Phone NumberTo Buy: 1800-258-5899 (9 am to 6 pm)



Locate BranchLocate Branch

Best Long-Term Investment Options For Salaried People

dateKnowledge Centre Team dateFebruary 09, 2021 views124 Views
Best Savings and Investment Plans

Investment is an asset that is created to allow money to grow. The wealth created can be used for various objectives such as meeting shortages in income, saving up for retirement, or fulfilling certain specific obligations such as repayment of loans, payment of tuition fees, or purchase of other assets. It helps in generating income in 2 ways.

Investment categories

Before getting into the best long-term investment option for salaried people, let me first brief you about the basics of investment.

  • Ownership investment: Assets that are purchased and owned by the investor. For example- stock, real estate properties etc.
  • Lending investment: Lending investments make you behave like banks. For example- corporate bonds, government bonds etc.
  • Cash Equivalents: Investments that are highly liquid and can be converted into cash. Cash equivalents generally offer low return, but the risk associated with them is highly negligible.

Importance of investment

You may be wondering why you should invest? Well, have you ever thought of how you’ll manage the upcoming expenses, the changing trends, unforeseen medical emergencies, and so much more? It is not always necessary that your earnings remain constant. Taking a portion of your income and saving each month will create a reserve fund, which may prove to be inadequate in covering your family.

Bread earners of the family are considered responsible for investing their monthly income. Although young adults who have just started working may not find themselves investing in the future. However, this is the age when you can make some of the wisest investment decisions due to this creating a nest for the future. Investing early can ensure the growth of your money with time now providing you with the security.

Here are basic reasons why you should invest your money-

  • Investing your money can allow you to grow it.
  • Retirement savings
  • High return

Here are a few basic tips that will help a salaried person plan his/her finances.

  • MAKE A BUDGET PLAN AND START SAVING - It is a simple way of reconciling your income with your expenses and keeping track of your monthly spending as per your ease of usage. Once you have budgeted for 3-4 months, it’ll become easier for you to sort your essentials from the entertainment. Once you notify the outgoing amount, start putting your 10-20% salary in savings before starting your monthly expenses.
  • FRAME YOUR FINANCIAL GOALS- Now that you have started saving your money accordingly, framing your financial goal must be your next step.
  • INVEST SMARTLY- There are various ways of investing, but how to check which investment guarantees maximum return with fewer loopholes is mandatory.

Maximise tax savings

The best investment option for any individual primarily depends on four factors — his risk appetite, time horizon, liquidity and tax slab. An investor can also opt for multiple investment options aimed at different financial goals having different time horizons.

  • Equity mutual fund- An investment of minimum 65% of their corpus inequities. Listed below are few equity schemes where a salaried person can consider investing-
  • a) Multicap fund- Multi cap are those funds that invest across all market capitalisations, segments and themes without any SEBI imposed caps. Fund managers of this fund can freely change their exposure to various market capitalisations and segments as per the changing market conditions. These funds have to invest at least 65% of the total assets in equity and equity-linked instruments.

    b) Large-cap fund- Large-cap funds primarily invest in large-cap companies. As per SEBI guidelines, top 100 companies in terms of market capitalisation are classified as large-cap companies. SEBI guidelines have mandated large-cap funds to invest at least 80% of the total assets in large-cap companies’ equity and equity-linked instruments.

    c) Equity-linked savings scheme- Popularly known as tax saving mutual funds, equity-oriented schemes qualify for the tax deduction of up to Rs 1.5 lakhs per financial year u/s 80C.

    d) Midcap fund- Mid-cap funds invest primarily in the equity and equity-related instruments. As per SEBI guidelines, mid-cap funds have to invest a minimum of 65% of the total assets.

    e) Large and mid-cap funds- ‘Large & midcap funds’ invest primarily in a mix of large and midcap companies. As per SEBI guidelines, ‘Large & Midcap Funds’ have to invest a minimum of 35% of their total assets.

    f) Small-cap funds- Small-cap funds primarily invest in equity and equity-linked instruments of small-cap companies. As per SEBI guidelines, small-cap funds have to invest at least 65% of their total investments in small-cap funds.

    g) Value fund- Value funds are those funds that follow a value investment approach during stock selection. This approach involves recognising stock pricing anomalies created by temporary setbacks to the fundamentally strong companies. As per SEBI guidelines, value funds have to invest a minimum of 65% of their total assets in equity and equity-related instruments.

    h) Contra fund- Contra funds are those that follow a contrarian investment goal approach. This investment approach involves fund managers to bet against the prevailing market sentiments and trends. As per SEBI guidelines, contra funds have to invest a minimum of 65% of the total assets in equity and equity-related instruments.

  • International funds- International funds mostly invest in equity and equity-linked instruments and debt securities of the entities/companies listed outside India. Most of the international funds are fund of fund schemes investing in foreign funds investing in overseas markets.
  • Debt mutual funds- Debt funds invest in fixed income instruments such as money market instruments, corporate bonds, government securities, etc. As market-linked fixed income instruments are less volatile than equities, debt mutual funds are relatively less volatile than most equity and hybrid fund categories. Being invested in market-linked fixed income instruments, debt funds usually generate higher returns than savings and fixed deposits. Listed below are some debt funds where a salaried person can consider investing-
  • a) Overnight fund- Debt Funds that invest in overnight securities or assets having residual maturity of 1 day.

    b) Liquid fund- Those funds that are allowed to invest only in debt and money market securities having the maturity of up to 91 days.

    c) Ultra short duration fund- Those type of funds that primarily invest in debt and money market instruments with a duration of 3 to 6 months.

    d) Low duration fund- Debt funds which invest in money market instruments for a duration of 6 and 12 months.

    e) Money market fund- Debt funds which invest in money market instruments for the maturity of up to 1 year.

    f) Short duration fund- Debt funds which invest in money and debt market instruments with a duration from 1 to 3 years.

  • Hybrid mutual funds - Funds that invest in equity, debt and another asset. List of hybrid mutual funds-
  • a) Conservative hybrid fund - Conservative hybrid funds primarily are invested in debt instruments with some exposure to equities. As per SEBI guidelines, conservative hybrid funds have to invest between 10% and 25% of their total assets in equity and equity-linked instruments and between 75% and 90% of the total assets in debt instruments.

    b) Balanced hybrid fund- As per SEBI guidelines, balanced funds are those that have to invest between 40% and 60% of the total assets in equity and equity-linked instruments and between 40% and 60% of the total assets in debt instruments. These schemes are not allowed to exploit arbitrage opportunities.

    c) Dynamic asset allocation- Dynamic asset allocation funds, popularly known as balanced advantage funds, have the freedom to dynamically manage their exposure to equity and debt instruments as per the market conditions and without any minimum or maximum exposure limits.

    d) Equity savings fund- It aims to provide capital appreciation and income distribution by investing in equity, debt, and arbitrage opportunities. As per SEBI guidelines, equity savings funds have to invest at least 65% of the total assets.

  • Bank fixed deposits- Bank FD guarantees principal repayments and interest returns at booked rates irrespective of any card rate changes in the tenure. Deposits made with Scheduled Banks are also covered under the deposit insurance program from the DICGC, an RBI subsidiary.

Bank fixed deposits- Bank FD guarantees principal repayments and interest returns at booked rates irrespective of any card rate changes in the tenure. Deposits made with Scheduled Banks are also covered under the deposit insurance program from the DICGC, an RBI subsidiary.

A bread earner of the family is the person responsible for himself and all the family expenses. So, it is beneficial to have a properly organised manner of best investment options. Before investing, make sure you know which plan is best suitable for you according to your monthly income and requirements

Related Articles

Browse by Categories

Get a Call Back

Do you want us to call back Please fill the form below

Annual Income (In Lacs)

Our Products

TERM Insurance PLAN

TERM Insurance PLAN

Whole life cover option available

Increase your life cover with changing life stages

Return of premium & in-built protection options

Multiple premium payment options

Avail tax benefits on premiums paid as per tax laws


Unit Linked Insurance Plan

8 funds and 4 portfolio strategies to invest

Loyalty additions and wealth booster

Return of Mortality Charge is available on Maturity under all three cover Options

Flexibility of switching between the fund options to take benefits of market movements or change in risk preference

Pos Easy Bima Plan

Top Benefits

Hassle free

Get double life cover in case of accidental death

Choice of flexible premium payment and policy term

Avail tax benefit on premium paid

Frequently Asked Questions (FAQs) for Term Insurance

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

  • 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  • 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  • 3. How to save money on tax if you pay for the term plan?
  • 4. Do they offer regular income options?
  • 5. Can you change the coverage and premium in the future?
  • 6. Does the claim consider valid if death occurs outside India?
  • 7. Which kind of death is not covered by insurance?
  • 8. Can NRIs take term insurance? If yes, what are the conditions?
  • Call BackCall Back Pay PremiumPay Premium
    Back to top