If one thing the recent unprecedented times have taught us, it's the importance of financial security since it's directly proportionate to our secured being.

Investment is to your money what working out is to your body – both ensure fitness, discipline and endurance in the long term.
Investing is an effective way to put your money to work and build wealth, while allowing it to outpace inflation. It is the only way to make your future safe and secured. It's like saving and accumulating a corpus for a rainy day. That's called smart investing.

Investing could mean different to different people. While some invest to achieve profit or make a second income source, others may simply do it to safeguard their health and future. In this context, we have defined investing as "putting money into a financial product, shares, assets or property, etc."

Note: Please do not confuse investment with savings or speculation
Savings are typically a part of your income that you set aside, without worrying about where you're deploying your surplus funds while investment is a more active way of deploying your wealth and requires decision-making. It is also different from speculation in a way that speculation is generally considered as targeting high returns from your investments within a short span of time and is also highly risky. Investments, on the other hand, are usually long term in nature and takes care of the risk factors.

Most investors want to make investments which provide them with sky-high returns, as quickly as possible and that too, without involving the risk of losing the principal money. Therefore, most of us are always on the look out for investment plans that can double their money in a few months or years, with little to no risk. However, this combination of high-return, low-risk does not exist and in reality, risks and returns are directly proportionate to each other, i.e. the higher the returns, the higher the risk and vice versa.

This is why, it's very important to consider your risk profile before choosing any investment plan. There are some investments that carry high risk but have the potential to generate higher-inflation returns in the long-run, while there are some that come with lower risk and therefore, proportionate returns.

There are majorly two categories that investment plans fall under, namely financial and non-financial assets. Financial assets are furthermore divided into market-linked products (stocks and mutual funds) and fixed-income products (provident funds and bank fixed deposits). While the non-financial category also has quite a few options, we, Indians choose to invest via this mode- physical gold and real estate.

 

Top Investment Options in India in 2022

Listed below are some of the best investment options in India 2022 that offer high returns. You can consider including these investment plans in your financial portfolio while savings for the future.

1. Unit Linked Insurance Plan (ULIP)

Unit Linked Insurance Plan is essentially a combination of insurance and investment. It's one of its kind where some portion of the investment made by the policyholder goes to equity and debt instruments, while the rest of it is utilized to provide insurance coverage to the holder. ULIPs are considered as one of the best forms of investment in India. Besides the dual benefit, it also provides tax exemption. ULIP plans work with a lock-in period of 3years-5 years.
 

Main Features:
 

• ULIP(s) are a long-term investment and you can reap best of the returns with this option.
   

• Investing in a ULIP is flexible since it provides the investor with the bandwidth to invest as per their risk appetite.
   

• You can also avail tax-free maturity with ULIP(s).
  
   

2. Public Provident Fund (PPF)

PPFs are by far the most preferable long-term investment plan in India. A PPF can be opened in a bank account or post office. It is tax free. The tenure of this investment is of 15 years and is also a locked one, however you can extend the time frame by 5 years. Moreover, in this investment, you can earn compound interest on the accumulated fund. The only setback of this plan is that you can withdraw the invested money by the end of the 6th year, Also, in case you're in dire need of money or there's an emergency situation, you are accustomed to take a loan on the balance of the PFF account. It is also interesting to note that the PFF interest rate has witnessed a drop from 8.80 % in 2012 to 7.60 % in 2022.
 

Main Features:

• Being a government-backed scheme, PPF the principal along with the interested amount in the PPF account is safe and guaranteed.
   

• The scheme has a locking system of 15 years and can be extended for up to 5 years post completion of the lock-in period.
   

• Benefit of availing loan against your invested amount.
   

• The minimum premium amount to be invested is Rs 500 up to Rs 1.5 Lakh.
  
   

3. Direct Equity
 

By Direct Equity, we are referring to the stock market. While we understand that investing in stocks is not everyone's cup of tea, it can be really be a game changer for those who are willing to take risks. Stocks is a volatile asset class and it involves very high risk of returns. Furthermore, it can be very difficult and confusing for a beginner to choose from the right stocks and the timings of entry and exit is also not easy to decide. The only silver lining is that over long periods, equity has been able to deliver higher than inflation-adjusted returns compared to all other asset classes.

At the same time, the risk of losing a considerable portion or even all of your capital is high unless one opts for stop-loss method to curtail losses. In stop-loss, one places an advance order to sell a stock at a specific price. To reduce the risk to certain extent, you could diversify across sectors and market capitalizations. To directly invest in equity, one needs to open a demat account.

Main Features:

• The most important aspect of investing directly in markets is the potential of the market to deliver the kind of gains it does.
   

• Buying and selling stocks or stock trading is no longer a complex mechanism. You can regularly monitor your investment in stock markets and trade along with your full-time jobs as it’s no longer a long and tiring process.
   

• Stocks are termed as liquid assets i.e. an asset that can be easily converted to cash, which has many buyers at any given point in time.
   

• The Indian stock market is regulated by the Stock Exchange Board of India (SEBI). SEBI is responsible for regulating the stock exchanges, their development, and protecting the rights of the investors.
  
   

4. Mutual Funds
 

Mutual Funds are undoubtedly one of the most prominent investment options in India. It is considered as an ideal investment option with high returns over the longer term. It is an alternative to market-linked investment where the funds are distributed among various financial instruments such as equity, debt, stock,s and much more. Here, the returns are generated as per the market performance and are variable. Although, mutual funds also involve higher risk proportion, it still offers much better returns as compared to other best options available in the market. Mutual funds have been categorized into two types:
 

• Equity Mutual Funds- Equity Funds predominantly invest in equity stocks. They tend to offer high ROI by investing in shares of companies of different market capitalization. Under the equity mutual fund scheme, 65 of the asset are invested in equity and equity-related securities and 35 of the asset are invested debt and money market instruments. Equity Mutual Funds are proven to offer much better returns than other investment options in India, like debt or fixed depposits, however the risk involved remains high.
   

• Debt Mutual Fund: Debt Funds are considered to be the one of the best investment options who wants to gain a steady ROI. Under this scheme, the investments are made in fixed-interest securities like corporate bonds, government securities, treasury bills, commercial paper, and various other money market tools. They are less volatile in nature, and hence considered less risky as compared to equity funds. However, these mutual funds are not risk free. They carry risks such as interest rate risk and credit risk. Therefore, investors should study the related risks before investing.
   

Main Features:
 

• Mutual funds let you have a diversified investment portfolio and help you to attain the investment objective.
   

• Every mutual fund scheme has an allocated fund manager who helps you to choose a lucrative investment for the scheme.
   

• Investments in mutual fund schemes are also beneficial as you are exempted from the wealth tax.
   

Investing in mutual funds is transparent, which helps the investors to make an informed decision.


5. Bank Fix Deposits
 

Fix Deposits are an exceptionally well known and trusted investment venture, right from our ancestral times.As the name suggests, FD offers fixed returns over the tenure of the investment. The profits are, however paid in a monthly, quaterly or yearly cycle, as per the bank rules.
FDs comes in cumulative and non-cumulative investment options, depending upon the bank. While the non-cumulative options pays you the interest, the cumulative one re-invests your interest and pays your only at the maturity.

The FD interest rates are attractive, ranging from 6.50 (for regular account holders) to over 7 (for senior citizens) for the tenure of 1 year.

FDs offer a range of tenures (minimum - 7 days, maximum - 10 years) and the investors can choose the investment as per their investment horizon.

Main Features:

• Investing bank fixed deposits give financial stability and a safe instrument tool, which lets you earn high returns on a surplus fund.
   

• The renewal of bank fixed deposits is easy and certain banks provide overdraft facility against fixed deposits.
   

• The market fluctuation does not affect the fixed deposit and the returns are fixed as well. 

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