Best Investment Options in India in 2023

12 January 2023
7 min read

We are all aware of how important it is to consider our own investment options. A financially secure life must, however, also include money accumulation and returns that can improve the future and your goals. Additionally, relying solely on savings won't always make sense, will it?

There are plenty of investing options in India. In this blog, you will find out what you would like to opt for to create financial stability and security that would benefit you. So, here are some of the Best Investment Options in India in 2023 based on three main criteria. You can choose how you could start your investment journey-

  • Low-Risk Investments
  • Medium-Risk Investments
  • High-Risk Investments

What is A Low-Risk Investment?

Simply put, a Low-Risk investor is one who has a lower risk tolerance. It indicates that the investor wants little to no volatility in their portfolio of investments.

Typically, retirees and beyond who have spent years building a nest egg choose to make these investments. The returns from these investments are always guaranteed because they rely on fixed-income instruments.

Here Are A Few Low-Risk Investment Options

  1. FIXED DEPOSIT

    They are consistently regarded as one of the best investment options and the safest form of investment. You can assemble high returns from various Fixed Deposit schemes through a fixed deposit.

    The fund always maintains security and promises returns free of market fluctuations. Most importantly, the principal on a fixed deposit is not depreciated.

  2. PUBLIC PROVIDENT FUND

    A Public Provident Fund is a government-backed investment option that can be used for a safe investment with high returns in India. It provides you with a risk-free return, which also makes it one of the best investment options. The interest that is received over the amount on this scheme is revised and paid by the government every quarter.
  1. MONEY MARKET FUNDS

    Money Market Funds are short-term debt funds. They invest in various money market instruments and endeavour to offer good returns over a period of up to one year while maintaining high levels of liquidity. The average maturity of a Money Market Fund is one year.
  2. MUNICIPAL BONDS

    A Municipal Bond or Muni-Bond is a debt instrument issued by municipal corporations or associated bodies in India. These local governmental bodies utilize the funds raised through these bonds to finance projects for socio-economic development through building bridges, schools, hospitals, providing proper amenities to households, etc.

  3. CERTIFICATE OF DEPOSIT

    A Certificate of Deposit is a term deposit that is offered by scheduled commercial banks which do not have the option of premature redemption. The primary difference between a Certificate of Deposit and a Fixed Deposit is that a Certificate of Deposit is freely negotiable.

  4. TREASURY BILLS

    The Government of India issues Treasury Bills to raise funds for a period of up to 365 days. It is considered an investment with best returns. Since these are issued by the government, they are considered to be very safe.

    However, lower risks also translate into lower returns which is the case with treasury bills too. The returns on Treasury Bills are lower than other money market instruments.

What is A Medium-Risk Investment?

Some investors are quite comfortable with Medium-Risk investments on the table. These returns are relatively higher when compared to low-risk investments. They are the investments that have a certain level of risk, but at the same time, they hold higher returns.

Here Are A Few Medium-Risk Investment Options

  1. BALANCE MUTUAL FUNDS

    A Balanced Mutual Fund is another one of the most prominent investment options in India and even though it is subjected to market risks, it can be the best investment to grow money multifold. When you have a lower risk appetite but want higher returns, a fixed income mutual fund or monthly systematic investment plan can be your best investment option.
  1. DEBT FUNDS

    Debt Funds are mutual funds that invest in fixed-income securities such as bonds and treasury bills. These have monthly income plans, or so that assure some sort of locked-in money and not a total loss. They definitely have a low-risk ratio when compared to high-risk investments.
  1. DIVIDEND-PAYING STOCKS

    Dividend-Paying Stocks are an excellent way to invest in the stock market. Although they're not as popular as high-yield bonds, dividend-paying stocks offer investors a way to earn a steady income from their investments.

    They're also known as "blue chip" stocks, because of their history of paying dividends and the fact that they tend to be bought by institutions such as mutual funds and pension funds.
  1. EXCHANGE TRADED FUNDS (ETFs)

    An ETF, short for Exchange-Traded Fund, is just like a stock and can be also called a basket of securities that also trade on the stock market.

    Exchange-traded funds pool the financial resources of several people and use them to purchase various tradable monetary assets such as shares, and debt securities such as bonds and derivatives. Most ETFs are registered with the Securities and Exchange Board of India (SEBI). It is an appealing option for investors with limited expertise in the stock market.
  1. CORPORATE BONDS

    A Corporate Bond fund is essentially a mutual fund that invests more than 80% of its total financial resources in corporate bonds. Business organizations sell these to fund their short expenses, such as working capital needs, advertising, insurance premium payments, etc. Corporate bond funds are increasingly becoming a popular debt instrument for businesses to raise required finances as associated costs are lower compared to bank loans.

What is A High-Risk Investment?

A High-Risk investment does not exactly have a guaranteed return. These are generally high-return investments in India as the returns on these investments, without a doubt, are quite high if invested wisely.

But the issue arises when the returns are not assured, and there are chances it might result in losses. The investors who pick these kinds of investments are usually the ones who are pretty savvy and are keen on the understanding of securities and more. There stands no limit to the gains in high-risk investments, but great gains come with risks too.

Here Are A Few High-Risk Investment Options

  1. DIRECT EQUITIES

    Direct Equities are also one of the best investments for long-term purposes. It is an equity share of a company, bound by legal terms which relate to company ownership.

    When you buy an equity share, you get the right to be involved in the company's decision-making. But equities do also hold a high hand when it comes to risk.
  1. EQUITY MUTUAL FUNDS

    Equity Mutual Funds are funds that will primarily invest in stocks. You can invest your money in these stocks through SIP, little by little, or in a lump sum amount.

    It suits savvy investors who are experts in the market. As you know, it is quite high when it comes to the risk involved. Your profits can be immense, but so should your risk appetite.
  1. FOREX TRADING/FOREIGN EXCHANGE

    FOREX, or Foreign Exchange, may be defined as a network of buyers and sellers who exchange currencies at an agreed-upon price. Hence, Foreign currency trading is the process through which people, businesses, and central banks exchange one currency for another.
  1. HEDGE FUNDS

    In the Securities and Exchange Board of India's (SEBI's) words, "Hedge Funds, including fund of funds, are unregistered private investment partnerships, funds, or pools that may invest and trade in many different markets, strategies, and instruments (including securities, non-securities, and derivatives) and are not subject to the same regulatory requirements as mutual funds."

Note - Although these instruments fall under High Risk, they yield high returns as well. Investors should access their risk factors before investing and conduct due diligence.

Conclusion

You can achieve financial stability by only saving, but is that really sufficient? What if you begin saving for retirement later, which means you won't be able to cover all of the costs by saving alone.

Investments are therefore always a wise choice, and this blog will assist you in selecting from among the best investment plans available in India. Additionally, you always have the option to select between Low-Risk, Medium-Risk, and High-Risk investment options.

Disclaimer: The views expressed in this post are that of the author and not those of Groww.

To read the RA disclaimer, please click here
Research Analyst - Bavadharini KS

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