals suffering from a disability or a disease specified under Section 80DDB or 80U, the premium should be up to 15% of the capital sum assured^{8 and 6} For policies issued on or after 1^st February 2021, the annual aggregate premium should be up to ₹2.50 lakh. If the annual aggregate premium exceeds ₹2.50 lahks, the returns earned would be taxed as long term capital gain @ 20% on gain amount. For debt mutual funds – No tax benefit on investment, and returns earned would be taxed at your income tax slab rates¹⁸

Risks & returns in investment

Different types of risks are associated with investment plans. Some of them include the following¹ –

Volatility risk
– This is the risk of fluctuating market prices which might incur a loss. For instance, if you invest in equity shares and their value falls, you incur a loss.
Credit risk
– This is the risk that the issuer of the investment avenue would not be able to repay the invested amount on maturity. Also called default risk, this might happen in the case of debt investments like fixed deposits, bonds, etc., wherein the issuer might not repay the deposited amount on maturity.
Liquidity risk
– This risk is the inability to convert your investment into cash at a fair price. Investments which have a fixed investment duration usually have this type of risk.
Reinvestment risk
– This is the risk that when you reinvest your investment, the rate of return might be lower than it was before

How to choose the best investment plan?

As mentioned earlier, there are various investment plans available in the market. To choose the right plan, here are some factors that can be considered –

The risk involved

Check the risk involved in the investment plan and assess whether you have the appetite to tolerate the involved risk.

For instance, equity-oriented investment plans, like equity shares, mutual funds and equity funds in ULIPs, have a high-risk profile. Choose these investment avenues only if you have a healthy risk appetite. Otherwise, you can consider less risky avenues like a fixed deposit or endowment insurance plans.

Return potential

Understand the return potential of the investment avenue that you are considering. An avenue that offers good returns is a good choice since it allows you to grow your savings effectively.

However, the return potential vis-à-vis the risks involved must be assessed. High-risk investments can give higher returns but might not suit your risk appetite. So, choose investments based on their risks and returns.

Investment horizon

Check the investment horizon of the investment avenue. Ensure that it aligns with your investment horizon. For instance, if you want to save for the short term, choose liquid avenues, like savings accounts, liquid mutual funds, etc. On the other hand, if you have a long-term investment outlook, you can choose avenues with a long-term horizon.

Financial needs

Choose investments that are suitable for fulfilling your financial goals. Try to earmark investment avenues for particular goals so that you can easily create a corpus for them.

Investment amount

There might be a minimum investment amount in some avenues. Check the amount and ensure that it aligns with your savings.

Tax benefits

Lastly, assess the tax benefits of investment avenues. Choose avenues that can help you save the maximum amount of tax so that you can invest and reduce your taxes, too.

When should one start investing?

When it comes to investing, the earlier, the better. This is because when you start early, you can save over a long-term horizon. With compounding returns, a long-term horizon allows your savings to grow considerably, yielding a good corpus.

For instance, say you want to invest ₹10,000 every month till you are 60 years old. You have two options – start investing at 25 years of age or start investing at 30.

Here’s what the corpus would be under both instances –

Case 1	Case 2
Invested amount - ₹10,000 per month	Invested amount - ₹10,000 per month
The assumed rate of return – 12% p.a.	The assumed rate of return – 12% p.a.
Current age – 25 years	Current age – 30 years
Maturity age – 60 years	Maturity age – 60 years
Investment tenure – 35 years	Investment tenure – 30 years
Corpus at maturity - ₹6.43 crore (approx.)	Corpus at maturity - ₹3.49 crore (approx.)

A delay of just 5 years and see the difference it has made to the corpus.

As such, starting early is beneficial to allow your savings to accumulate and grow into a good corpus

Conclusion

Given the wide variety of investment plans available in the market, you can choose one that matches your investment needs and creates a corpus for your financial goals. Life insurance plans, like ULIPs, can be a good choice since they combine the dual benefits of investment returns and insurance protection.

So, assess your goals, the corpus needed to fulfil the financial goals, risk appetite, investment horizon and other factors to choose the right insurance / investment plan.

Reference

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Investment plans

What is an Investment Plan?

Types of Investment Plans

Risks & returns in investment

Volatility risk

Credit risk

Liquidity risk

Reinvestment risk

Benefits of investment plan

Inculcates saving habit

Helps in financial planning

Helps saving tax

Helps in estate planning

How to choose the best investment plan?

The risk involved

Return potential

Investment horizon

Financial needs

Investment amount

Tax benefits

When should one start investing?

Identity proof

Address proof

KYC documents

Why Bajaj Allianz Life Insurance ?

Claim Settlement Ratio^~

Claim Approval^%

CARE Stable Rating^$

Assets Under Management (AUM)^**

Number of Lives Covered^#

Solvency Ratio^{^}

Conclusion

Frequently Asked Questions

Life Insurance Guide Investment Insurance Plans

Articles

Calculators

Podcasts

Videos

Customer Speaks

Popular Searches

Investment plans

What is an Investment Plan?

Types of Investment Plans

Risks & returns in investment

Volatility risk

Credit risk

Liquidity risk

Reinvestment risk

Benefits of investment plan

Inculcates saving habit

Helps in financial planning

Helps saving tax

Helps in estate planning

How to choose the best investment plan?

The risk involved

Return potential

Investment horizon

Financial needs

Investment amount

Tax benefits

When should one start investing?

Identity proof

Address proof

KYC documents

Why Bajaj Allianz Life Insurance ?

Claim Settlement Ratio~

Claim Approval%

CARE Stable Rating$

Assets Under Management (AUM)**

Number of Lives Covered#

Solvency Ratio^

Conclusion

Frequently Asked Questions

Life Insurance Guide Investment Insurance Plans

Articles

Calculators

Podcasts

Videos

Customer Speaks

Popular Searches

Claim Settlement Ratio^~

Claim Approval^%

CARE Stable Rating^$

Assets Under Management (AUM)^**

Number of Lives Covered^#

Solvency Ratio^{^}