Long-term investing is all about getting into the right investments and waiting it out patiently till you are ready to redeem them to meet your financial goals.
Three Good Long Term Investment Options for 2015
- ULIPsUnit-linked insurance plans or ULIPs invest in asset markets – equities and debt. For this reason their portfolio witnesses ups and downs which is captured by the net asset value(NAV), usually published at regular intervals. All purchases and redemptions in the ULIP are at the NAV plus a load, if any.Given the fluctuations inherent in ULIPs from exposure to equities, they are ideally suited for investors who consider high risk investments.ULIPs usually offer a wide range of options across equity and debt markets. The varied choice of options means you have a better choice of finding the most suitable plan/option for your risk profile and investment objective.
ULIPs offer tax benefits under Section 80C. The maximum deduction that can be claimed is Rs 1.5 lakhs. Redemption proceeds are tax-free under Section 10(D) and hence ULIPs also play the role of ideal tax free investment options in India.
ULIPs can prove useful in meeting a range of financial goals like retirement planning, child’s education / marriage, down payment for a house, among others; hence making them an ideal choice to opt for while choosing a long term investment option.
- Equity fundsMutual funds that invest in stockmarkets are a must-have for long-term investors. They diversify across stocks and sectors to ensure they make the most of emerging trends in stockmarkets.Go for well-managed, well-diversified equity funds with long-term track records across market cycles. Enter the fund with a horizon of at least five years to give the investment an opportunity to record long-term gains.
If you are looking for tax benefits, opt for tax-saving mutual funds, also called ELSS or equity-linked saving scheme.
These mutual funds work like regular equity funds except that they have a three-year lock-in.They offer tax benefits under a maximum investment of Rs 1.5 lakhs. Redemptions are tax-free under Section 10(D).
- Public Provident Fund (PPF) PPF is particularly relevant for individuals with a low risk appetite looking to save money over the long term for retirement planning or any other long-term financial goal.Investors with higher risk appetites can also invest in it to balance their investment portfolio.Contributions to PPF as also EPF (Employee Provident Fund) qualify for tax benefits.
A maximum investment of Rs 1.5 lakhs is permitted for the purpose of claiming benefit under Section 80C. The individual can invest more than that, but can’t claim tax benefit
The interest rate on the PPF is market-linked and reset every year. The PPF matures in 15 years.
You can withdraw after six years but it cannot exceed 50% of the balance at the end of the fourth year or the immediate preceding year, whichever is lower.
Curated from 3 Best Long Term Investment Options in India for 2015