Long-term investments are made to help them achieve their long-term goals. These funds can be used as a safety net for various life events or to meet any emergency needs. It would be disappointing if your long-term investments lose value over time. The safety of your capital is crucial when you are investing for the long-term.
These are the best investment options in India for 3+ years:
1. Public Provident Fund
Public Provident Fund (PPF), has been a preferred investment option for the salaried classes in India. The government of India issues PPF as a long-term debt instrument. PPF is a long-term debt instrument that has a 15 year tenor. However, the investor can withdraw up to 50% of the fund’s value after five years. India’s government decides the interest rate for these funds. The interest rate on these funds is generally slightly higher than that of FDs. The amount you have invested in PPF can be deducted from your taxable income when you file your returns. PPF returns are also not taxable.
2. Post Office Recurring Deposit
Another safe investment option for the long-term is the Post Office Recurring deposit. These deposits are great for salaried workers because they require employees to make a monthly payment for a set period. These RDs offer moderate returns, with an interest rate of 7.1% annually at the moment. These instruments earn interest that is taxable.
3. Sovereign Gold Bonds
India has long considered gold to be a good investment option. But, the risk of owning physical gold is high and can prove cumbersome. The best alternative to buying physical gold is sovereign gold bonds. These gold bonds are issued by the RBI and backed up by the government. These bonds are measured in grams of gold. These bonds are eligible for capital appreciation if the gold price rises. SGB holders can also receive interest at 2.5% per year, which is paid semi-annually.
4. Monthly Income Scheme
The Post Office Monthly income Scheme was designed for risk-averse investors. The government of India offers a guarantee for Monthly Income Schemes. These instruments have an interest rate that is adjusted every quarter in accordance with bond interest rates. These schemes currently generate an interest rate around 7.3%. These instruments have a disadvantage: the returns are taxable.
5. Tax Saving FDs and Company FDs
Bank Fixed Deposits of no less than 5 Years can save you tax under Section 80C. They also offer returns around 7% per year.