Investors opting for long-term investment options often chase funds that offer best returns over a period of time. Having said that, the need for such long-term investments varies from one person to another basis their risk profile, investment duration, financial goals, liquidity, among other factors. Before you choose any long-term investment options such as mutual funds, PPF (public provident fund), bank FDs (fixed deposits), equities, etc, you must properly understand these investment tools before you begin to invest in these long-term securities. For example, investing in mutual funds or equities would be comparatively riskier than investing in FDs. Thus, it’s important that one considers their risk profile before choosing the right type of investment for their investment portfolio.
Long-term investment options
Here are a few long-term investment options that you can choose to invest in to achieve your financial objectives:
- Public Provident Fund (PPF)
PPFs are one of the safest investment options to park your money for a long-term duration. These investment options have the potential to generate decent returns over time. PPF schemes have a fixed investment duration of fifteen years. However, one can further extend their investment horizon for another five years. You must note that although PPF schemes have an investment duration of 15 years, one can partially withdraw their investments from the seventh year. As PPF schemes are a part of Section 80C investments, they offer tax deduction under Section 80C up to Rs 1.5 lac pa*. Apart from the tax benefits offered to investors, what attracts investors towards PPF schemes is the EEE (exempt exempt exempt) status provided to investors.
- Mutual funds
Mutual fund investments have the potential to generate significant returns when invested for a longer duration of say ten years or more. As an investor, you are provided with several options such as money market funds, equities, debt funds, etc. to diversify your investment portfolio. What’s more, the professional fund management offered by fund managers help investors to make a sound and solid investment decision. Other mutual fund benefits include tax benefits, transparency, ease of investing attract investors towards mutual fund investments. You can also calculate mutual fund returns by using a mutual fund return calculator. This will give you a clearer picture of the future value of your mutual fund investments.
- National Pension Scheme (NPS)
Another ideal investment option for long-term investors is NPS. These investment securities provide investors with the flexibility to choose between active and auto schemes. One must note that the lock-in period on these types of investments varies from one investor to another basis their age. NPS schemes also allow investors to make partial withdrawals. NPS schemes also provide investors with tax benefits of up to Rs 1.5 lac per annum under Section 80C of the Income Tax Act, 1961.
If you are one such investor who is looking to park their money for a long-term, you might consider these investment options. Other popular long-term investment options include stocks, fixed deposits (FD), real estate, gold, ULIPs (unit-linked insurance product), etc. Choose an investment option that best aligns with your financial objectives, risk appetite, investment duration, liquidity preference, etc. Happy investing!
*you can save up to Rs 46,800 per annum by investing in tax-saving investments provided that you belong to the highest income tax bracket.