Investments are integral to financial planning. Through investment plans, you can put your savings to use and multiply your wealth. Investment plans help you meet your financial goals more strategically.The first five years of investments are crucial as they decide your finances' direction and future developments. Here are some of the best investment plans for five years.
Which Are The Best Investment Plans?
These are some of the top investment plans you can consider investing in India.
- Mutual funds
Mutual funds are a pool of funds managed by fund managers who strategically invest the fund in different asset classes. Returns depend largely on market factors and fluctuations. You can earn a significant amount of return from minimal investments.
- Stocks
Stocks are ownership shares of a company that is available for trading on stock exchanges. Stocks are an ideal investment avenue for long-term investors to earn generous returns. But as these are market-linked instruments, there is always a risk of loss.
- Fixed Deposit
Risk-averse investors prefer fixed deposits over any other investment option due to their guaranteed and secure return. For further advantage, you can invest in tax-saving FDs. Even investors with high-risk appetites add FDs to their investment portfolios to mitigate risk.
- NPS
NPS (National Pension Scheme) is one of the most preferred government-backed investment options. Your capital is invested in multiple asset classes such as bonds, government securities, stocks, etc. The lock-in period is determined based on the investor’s age as this scheme matures when you reach 60 years.
Which Investments Are Best For 5 Years?
You might find some of the following investment options ideal for 5 years period.
- ELSS
ELSS (Equity Linked Savings Scheme) is a mutual fund with a lock-in period of 3 years. Your investment of up to Rs.1.5 lakh is eligible for tax deduction u/s 80C of the IT Act. Also, a maturity amount of less than or equal to Rs.1 lakh is non-taxable as capital gains.
- ULIP
ULIP or Unit Linked Insurance Plan combines insurance and investment plans. You can find this plan to be highly beneficial for its unique features such as premium protection, diversified asset allocation, systematic withdrawal option, tax exemption, etc. *
- NSC
NSC or National Savings Certificate works similarly to that of bank fixed deposits. It has a lock-in period of 5 years, and you can claim tax benefits on multiple occasions, such as annual interest accrued and investment amount. Also, the current interest rate applicable for NSC is 6.8% which is a little higher than bank FDs.
- FMP
An FMP or Fixed Maturity Plan is a debt-based close-ended mutual fund that invests in debt instruments that mature along with the scheme. This is a perfect solution if you want the security of bank deposits but want higher returns.
- Liquid funds
Liquid funds are a type of mutual fund that have a maturity period of 91 days. This investment option is ideal for those who want high liquidity and low tenure. However, returns are based on the performance of the assets as they are market-linked.Liquid funds are one of the best investment plans for the short term.
How Can I Double My Money In 5 Years?
Doubling your investment in just 5 years in today’s market is not an easy task. But it’s not impossible.There is only one way in which you can double your money in 5 years and that is through mutual funds. Despite the market risks, mutual funds can earn significant returns in 5 to 6 years. This is because mutual funds offer higher returns than any other investment option and higher risk.
If you invest in long-term mutual funds, they offer an interest rate ranging between 12% and 15% year over year. This has the potential to double your investment in 5 to 6 years.
Which SIP Is Best For 5 Years In SBI?
SBI SIP plans are popular investment options. You can earn considerable returns by investing a minimal amount at regular intervals for a long period. Here are the top 5 SIP plans of SBI:
| SBI SIP Plan | 3 Years CAGR | 5 Years CAGR |
| SBI Focused Equity Fund | 26.50% | 20.60% |
| SBI Bluechip Fund | 20% | 15.10% |
| SBI Small Cap Fund | 29.20% | 23.80% |
| SBI Equity Magnum Fund | 20.40% | 16.50% |
| SBI Large & Midcap Fund | 21% | 17.40% |
Note: Data as of 2 February 2023.
Which Investment Has The Highest Return?
Multiple investment avenues offer high returns, but as per market history, equity investments offer the highest returns beating inflation. However, as equities offer market-linked returns, there is also a high risk of capital loss. Hence, this is only advisable for investors with a high-risk tolerance.
Which Is The Best Monthly Investment Plan?
There are multiple options available in the market when it comes to the best investment plan for monthly income.Some prominent ones include SIPs, Pradhan Mantri Vaya Vandana Yojana, Senior Citizen Saving Scheme, and Monthly Income Scheme.
Conclusion
There are multiple options available for the best investment plans in India for 5 years. The best option for you, however, depends on your risk tolerance, financial objectives and investment horizon.
Investments play a pivotal role in financial planning, utilizing savings to generate wealth. Understanding the dynamics of various investment plans and their impact on financial goals is crucial, especially in the initial five years, which significantly shape future financial outcomes.
Let's break down the concepts and investment avenues mentioned in the article:
Investment Plans Discussed:
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Mutual Funds:
- Pooled funds managed by professionals across different asset classes, returns subject to market fluctuations.
-
Stocks:
- Ownership shares of a company tradable on stock exchanges, ideal for long-term investors but market-dependent.
-
Fixed Deposits (FDs):
- Preferred by risk-averse investors for guaranteed returns; also used for tax-saving purposes.
-
National Pension Scheme (NPS):
- Government-backed investment involving multiple asset classes with a lock-in period, matured at 60 years.
Best Investments for 5 Years:
-
ELSS (Equity Linked Savings Scheme):
- Mutual fund with a 3-year lock-in period, tax deduction benefits under Section 80C.
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ULIP (Unit Linked Insurance Plan):
- Combines insurance and investment, offering features like premium protection, tax exemption, etc.
-
NSC (National Savings Certificate):
- Similar to bank FDs with a 5-year lock-in period, offers tax benefits on interest accrued and investment.
-
FMP (Fixed Maturity Plan):
- Close-ended debt-based mutual fund with maturity aligned with the scheme, offering higher returns than bank deposits.
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Liquid Funds:
- Short-term mutual funds with 91-day maturity, ideal for high liquidity with returns linked to asset performance.
Doubling Money in 5 Years:
- Achieving this in today’s market is challenging but not impossible. Long-term mutual funds offer potential returns between 12% and 15% annually, doubling the investment in 5-6 years.
SBI SIP Plans for 5 Years:
- SBI offers various SIP plans with differing returns: Focused Equity, Bluechip, Small Cap, Equity Magnum, and Large & Midcap Funds.
Investment with Highest Returns:
- Historically, equity investments yield the highest returns, outperforming inflation. However, they involve high market risks and are advisable for high-risk tolerant investors.
Best Monthly Investment Plans:
- Options include SIPs, Pradhan Mantri Vaya Vandana Yojana, Senior Citizen Saving Scheme, and Monthly Income Scheme for steady monthly income.
Conclusion:
- The best investment plans in India for 5 years vary based on risk tolerance, financial goals, and investment horizon. Evaluating these factors is essential for making the right investment choice.
Understanding these investment avenues and their nuances aids in making informed financial decisions aligned with one's goals and risk tolerance.
