Best Investment Options for Salaried Person in India 2024

Investing is a crucial aspect of financial planning, and for salaried individuals, making the right investment choices is essential to achieving their financial goals. In 2024, the investment landscape will be more dynamic, with various options available, and the path to financial success will not be one-size-fits-all. 

Central to this idea is the critical consideration of risk appetite – a pivotal factor distinguishing low-risk investors from those more inclined to high-risk for potentially higher returns. In this article, we’ll understand the different investment options available for salaried people in India, depending on their risk profile. But first, let’s start with the basics:

Types of Investment Options in India

Investments in India fall into three categories based on risk and potential returns.

1. Low-risk investments: These have very little or zero risk, offering stable returns, usually guaranteed. They’re good for people who don’t want much risk. Examples include Fixed deposits, the Public Provident Fund, and Sukanya Samriddhi Yojana.
2. Medium-risk investments: Slightly riskier than low-risk options, these aim for decent returns with moderate risk. They suit those looking for a balance between growth and stability. Examples include Debt funds, Corporate Bonds, and Government Bonds.
3. High-risk investments: These are linked to the market and come with higher risk. They aim for higher returns but also bring more uncertainty. These are for those who don’t mind taking more risks and want returns from market changes. Examples include stocks, mutual funds, and Unit Linked Insurance Plans (ULIPs).

Low-Risk Investment Options in India

Here are some low-risk investment options in India for salaried employees:

1. Short-Term Debt Funds 

Short-Term Debt Funds belong to the category of mutual funds that primarily invest in fixed-income securities with maturities of up to 3 years. These funds are designed for investors seeking relatively higher returns than traditional savings accounts or fixed deposits while maintaining a controlled level of risk. 

• Availability: Accessible through mutual fund distributors or online platforms like Angel One.
• Investment Amount: Minimum ₹500, no upper limit; options for SIP or lump sum.
• Maturity: Up to 3 years, ideal for short-term parking of funds.
• Taxation and Benefits: Eligible for Section 80C deduction (5 years or more), taxable interest as per income slab. 
• Risk Level: Low-risk, yet susceptible to credit, interest rate, and liquidity risks.
• Who Can Invest: Open to residents, HUFs, minors, senior citizens, NRIs, trusts, societies, and companies.
• Returns: Variable interest rates, as determined by fund managers.

2. Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a financial instrument in India established by the National Savings Institute of the Ministry of Finance in 1968. Functioning as a tax-saving and savings avenue, it has garnered popularity for its attractive interest rates and tax benefits.

• Accessibility: PPF accounts are conveniently accessible, with the flexibility of opening one at any post office or designated bank branch in India. Additionally, some banks facilitate online PPF account openings.
• Investment Limits: Allows for a minimum investment of ₹500 and a maximum of ₹1.5 lakh per financial year. Investors can choose a lump sum deposit or spread the investment over a maximum of 12 installments.
• Maturity and Withdrawals: The PPF has a minimum tenure of 15 years, extendable in blocks of 5 years. Partial withdrawals become permissible from the 7th year, subject to specified conditions.
• Taxation and Advantages: PPF investments qualify for deductions under Section 80C of the Income Tax Act, up to ₹1.5 lakh annually. Furthermore, both the interest earned and the maturity amount remain tax-exempt. PPF also provides a loan facility against the account balance between the 3rd and 6th years.
• Risk Profile: PPF stands out as a low-risk investment due to the backing of the Indian government, ensuring guaranteed, risk-free returns and complete capital protection.
• Eligibility: PPF accounts can be opened by any resident individual in their name or on behalf of a minor. However, Non-Resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not eligible for PPF accounts.
• Returns: The PPF offers a variable interest rate, subject to quarterly revisions by the government. As of the quarter ending March 31, 2024, the annual interest rate is 7.1%, compounded annually.

3. Bank Fixed Deposit 

Bank Fixed Deposit (FD) is a widely embraced investment avenue in India, allowing individuals to deposit a fixed sum for a predetermined duration, earning a steady and assured interest rate. Bank FDs provide a secure and stable investment avenue, ensuring guaranteed returns and safeguarding the invested capital. Investors enjoy flexibility in selecting tenure and interest payout frequency based on personal financial objectives.

• Accessibility: Available at any bank branch or online.
• Investment Limits: Investors can start with as little as ₹100, and the maximum cap is ₹10 crore per FD account. Multiple accounts with different tenures are allowed.
• Maturity Options: FDs have tenures ranging from 7 days to 10 years, with the flexibility to renew or withdraw, subject to conditions.
• Tax Implications: Eligible for Section 80C deductions (up to ₹1.5 lakh per annum for 5-year tenures or more). Interest is taxable per the individual’s tax slab. Tax saver FDs with a 5-year lock-in offer exemptions.
• Risk Profile: Low-risk with DICGC insurance covering up to ₹5 lakh per depositor per bank. However, inflation risk may impact real returns over time.
• Eligibility: Open to a wide range of entities, including individuals, HUFs, minors, senior citizens, NRIs, trusts, societies, and companies.
• Interest Rates: Variable rates, as per the bank’s periodic revisions. Current rates for the quarter ending March 31, 2024, range from 2.50% p.a. to 9.00% p.a. for regular depositors and 3.00% p.a. to 9.50% p.a. for senior citizens.

4. Government Bonds

A government bond represents a debt security issued by a government to support its public spending and fulfil financial obligations, encompassing periodic interest payments, known as coupon payments, and the repayment of the face value upon maturity. Government bonds are a secure investment option, offering guaranteed returns and capital protection. Investors can select tenure and interest payout frequency in alignment with their financial goals.

• Accessibility: Available at post offices, designated bank branches, and other online platforms.
• Investment Limits: Minimum ₹100, maximum ₹10 crore per bond account. Multiple accounts with varied tenures are possible.
• Maturity Period: 7 days to 40 years. Renewal or premature withdrawal with conditions.
• Taxation and Advantages: Eligible for Section 80C deductions (up to ₹1.5 lakh per annum for 5+ years). interest income is taxed. Tax saver bonds come with a 5-year lock-in offer exemption.
• Risk Assessment: Low-risk with government backing but susceptible to inflation risk impacting real returns.
• Eligibility: Open to residents, HUFs, minors, senior citizens, NRIs, trusts, societies, or companies based on issuer criteria.
• Returns Offered: Variable interest rate (6.00% to 8.00% p.a. for regular investors, 6.50% to 8.50% p.a. for senior citizens).

5. National Savings Certificate (NSC)

National Savings Certificates (NSC) represent a secure fixed-income investment scheme supported by the Government of India, ensuring reliable returns and tax advantages. NSC stands out as a dependable investment avenue, providing assured returns and capital safeguarding. Tailor the tenure and interest payout frequency based on your financial goals and preferences.

• Availability: NSC accounts can be opened at post office branches or some banks, with online options available. 
• Investment Amount: Invest as little as ₹100 or up to ₹10 crore per NSC account, diversifying with multiple accounts.
• Maturity: NSC has a fixed five-year maturity period, offering renewal or withdrawal options with certain conditions.
• Taxation and Benefits: NSC investments qualify for deductions under Section 80C, up to ₹1.5 lakh annually. Interest is taxable per your income slab, but tax-saver NSCs provide a 5-year lock-in with interest income exemption.
• Risk Level: Low-risk with government backing, ensuring guaranteed, risk-free returns and capital protection. However, it’s not immune to inflation risk.
• Who Can Invest: Open to residents, minors, senior citizens, and NRIs with specific eligibility criteria. HUFs, Trusts, and Companies are ineligible.
• Returns Offered: The variable interest rate set by the government is currently at 7.7% annually for the quarter ending March 31, 2024.

6. Senior Citizens Savings Scheme (SCSS)

The Senior Citizens Savings Scheme is a government-backed savings scheme specifically designed for senior citizens in India. It provides a regular and secure income source for individuals above the age of 60. In some cases, individuals aged 55-60 can also invest in the scheme, provided they have opted for voluntary retirement and meet certain other criteria.

• Availability: This scheme can be started at all post office branches or some banks
• Investment Amount: The minimum investment is ₹1,000, and the maximum is ₹15 lakh per SCSS account.
• Maturity: The scheme has a tenure of 5 years, extendable for an additional 3 years. Interest is payable quarterly, and the option to withdraw or reinvest is available.
• Taxation and Benefits: Interest earned is fully exempt from tax under section 80C. Premature closure and nomination facilities are offered.
• Risk Level: SCSS is considered a low-risk investment suitable for senior citizens, ensuring capital protection and a stable return of 8% annually.
• Who Can Invest: Open to senior citizens residing in India.
• Returns Offered: SCSS provides a fixed interest rate of 8.2% for the quarter ending March 31, 2024.

7. Sukanya Samriddhi Account (SSA)

The Sukanya Samriddhi Account is a government-sponsored savings scheme aimed at promoting the welfare of the girl child. It was launched as part of the ‘Beti Bachao, Beti Padhao’ campaign. Parents or legal guardians can open this account for a girl child below the age of 10.

• Availability: This account can be opened at all post office branches or some banks.
• Investment Amount: The minimum investment is ₹250, and the maximum is ₹1.5 lakh per financial year.
• Maturity: The scheme matures after 21 years from the opening date or when the girl child turns 18 and gets married.
• Taxation and Benefits: The interest earned is fully exempt from tax under section 80C. Partial withdrawals are allowed for the girl child’s higher education and marriage.
• Risk Level: Considered a low-risk savings scheme with tax benefits, providing financial security for the girl child’s future.
• Who Can Invest: Parents or guardians on behalf of girl children below 10 years of age.
• Returns Offered: SSA offers a fixed interest rate of 8.2% per annum for the March 31, 2024 quarter. 

8. Kisan Vikas Patra (KVP)

Kisan Vikas Patra is a government-backed, secure investment instrument available in the form of certificates. It operates as a fixed-rate small savings scheme to double the invested amount over a specified period. In the presently available issue, this doubling occurs after 115 months. Applying for Kisan Vikas Patra can be done by adults or guardians acting on behalf of minors above the age of 10. 

• Availability: Can be opened at post office branches or some banks.
• Investment Amount: The minimum investment is ₹1,000, with no upper limit.
• Maturity: Doubles the investment in around 9.5 years. Premature encashment and transfer of certificates are allowed.
• Taxation and Benefits: Interest earned is taxable as per the individual’s income tax slab.
• Risk Level: Considered a moderate-risk investment due to the fixed tenure and variable interest rate.
• Who Can Invest: Open to any resident individual, minor, or trust, excluding HUF or NRI.
• Returns Offered: The current interest rate is 7.5% per annum, compounded annually for the quarter ending March 31, 2024.

Medium-Risk Investment Options in India

1. National Pension System 

The National Pension Scheme (NPS) is a comprehensive pension and investment initiative launched by the Indian government, overseen by the Pension Fund Regulatory and Development Authority (PFRDA). 

• Eligibility: Open to all Indian citizens aged between 18 and 70  years.
• Account Types:
  •  Tier-I Account: Mandatory for accumulating savings for retirement. 
  • Tier-II Account: Voluntary and can be opened only if the subscriber has an active Tier-I account. Withdrawals from Tier II are allowed at any time.

• Investment Options: Four asset classes: equities, corporate bonds, government bonds, and alternative assets. Market-linked returns with no fixed interest rate. Subscribers can choose and switch between investment funds based on their retirement goals.
• Investment Amount: Minimum contribution for Tier-I: ₹500; Tier-II: ₹1,000. Maximum contribution depends on the subscriber’s age and income.
• Retirement Corpus and Annuity: On retirement or exit, a portion of the corpus must be invested in an annuity to provide a monthly pension. The amount invested in annuity is tax-exempt, but annuity income is subject to income tax.
• Returns: Returns from NPS debt schemes have decreased from around 14% to approximately 11.2% and 10% in Scheme C and Scheme G. In the last five years, NPS Scheme E had an average return of around 15%, with a 10-year return settling at around 11%. Returns are market-linked and not guaranteed.
• Tax Efficiency: Highly tax-efficient investment. Contributions can be made up to the age of 70. A portion of NPS invested in equities offers potentially higher returns compared to traditional tax-saving investments like the Public Provident Fund (PPF).

2. Sovereign Gold Bonds

Sovereign Gold Bonds (SGBs) represent government securities denominated in grams of gold, providing a secure and regulated alternative to physical gold ownership. These are available to a range of entities, including individuals, HUFs, trusts, universities, and charitable institutions. SGBs can be acquired through various avenues such as scheduled commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges like NSE and BSE.

• Availability: RBI issues SGBs in tranches on behalf of the Government of India.
• Investment Limits: Minimum: 1 gram; Maximum: 4 kg (individuals), 20 kg (trusts), 50 kg (eligible institutions).
• Maturity: 8-year tenor, with an exit option after the fifth year.
• Taxation: Taxable interest; exempt from capital gains tax on redemption for individuals.
• Risk Level: Low-risk, backed by the Government of India with a sovereign guarantee.
• Eligibility: Open to individuals, HUFs, trusts, universities, and charitable institutions.
• Returns: Linked to gold market prices; fixed interest rate, e.g., Series XII at 2.5% per annum.

3. Debt Funds 

Debt funds represent a category of mutual funds primarily focusing on fixed-income securities, including bonds, treasury bills, and money market instruments. These funds are recognised for their lower risk compared to equity funds, making them suitable for investors seeking stable returns.

• Availability: You can invest from mutual fund houses, banks, financial institutions, and stock brokers like Angel One.
• Investment Threshold: Varies ranging from ₹100 to ₹5,000.
• Maturity: Duration varies from months to years.
• Taxation: Capital gains taxed at 20% with indexation benefits.
• Risk: Less risky than equity funds; risk depends on the credit rating of underlying securities.
• Eligible Investors: Open to individuals, HUFs, trusts, universities, and charitable institutions.
• Returns: Linked to prevailing interest rates, typically higher than similar-duration bank fixed deposits

4. Hybrid Funds

Hybrid funds represent a versatile investment option for individuals seeking a balanced mix of equity and debt instruments to optimise diversification and enhance returns. These funds attract investors aiming for a well-rounded approach that mitigates risk while capitalising on growth opportunities. Hybrid funds strategically invest in equity and debt instruments, ensuring diversification and minimising concentration risk. Investors can select a hybrid fund based on risk tolerance and investment objectives.

• Availability: You can invest from mutual fund houses, banks, financial institutions, and stock brokers like Angel One.
• Minimum Investment: Varying minimum investments (₹500 to ₹5,000).
• Taxation: Taxation of hybrid funds is based on their asset allocation. If the fund’s equity component exceeds 65%, it is taxed akin to an equity fund. Conversely, if the debt component surpasses 65%, taxation aligns with debt funds.
• Risk Profile: Intermediate risk—less than equity, more than debt.
• Eligibility: Open to individuals, HUFs, NRIs, and institutions.
• Returns: Tied to asset allocation, with equity-focused hybrids generally offering higher returns.

High-Risk Investment Options in India

Here are some high-risk investment options in India for salaried employees:

1. Direct Equity

Direct equity is a form of investment where individuals directly purchase shares of a company listed on a stock exchange. This investment option is characterised by its high-risk nature, offering returns that are linked to market performance. Investors engage in direct equity by acquiring shares of a publicly traded company.

• Aviliabitty: You can start investing with opening a demat account from a stock broker, such as Angel One.
• Taxation and Benefits: Investments in direct equity do not qualify for tax deductions. Short-term capital gains are subject to a 15% tax rate. Long-term capital gains up to ₹1 lakh are exempt from tax, while gains exceeding this threshold are taxed at 10%.
• Risk Profile: Direct equity is considered a high-risk investment due to its susceptibility to market fluctuations.
• Eligibility: Anyone interested in gaining market-linked returns is eligible to invest in direct equity.
• Returns on Investment: Returns from direct equity are influenced by the performance of the invested company and are market-driven, varying accordingly.

2. Equity Mutual Funds

Equity mutual funds offer a diversified investment approach by spreading your money across multiple stocks. Professional fund managers conduct thorough research before investing, enhancing the potential for long-term returns.

• Availability: Accessible through the Angel One app or website, providing a user-friendly platform for investment.
• Investment Amount: Flexibility in investment amounts, allowing investors to start with as low as ₹100. No strict upper limit on the investment amount.
• Maturity: No mandatory lock-in period for most equity mutual funds, providing the flexibility to redeem anytime. ELSS (Equity Linked Saving Schemes) has a compulsory lock-in of three years.
• Taxation and Benefits:Equity mutual funds do not qualify for tax deductions. ELSS investments allow a tax deduction of up to ₹1.5 lakh per financial year. Capital gains from equity funds are taxable, with STCG (Short Term Capital Gains) taxed at 15% and LTCG (Long Term Capital Gains) at 10% for amounts exceeding ₹1 lakh.
• Risk Level: High Risk
• Who Can Invest: Open to anyone seeking market-linked returns on their investments. Suited for individuals with a higher risk tolerance and a long-term investment horizon.
• Returns Offered: Market-linked returns based on the performance of the underlying stocks. 

3. Real Estate

Investing in real estate remains a popular choice among Indians, known for its historical success in delivering impressive returns. However, like any investment avenue, it comes with its own set of risks and limitations.

• Availability: Investors can choose from various avenues like residential or commercial properties or opt for the convenience of investing through REITs.
• Investment Amount: No strict minimum or maximum investment limits, providing flexibility for investors to allocate funds based on their budget.
• Maturity: Real estate investments don’t have fixed maturity dates, allowing investors the freedom to decide the duration of their investment.
• Taxation and Benefits: While rental income is taxable as per income tax slab. But real estate offers tax advantages such as deductions for mortgage loan interest and property taxes, with potential favourable treatment for long-term capital gains.
• Risk Level: Moderate to high risk, particularly in terms of liquidity, as selling property quickly may involve a significant discount.
• Who Can Invest: Ideal for those seeking regular rental income, capital appreciation, and portfolio diversification.
• Returns Offered: Potential profits through property appreciation and rental income, influenced by factors like location and market trends.

4. ULIPs 

A Unit-Linked Insurance Plan (ULIP) seamlessly integrates life insurance and investment components. A segment of your premium is strategically invested in diverse asset classes such as equity and bonds, aiming to yield wealth over an extended period. Simultaneously, another portion of your premium is allocated towards providing a life insurance cover.

• Availability: ULIPs are accessible through various life insurance companies, offering investors the flexibility to choose from different providers.
• Investment Amount: The investment amount in ULIPs varies among companies, with a general benchmark set at a minimum of ₹1,500 per month.
• Maturity: ULIPs typically have a maturity period of 5 years, providing investors with a medium-term investment horizon.
• Taxation and Benefits: Investors can avail themselves of tax benefits by investing in ULIPs, as contributions are eligible for deduction under Section 80C, up to ₹1.5 lakh.
• Risk Level: ULIPs entail a medium to high level of risk, given their exposure to market dynamics through investments in equity and bonds.
• Who Can Invest: ULIPs are well-suited for investors seeking a dual advantage of market-linked returns and insurance coverage. 
• Returns Offered: ULIPs offer market-linked returns, aligning the financial outcomes with the performance of the underlying asset classes in which the premiums are invested.

Factors To Consider Before Choosing an Investment Option in 2024

When you’re choosing the best investment plan in India, consider these factors to make a wise decision based on your unique situation:

1. Your Goals: Identify your financial goals, whether it’s buying a car, funding education, purchasing a house, or planning for retirement. Your investment choice should align with these goals.
2. Risk Comfort: Assess how comfortable you are with taking risks. If you’re open to higher risks, market-linked investments might be suitable. If you prefer lower risks, government-guaranteed schemes could be a better fit.
3. Past Performance: Look into the historical performance of potential investments. Compare past returns of mutual funds, for example, with their benchmarks to gauge performance.
4. Lock-in Period: Understand if there’s a mandatory lock-in period for your chosen investment. For instance, ELSS funds have a 3-year lock-in period. Ensure the duration aligns with your needs.
5. Expense Considerations: Be aware of associated expenses that can impact your returns, such as expense ratios, exit loads, brokerage fees, and management fees. Factor these into your decision-making process.

Start Investing

When navigating the diverse investment landscape in India, it’s crucial to align your choices with your unique financial goals, risk tolerance, and investment horizon. Whether opting for low-risk options like PPF or exploring the potential of high-risk investments like direct equity, careful consideration of factors like past performance, lock-in periods, and associated expenses is key. 

Start investing wisely to pave the way for a financially secure future tailored to your individual needs and aspirations. So, open your demat account today with Angel One and take first step forward to invest in the best options. 

Disclaimer: This article has been written for educational purposes only. The aforementioned stocks are only examples and not recommendations.