Recent uncertainties at the world stage have brought forth new risks to the market. If these kinds of unforeseen and their possible impact on your investments bother you, it’s time to look for safer pastures. Fortunately, we have several investment and saving plan options when it comes to safe and steady growth of your money.
Here are five long-term investments which offer the safest returns on investment.
Unit Linked Insurance Plans (ULIPs)
Unit linked insurance plans are another highly flexible and tax-efficient investment of modern times. The plan gives you the opportunity to choose your investment options from equity, debt and balanced funds. You also have the opportunity to switch your asset allocation anytime.
More than that, the plan has a lock-in period of just five years, after which you can make tax-free partial withdrawals from the scheme. The best ULIP plans including Invest 4G plan from Canara HSBC OBC Life also offer bonuses for long-term investors. The bonus from the life insurer adds more units in your fund increasing your overall holdings.
Plus, if you are using the ULIP plan to save for your child’s goals, you can opt for a goal protection feature. Goal protection ensures that the plan reaches its intended maturity even in the case of your early demise.
The insurer will deposit all the due premiums in case of your demise within the policy term.
This is perhaps the best part of a ULIP investment. Whenever you decide to switch from one asset class of fund to another, it doesn’t affect your tax liability for the year. So, you can switch your funds from debt to equity and vice versa anytime without having to pay any capital gain.
Public Provident Fund (PPF)
Public provident fund is the oldest long-term investment scheme with a fixed rate of return. EPFO declares the rate of return depending on the market conditions every financial year. However, the returns are usually better than any other instruments offering a fixed rate of return.
For example, the rate of return for FY 2020-21 has been hovering at 7.1%, which is even better than the post office time deposit rates of the time.
The best part of PPF investment is that it allows a deduction of up to. Rs. 1.5 lakhs in the year of investment and the maturity value is also tax-free. With all these qualities, you may say that the maximum investment limit of Rs. 1.5 lakhs a year is the only limitation of the investment.
The normal maturity period for the investment is 15 years. However, you can start partial withdrawals from the sixth financial year after the investment. You can also extend PPF investments in batches of 5-years.
If you are a parent of a daughter, you can also invest in Sukanya Sammriddhi Yojana (SSY). SSY account has similar properties but the investment is dedicated to your daughter and vests in her after she attains the age of 18.
National Pension Scheme (NPS)
NPS tier-I account is a great option for retirement savings. The investments can get you an annual tax rebate of up to Rs. 2 lakhs. You can choose the type of investment portfolio you would like to invest in.
Low fund management charges and flexible investment schedule makes this plan a great option for retirement planning. Since there is no maximum limit of investment in the account you can keep increasing your retirement savings along with your income.
The maturity of the retirement account, though, happens only after you attain 60 years of age. You can, however, withdraw money from the account partially, after you have completed 10 years, for specific occasions such as:
Tax-free withdrawal at maturity is limited to 60% of the total accumulated corpus. The remaining corpus must be used to buy an annuity for monthly pension.
Life insurance companies have been at the forefront of safe investment options in India. Pension plans from life insurers are another long-term safe investment option you can use towards your retirement. There are two types of pension plans available with life insurers:
Immediate annuity plans are best suited for investors close to their retirement and looking to invest a large sum of money for safe retirement income.
However, if you still have a long way to go before retirement, you should opt for a deferred annuity plan. With this plan, you will first invest to build a retirement corpus.
With the pension plans, you can also have life and critical illness insurance covers. The insurance covers will help your spouse gain enough financial backup for her comfortable retirement in your absence.
Other Savings Plans from Life Insurers
Savings plan from life insurance companies is some of the best long-term investment options with almost certain returns. The maturity value of these plans is guaranteed at the beginning of the plan and investments too remain fixed.
A guaranteed savings plan is the best investment option if you have a very important long-term goal to look after. Also, like ULIPs these plans provide the tax exemption on investment and tax-free maturity values.
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