Achieving financial stability and growth requires investing in long-term financial instruments. Whether you're looking to save for retirement, create a passive income stream, or build wealth over time, there are numerous investment options available that can help you reach your financial goals. However, with so many investment plans to choose from, selecting the right one can be overwhelming. That's why we've created this comprehensive guide to some of the best long-term investment plans in 2023. In this article, we'll explore some of the best long-term investment plans that will help you make an informed decision and achieve your long-term financial objectives.
6 Best Long-term Investment Plans
In this section, we have covered five popular long-term investment plans with high returns.
1. Public Provident Fund (PPF Account)
A PPF account is one of the best long-term investment plans because it is a government-backed long-term savings scheme, which offers tax benefits to investors. The scheme has a lock-in period of 15 years, and the minimum investment amount is Rs. 500 per annum, while the maximum investment limit is Rs. 1.5 lakhs per annum. Here are some of the benefits of investing in a PPF account:
- Tax benefits: The contributions made to the account are eligible for tax deductions under Section 80C of the Income Tax Act. Additionally, the interest earned on the account is also exempted from tax.
- Guaranteed returns: The current interest rate for PPF is 7.1% per annum, and it is guaranteed by the government.
- Long-term investment: PPF is a long-term investment option with a fixed term of 15 years. This makes it a good option for individuals looking to save for their long-term financial goals such as retirement or their children's education.
- Flexibility: Investors can make partial withdrawals from their PPF account after the completion of 5 years. They can also take a loan against their PPF balance.
2. Mutual Funds
A mutual fund is one of the best long-term investment plans with high returns as it is a type of investment scheme that is professionally managed and involves the pooling of funds from a diverse range of securities, such as bonds, stocks, and other financial instruments. Here are some of the benefits of investing in mutual funds:
- Diversification: Mutual funds offer a diversified portfolio of securities, which helps to reduce the risk associated with investing in a single security.
- Professional management: Mutual funds are managed by professional fund managers who have expertise in managing investments. This helps investors who may not have the time or expertise to manage their investments on their own.
- Liquidity: Mutual funds are highly liquid, and investors can buy and sell their units on any business day.
- Flexibility: Mutual funds offer different investment options based on the investor's financial goals, risk appetite, and investment horizon.
3. Fixed Deposits
Fixed deposits are a popular investment option in India that offers a fixed rate of return for a fixed period. And for this very reason, they are considered one of the best long-term investment plans. Here are some of the benefits of investing in fixed deposits:
- Guaranteed returns: Fixed deposits offer a guaranteed rate of return, which is generally higher than savings accounts.
- Low risk: Fixed deposits are considered a low-risk investment option, as the principal amount invested is secure.
- Flexibility: Fixed deposits offer different maturity periods, ranging from a few months to several years. Investors can choose a maturity period based on their financial goals and liquidity requirements.
4. Unit-Linked Insurance Plans (ULIPs)
Unit-linked insurance plans are a type of insurance product that combines investment and insurance. A portion of the premium paid by the policyholder is invested in a fund, while the remaining amount is used to provide life insurance coverage. Here are some of the benefits of investing in ULIPs:
- Insurance coverage: ULIPs offer life insurance coverage, which helps to secure the financial future of the policyholder's family.
- Investment options: ULIPs offer different investment options such as equity, debt, and hybrid funds, which allows investors to choose a fund that suits their investment goals and risk appetite.
- Flexibility: ULIPs offer flexibility in terms of premium payment and fund switches.
5. National Pension Scheme (NPS)
The National Pension Scheme is again one of the best long-term investment plans owing to its government-backed retirement savings scheme, which offers tax benefits to investors. Here are some of the benefits of investing in NPS:
- Tax benefits: Investments made in NPS are eligible for tax deductions under Section 80C and Section 80CCD of the Income Tax Act.
- Low-cost: NPS has a low-cost structure, with the fund management fee capped at 0.01% of the assets under management.
- Long-term investment: NPS is a long-term investment option that helps investors to build a retirement corpus.
- Flexibility: Investors can choose their investment option and asset allocation, and can also make partial withdrawals after the completion of 3 years.
6. Farmland Investment
Another great long term investment is a agricultural place or a farmland. Perhaps, it is undeniable that investing in farmland is a very secure choice! Not only is it a wise investment for you, but it will also benefit future generations. Nimbus Farmland, one of Bangalore's most popular farms, is simple to tour. You can check out all the great benefits it has to offer, from its website.
After this, let’s look at some long-term investment examples
Long-term Investment Examples
Here we will take the example of the Public Provident Fund (PPF). Here's an example of how a PPF account works:
Suppose you invest Rs. 1 lakh in a PPF account for 15 years. The current interest rate on PPF is 7.1%, compounded annually. At the end of 15 years, your investment will grow to approximately Rs. 2.8 lakhs, with the interest earned being tax-free.
Let’s take another example of ULIPs. Let’s say you invest Rs. 1 lakh annually in a ULIP for a period of 20 years. The ULIP offers a life cover of Rs. 10 lakhs and invests your premiums in a mix of equity and debt instruments. The fund value of your ULIP grows at an annualized rate of 10%, and the fund management charge is 1%.
At the end of 20 years, your fund value would be approximately Rs. 65 lakhs. In addition, the life cover of Rs. 10 lakhs would be paid out to your nominee in case of any unforeseen event. ULIPs also offer tax benefits on both the premium paid and the maturity proceeds, making them an attractive long-term investment option.
Investing in a long-term financial instrument is a crucial step in building wealth and achieving financial goals. With a variety of investment options available, choosing the right one requires careful consideration of factors such as risk tolerance, investment horizon, and financial goals. By considering the features and benefits of each option, investors can make an informed decision that aligns with their needs.