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Best Investments for Long Term Growth

The basic purpose behind investing is to save the money you have earned today for a comfortable future. Your financial goals could be anything from your children's education to personal retirement planning. To generate good returns, you need to spend smartly so that you do not burn a hole in your pocket at the end of each month. When you want to invest for a comfortable future, follow the 50/30/20 budgeting rule. This means spending 50 percent of your income on necessities like rent and food, 30 percent of it on entertainment, and 20 percent should go in savings.

This will ensure you have a substantial amount at the end of each month to put in your investment account. When you start investing early on, long term investments give you good returns by compounding the interest on your investment. Also, these investments give you tax benefits, which means you save tax on your savings, while also meeting your financial goals. Whatever your goal may be, the ultimate reason for investment is to secure your financial future. So, if that's your plan, you need to know all about investment plans that will grow your money.

Best Long Term Investment Options in 2018-19

Considering long-term investment plans? Here are some of the best investment options for long term in India in 2018-19.

Life Insurance Policies

Life insurance is generally considered to be one of the best investment plans for the long term. Why, you ask? Because these plans offer protection for yourself as well as your family and wealth creation benefits that most long term investors look for. Insurance companies generally offer two types of investment plans, namely ULIP and Traditional endowment plan.

  • ULIP - Unit Linked Insurance Plans or ULIP is a plan where you get returns on the basis of overall market performance. SBI Life Wealth Assure is a good choice under this scheme.

  • Traditional Endowment Plan - This plan offers a one-time payout on maturity. You can consider the LIC New Endowment Policy under this scheme.

Both plans serve as a good investment option, and you can choose the one that best meets your financial goals.

Mutual Funds

Mutual funds offer a variety of investment plans, making them one of the most sought after investment options in India. Mutual funds are managed by an asset management company and investors can buy units in the schemes offered by these companies. They offer flexible investment plans and instant liquidity. Also, the returns that you get, if invested wisely are better than most investment plans. Some of the best investment plans under mutual funds are:

  • ELSS - Equity Linked Saving Scheme or ELSS is a type of mutual fund where you invest in equity. Along with a safe investment option, ELSS also offers tax benefits. An example of a well-performing investment plan in 2018 is Aditya Birla Sun Life Tax Plan scheme.

  • Index funds - In these type of investment plans, the value of your investment depends on the performance on the index you invest in. The ICICI Prudential Nifty Next 50 Index Fund is a good option in this scheme.

  • Balanced funds - These investment plans offer schemes in a mix of equities and fixed income securities. They try to balance the goal of achieving higher returns while minimising risk. A good option under this scheme is the ICICI Prudential Balanced Advantage Fund.

  • Equity Shares - The first option most people consider when it comes to long-term investment plans is equity shares. When you invest in equity, it means that the price of your investment will fall or rise depending on the performance of the company you invest in. Some of the best performing plans in equity in 2018 are:

  • Induslnd Bank - According to predictions, strong loan growth and an expansion in interest margins has made this a good investment option.

  • JSW Steel - An expansion with an investment of $1 billion in the US has given this stock a strong growth chart.

  • Asian Paints - This stock is on a growing trend due to consistent demand, extensive reach, and increased international operations.

Remember that the best shares should be chosen based on your financial goals.

Stock

This is a general term used to describe the ownership certificates of a company. When you invest in a company, you become its shareholder. The stock market rises in value while the prices of individual stocks rise and fall on a daily basis. This is a great investment plan for long term, and you can sell them anytime you want. There are two types of stocks:

  • Common - A shareholder in this category has the right to vote and contribute in the company's decisions.

  • Preferred - A benefit for these type of shareholders is that they get dividend before any other shareholders.

Public Provident Fund

One of the most popular and best long-term investment plans in India are Public Provident Funds. This type of investment encourages small savings over a long period. Apart from being tax free, since you can claim deduction for the amount invested under Section 80C and the interest earned is tax free, they are also risk free because they are owned by the government. And, the returns offered are also good; the interest rate under PPF in 2018-19 is 7.60%.

Real Estate

When you have a huge amount of cash available, then investing in real estate is the ideal option. Apart from being an excellent long-term investment, the returns on such types of investment are also very good. There is a nice supply of real estate in big cities with a very low risk. Although it should be noted that the annual returns on such investments is very low (around 3%), and hence, these investments are only good for long term. Some real estate investments you can consider are:

  • Commercial - Stable income generating investments are always a better choice than a small office space. Currently, there is a strong demand in the commercial real estate market.

  • Hospitality - With an increase in tourism, comes the need for better hotels and that is where investment in hospitality comes in.

  • Housing - If nothing else, investing in housing never fails. You can use it as a future investment or generate annual income from lease.

FAQs on Best Long Term Investment Options

Are bonds a good long term investment?

When it comes to bonds, the only major difference between short and long term bonds are the returns they generate. The longer the maturity period, the higher is the interest you get.

Are mutual funds a good long term investment?

Yes. Mutual funds are the best option for long-term investment, especially stock and equity mutual funds.

How do I invest my money to make money?

You can consider investing in bank fixed deposits where you can get assured returns at a fixed rate. Or, you can opt for a post office scheme like PPF or Senior Citizens Savings scheme, where you can get good returns with small investments.

How long do you have to hold stock for long term returns?

One to five year is the ideal time for holding your stock for a long term. Long term gains are taxed at a much lower rate than short term gains for most assets.

How long is long term investment?

For investments in listed stocks and equity mutual funds, one year is considered as long term whereas for all other investments, three years is considered as long term.

What are the 4 types of investments?

The four main types of investments or asset classes are:

  • Cash - This investment includes a high-return savings account.
  • Fixed Interest - This includes term deposits, corporate bonds, and government bonds.
  • Shares - This is unit of ownership in a company.
  • Property - You can get good returns by buying and selling property over a long term.

What are the best assets to own?

There are two categories of assets, namely financial and non-financial. Stocks, mutual funds, PPF, bank deposits fall into financial assets, while non-financial assets include investment in gold and real estate.

What are the best investment options?

Peer-to-peer lending, money market funds, annuities, and dividend paying stocks are considered among the best investment options.

What are the best long term mutual funds?

Most mutual fund investments generate good returns for long-term. But, the best type of mutual fund for long term investment is stock mutual funds.

What is the best investment to make money?

Investing in the stock market is the best way to make more money. This is because these investments are flexible and generate good returns in the long term.

Where can I invest my money for long term in India?

Government schemes like PPF and National Pension scheme are a good place to start investing for a long term. Bank fixed deposits are also a good option.

Which investments have the best returns?

Investments like high interest savings and life insurance generate the best returns.

How long do investors hold mutual funds for?

An investment period of at least five years is considered a good starting point for mutual funds.

How long should I stay invested in Mutual Fund SIP?

A period of three years is generally the norm in Mutual Fund SIP.

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