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Investment Plan

Meaning of Investment Plan

What is Investment Plan?

An investment plan refers to an asset that allows you to grow your wealth in the long run. In addition to creating wealth, investments help you secure your future financial goals. For instance, there is constant inflation in the education sector. So, by the time your 5-year-old child turns into an adult, educational fees and costs will be at their peak. Therefore, when you invest in long-term investment plans, you will be able to provide the best quality of education to your children without worrying about fees and other educational expenses.

No matter what your earnings are, it is still very important that you put in a substantial amount of your earnings to build a corpus. An investment plan exactly serves this purpose and helps in creating a financial corpus for the future. Whether you want to save money for your child’s future, buy a dream house, or anything else, a life insurance plan like investment will be extremely helpful in multiplying your wealth. On buying investment plans, it becomes easier to save your hard-earned money in a disciplined manner. Some of the investment plans you can consider buying are as follows:

  • ULIPs

  • Child plans

  • Endowment

  • Money-back plans

  • Senior Citizen Savings Scheme

  • Mutual Funds

  • Tax-saving Fixed Deposits

Understanding Risk and Return in Investment

There are two important concepts that you must be aware of while investing, risks and returns. While risk refers to the potential of the investor to bear any kind of capital loss, on the other hand, return refers to the amount of money paid out to the investor. Typically, investment plans with higher risks yield higher returns, for instance, a ULIP plan. As an investor, you need to thus analyse both risks and return before you decide to invest. You can also consult a financial planner who will help you in picking the right plan for yourself.

Types of Investment Plans

The investment plans in India are highly affected by market fluctuations. Based on the market risk, investment plans are classified into high-risk investment, low-risk investment, and medium-risk investment. Scroll through the section below to learn all about these three types and about some of the best investment plan with high returns:

Low-risk Investment

This type of investment plan provides assured returns to investors at minimal or no risk. Investors can yield profitable returns by making long-term investments in low-risk investment plans. Here are some of the low-risk investment options in India:

    • Public Provident Fund: It is one of the best investment options in India which is backed by the Indian government. You can start investing in Public Provident Funds (PPF) by opening an account at any post office. Additionally, you can start your investment at an early age with a minimum amount of Rs. 100. The return on investment is also tax-deductible under Section 80C of the Income Tax Act, 1961. The PPF comes with a fixed rate of interest and has a lock-in period of at least 15 years.

    • Post Office Monthly Income Scheme: If you are looking for an investment plan that provides assured profits with low risk, then this scheme is ideal. As the name suggests, it is counted amongst the best investment plans for monthly income. The Indian government supports the Post Office Monthly Pension Scheme. Additionally, income earned from this investment option is fully taxable as monthly income plans do not provide Tax Deduction at Source (TDS). For individual accounts, you can invest a maximum of Rs. 4.5 lakhs and for a joint account, you can invest Rs. 9 lakhs.

    • Fixed Deposits: Fixed deposits are the safest and one of the best investment plans for 5 years in India. FD interest rates are constant, and they may range between 3% and 9% depending on the term of the investment. The rate of interest for fixed deposits varies from one bank to another. As a result, the investors get assured returns on their investments. Fixed deposits provide various other benefits, like loan facilities, different monthly payout options, and special FD interest rates for senior citizens. You can also use an FD calculator to get an estimate of the returns you will get.

    • Endowment Plans: Endowment is a type of life insurance that provides dual benefits to the policyholders. In simple terms, with endowment insurance plans, you can create risk-free savings and secure your family against financial emergencies that may arise in the future. Additionally, endowment plans can be helpful even if you are looking for short-term investment options.

    • Money-Back Plans: This is one of the best types of life insurance plans in India. It provides both insurance coverage and investment opportunity under the same plan. The policyholders of Money-Back Plans receive regular payouts from an insurance company as income. In addition to maturity benefit, the life assured also get survival benefit during the policy tenure.

    • Retirement Plans: This type of plan, also known as an Annuity plan, will help you secure the golden years of your life. Pension plans provide you with financial security post-retirement. You can ensure that you can continue to live the same lifestyle during your retirement. By investing in retirement plans, you can fulfill all your dreams without worrying about finances.

    • Child Plans: You must always wonder about providing the best for your children. But, sometimes mishaps can be an obstacle in your dream. So, investing in a child plan will ensure that your child is financially protected in case of any mishap that may arise in the future. Child insurance will help your child in achieving different milestones of life such as higher education, marriage, and more.

    • Systematic Investment Plan: The Systematic Investment Plan or SIP is another popular investment plan that lets you invest in a systematic way. You can invest in SIP either on a monthly, quarterly, or yearly basis. With a systematic approach toward investment, there are lesser chances of market fluctuations affecting your investment. You can use a SIP calculator to make an estimate of the amount that will be returned over a period of time.

    • Capital Guarantee Plan: It is a type of investment plan that protects your investment from potential losses. It is a mix of ULIP and traditional guaranteed plans. This type of plan is market-regulated and thus offers great returns in the long run. Under this plan, 50% of the investment amount goes toward debt and the remaining goes towards equity.

    • Guaranteed Savings Plan: It is yet another type of investment plan that offers the option of both protection and growth in wealth. Under this plan, you need to invest a certain amount of money for a defined period of time. Based on the amount of money you invest, you will get maturity benefits toward the end of the term.

    • Sukanya Samridhi Yojana: The Sukanya Samridhi Yojana is another government-backed scheme that is less affected by market fluctuations. Also known as the SSY scheme, this is one of the best savings/investment schemes in India. This scheme can be opened by parents for their girl child who is less than 10 years of age. As compared to many other investment schemes, this plan offers great returns and is thus highly preferred. Sukanya Samridhi Yojana also offers tax benefits under section 80C of the Income Tax Act of 1961. The invested fund in the SSY scheme can be used for funding girls’ education, marriage, or other relevant causes.

    • Senior Citizen Savings Scheme: As the name suggests, the Senior Citizen Savings Scheme is a popular investment scheme designed for individuals who are the above age of 60 years. You can visit your nearest post office or bank to invest in this popular scheme. So, make way for a steady income even after you retire by investing in Senior Citizen Savings Scheme.

    • National Pension Scheme: National Pension Scheme or NPS is a popular type of investment option that helps in building a corpus for your future. The invested amount in National Pension Scheme is invested towards debts and equities. The National Pension Scheme is sponsored by Pension Fund Regulatory and Development Authority (PFRDA). This type of scheme also provides tax benefits under section 80C of the Income Tax Act.

    • National Savings Certificate: This is a type of investment scheme backed by the Indian government. As the National Savings Certificate is a low-risk investment scheme, it is the preferred choice for a lot of investors. It comes with a fixed lock-in period, however, there is no limit on the maximum amount invested in National Savings Certificate. The amount generated out of the National Savings Certificate is also eligible for tax deductions under section 80C of the Income Tax Act.

    • Gold: Gold is one of the most popular investment schemes for ages. With time, there are a number of options available when you plan to invest in gold. Some of the popular options available when it comes to gold investment are, physical gold, gold coins, Sovereign gold bond scheme, and many more.

    • RBI Taxable Bonds: It is another type of fixed-deposit investment scheme that are issued by the Reserve Bank of India or RBI. Investing in these type of bonds are preferred by low-risk investors. The payments made out of these bonds are paid out at regular intervals.

Medium-Risk Investment

Investment plans that offer diversified and balanced investments that fall under the category of moderate or medium-risk investments. These types of plans offer both a wealth creation opportunity and, to a certain extent, protection from market volatility. In order to generate a stable return with the moderate risk involved, medium-risk investment plans primarily aim to diversify investment portfolios through a combination of debt and equity securities. Listed below are a few medium-risk investment plans:

    • Hybrid debt-oriented funds: This type of investment goes towards bonds and equities. A large portion of the amount goes towards bonds and the remaining is invested in equities, which is thus recommended for those with a medium-risk appetite. Moreover, investing in both bonds and equity, it is helpful in diversifying your investment portfolio.

    • Arbitrage funds: Arbitrage funds are a type of mutual fund or investment fund that aim to capitalize on price discrepancies or inefficiencies in the financial markets. These funds typically engage in a strategy known as "arbitrage," which involves exploiting price differentials between two or more assets or markets to generate profits. They offer the potential for modest returns while aiming to minimize downside risk.

    • Monthly income plans: Also known as MIPs, these types of investment plans are helpful in providing regular income, while at the same time protecting the capital. A major part of this investment plan goes towards government bonds or debt instruments. It is ideal for those who are looking for both investment and regular income.

    • Exchange-traded Funds: Exchange-traded funds or ETFs are traded on different types of stocks. It is ideal for those who want to diversify their investment portfolio and have a moderate risk appetite. Some of the options available are bonds, equities, commodities, and more.

High-Risk Investment

High-risk investment plans are ideal for investors who are willing to take high risks and want long-term income. The majority of high-risk investment plans involve significant fluctuations, but there is also a very high likelihood of generating a sizable potential return over the long term. Here’s a list of some of the high-risk investment plans in India:

    • Direct Equities: This is one of the best investment schemes if you are willing to take a high risk. Equities have a proven track record of generating profitable earnings in the long term. In direct equities, the investor can purchase a share of the company’s ownership. As a result, the investor will be entitled to the profits and losses of the business.

    • Unit Linked Insurance Plans: ULIPs are one of the best investment plans in India. It provides the dual benefits of life coverage and wealth creation to investors. Similar to other savings and protection plans, you may have to pay a premium against your Unit Linked Insurance Plans. A portion of a premium paid by you is used to provide life insurance and the remaining amount is invested in different funds of your choice. When you invest in ULIP, you can make switches from one fund to another.

    • Mutual Funds: In this type of investment, fund managers collect money from different investors to invest in the company’s stocks or bonds. After a certain time period, the profit earned from mutual funds is distributed among the investors. As an investor, you get the option to select from different fund options like equity stock, bonds, debentures, and others as per your risk appetite.

    • Cryptocurrency: A cryptocurrency is a digital form of currency that has gained popularity over the past few years. It yields great returns, however, it is highly affected by market fluctuations.

    • Stocks: Stock refers to the act of purchasing shares or ownership stakes in a company's stock with the aim of generating a financial return. When you invest in stocks, you become a partial owner of the company, and your potential for profit is linked to the company's performance and overall value in the market. Stock investments can offer the potential for substantial returns, but they also come with risks. The value of stocks can be volatile, and influenced by factors such as market trends, economic conditions, company performance, industry developments, and geopolitical events.

Benefits of Investment Plans

Have you seen your father invest his money in different types of investment options, like real estate? Why do they invest? How will this investment help in the future? Undoubtedly, you want to know the answers to these questions. So, let’s find out the benefits of investing in investment plans in detail!

  • Accomplish Financial Goals: We all have some financial goals and dreams that we want to accomplish in the future. These goals can either be buying a dream house or providing a better-quality education to our children. If you have similar goals, you can invest in any investment plan like mutual funds, ULIPs, and others that are counted as some of the best investment plans with high returns.

  • Tax Benefits: Investment plans like ULIPs and other online savings plans provide market-linked returns to investors. Additionally, premiums paid against the policy and income generated from these investment schemes are tax deductible under Section 80C of the Income Tax Act 1961. So, save tax by investing in your desired type of investment plan.

  • Financial Protection: Financial contingencies can arise anytime. Therefore, investment in the right plans will provide financial protection during those tough times. Additionally, in the event of the death of the breadwinner of the family, the dependents can continue to live a financially stable life with the income earned through those investments.

  • Retirement Planning: Investment plans are a great source of income that will let you enjoy the golden years of your life peacefully. You can invest in different types of investment plans to ensure that you continue to live a financially stable life even during your retirement.

  • Flexibility: There are a number of best investment options available such as ULIPs, endowment, money-back plans, and more. So, when you are buying any kind of investment plan, you have the option to choose a desired investment option.

  • Retirement Planning: With investment plans, you can also create a corpus for your future. When you buy the right kind of investment plan such as a pension plan, it becomes easier to create substantial funds for your retirement so that you can lead a stress-free life. So, buy the best retirement plan and secure your future.

  • Loan Collateral: You can also use investment plans for getting loans from different financial institutions. For example, when you have invested in a fixed deposit, the same can be used as loan collaterals.

Things to Check Before Investment Planning

When choosing the best investment plans in India, there are a few parameters that you need to consider so that you do not end up buying an investment plan that does not suits your budget. Some of these parameters are highlighted in the section below:

  • Financial Goals: It is important to determine your financial goals before investing in any specific investment plan. The financial goals might be marriage, buying a house or car, planning for retirement, and more. ULIPs are ideal investment options for individuals who have just started their careers. However, if you are in your 40s or 50s, and have long-term goals to fulfil, then investing in an endowment plan or mutual fund is the right choice.

  • Existing Expenses and Income: Another step is to figure out existing expenses over your income and understand how much you can save each month to fulfil your desired financial goals. Once you start investing regularly, you will be able to accomplish all your financial goals and objectives.

  • Future Expenses vs Savings: One of the important things to consider before investing is the existing savings and the future expenses. For instance, in the future, if you have your child’s wedding planned then, in this case, you can choose an option that pays out at regular intervals after a few years so that you can fulfil your future expenses. Investing a high amount currently can help the investor maximize profit in the next 15/30 years.

  • Number of Dependents: The sum assured or the investment you would need to make to make sure you can fulfil your obligation to them depends on how many dependents you have. If all you have is a wife and a child, you won't need as much money as someone who needs to save for their parents, in-laws, siblings, etc.

  • Investment Options Available: With so many investment options available, it often becomes difficult to choose the right investment plan. However, when you are buying an investment plan, you must perform a detailed analysis of the different investment options available and only then proceed with buying one. You can also consult a financial advisor who will help you buy the right investment plan based on your needs.

  • Rate of Return: The rate of return varies from one investment plan to another which is why it becomes crucial that you check the rate of return associated with different investment avenues. You can check the performance of different investment plans over the years and accordingly buy the best-suited for yourself.

  • Insurance Coverage: There are a few investment plans that also provides the benefit of life insurance coverage. One of them is a ULIP plan, so if you are planning to buy a plan that offers both protection and savings, then also check the insurance coverage offered under such plans.

Investment Plans for Children


Investment plans for children are designed to help parents or guardians save and invest money for a child's future needs, such as education, weddings, or other significant life events. These plans often offer a combination of financial growth potential and tax advantages. Here are some investment options to consider for children:

Long-Term Growth: Child investment plans allow you to start saving and investing early, giving the invested funds more time to grow. You can use the invested amount to fund your child’s immediate financial needs or any other need that may arise in the future.
Financial Security: By investing in a child investment plan, you can create a financial safety net that can be used for important milestones such as education, weddings, or buying a home.
Tax Advantages: Many child investment plans offer tax benefits. So, to reduce your tax liability you can invest in different child investment plans and get dual benefits of both tax savings and investment.

Disciplined Saving: Child investment plans to encourage disciplined saving. Regular contributions to these plans instill a savings habit, teaching children about the importance of financial responsibility.
Flexibility: Depending on the type of investment plan, you might have flexibility in how you invest the funds, such as choosing between stocks, bonds, mutual funds, or other investment options.
Hedge Against Inflation: Investing for the long term helps protect against the effects of inflation, ensuring that the purchasing power of the saved funds is maintained over time. So, you can also invest in a child investment plan to beat inflation.
Future Opportunities: As the child grows and becomes more financially responsible, they may have the opportunity to take over management of the investment plan and continue contributing to it.
Emotional Benefits: Knowing that they have a financial cushion can provide both the child and parents with peace of mind and a sense of security. It is important to carefully research and consider the specific investment plan options available in your region and consult with a financial advisor to determine the best approach based on your financial goals and circumstances.


How Can I Check the Status of My Investment Amount


With guaranteed investment plans like endowment plans, investors do not need to check the status of their investments because the return amount is mentioned on the bond paper they received. However, if you are investing in market-linked investment plans like ULIPs, you can check by following the below-mentioned steps:

  1. Login to the online insurer portal.

  2. Enter your policy details.

  3. On your dashboard, click on the recent transaction followed by fund performance.

  4. The status of all your investments will be displayed.

When is the right time to buy an investment plan? 

Each one of us has specific goals in life when it comes to investment. In addition to keeping the investment goals in mind, you also need to consider the right time to start investing. The right time to start investing in an investment plan is at your early age when you have lesser financial dependants. If you have any short-term or long-term financial goals that you want to achieve, then you can compare different investment plans and choose the best one as per your risk appetite. If you want to invest for the long term, then ULIPs and mutual funds are the best. However, if you want to satisfy your short-term financial needs, you can invest your money in equity funds or the Public Provident Fund.

Here is a table that helps with the best investment strategies for different stages of life:

  • Age                     Investment Strategies

  • 20s                          When you are in your 20s, you must invest at least 10% of your income. You can invest in low-cost investment options such as ETFs, PPFs, and more.

  • 30s                          Gradually, when you turn 30s, you should increase your investment amount. In your 30s, you should invest at least 15% of your income. Ideally, at this time, you should prefer low-risk investment options.

  • 50s                           In your 50s, you can increase the investment amount to at least 30% of your income and consider investing in high-risk investment plans too such as ULIPs.

  • Post-retirement      At this stage of life, you must invest in annuities or government-backed investment plans.

 

How to Choose the Best Investment Plan?

Listed below are some of the steps that will help you in making informed decisions about your investment plan:

  • Assess your financial goals

  • Set the timeline for which you plan to invest

  • Evaluate your risk tolerance

  • Compare different investment options

  • DIversify your investment portfolio

  • Seek advice from financial advisors and choose the best investment plan

  • Keep monitoring your investment plan regularly

Process to Claim Investment Insurance Plan

The death benefit claim process and maturity benefit claim process in an investment insurance plan may vary. Here are the steps that you need to follow in each case:

Steps to Claim Maturity Benefit

  • Fill out the policy discharge form given by a life insurance company before the maturity date.

  • Attach all the necessary documents like original policy documents, identity proof, and others.

  • Submit the policy discharge form along with all the documents within 5-6 days of receiving the form.

  • An insurance company will verify the documents submitted by you.

  • Once the verification process is completed, the insurer will process your maturity benefit.

Steps to Claim Death Benefit

  • Visit the official website of the insurance company.

  • Download and thoroughly fill out the claim form.

  • Attach all the required documents like the death certificate of the policyholder and others.

  • An insurance company will verify all the details and documents that you submit. In some cases, an insurer may send an investigating officer to the hospital for verification.

  • Once this process is completed, an insurer will process the death benefit to the nominee’s bank account.

Documents required To Invest in Investment Plans

The following are the documents required to invest in the best investment plans in India.

  • Identity proof

  • Address proof

  • Last 3 months' salary slip

  • Bank statements for 6 months

  • ITR returns for 2 years

  • CA audited profit and loss statement

Can NRI Buy Investment Plans in India?

Non-resident Indian citizens (NRI) can buy investment plans in India. The growing Indian economy has attracted many NRIs to start investing in India. The minimum age of an NRI individual should be 18 years, and the maximum is 60 years, to open an NPS account with a POP in India. Additionally, an NRI may also have to open an eNPS account if they have a PAN or Aadhaar card.

Here’s a list of some of the best NRI investment plans in 2023:

  • Fixed Deposits

  • Capital Guarantee Solution Plan

  • Retirement Plans

  • Guaranteed Returns Traditional Plan

  • Child Plan

  • National Pension Scheme

  • Mutual Funds

  • Real Estate

  • Equity Investments

  • Public Provident Fund

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