Middle class is the vast majority of the population that comprises the mass of India. Let’s look at the various options of investment that best suit the middle class in this post.
The middle class is the social group that comes in between the high class and the working class. The middle class people comprise both the professional class as well as the business people including their families. When it comes to investment options available for the middle class, there are varied possibilities. This is because being the huge mass of the country’s population, most of India’s economic and financial planning is done taking into consideration the middle class people.
However, when it comes to choosing the best investment options there are several questions that the middle class people want to know before choosing to invest in a plan. For instance, how should they select their plans? How they should plan investment depending on their liquidity needs, financial goals, investment possibilities and safety of the principal amount etc. Let us see some of the top investment options for middle class in India:
Below are some of the best investment options in India for the middle class that allow medium to high returns.
Best Low Risk Investments for Middle Class Family:
- Public Provident Fund (PPF) – This is considered as the most secured investment option in India for the long term. Here, the investor can earn multiple interest on the money accumulated and at the same time the interest earned is also tax-free. Further, an investor can open a PPF account with mere Rs.1000 in a post office or bank. PPF is available with a fixed duration of 15 years as lock in period. However, there is an option to withdraw money in the 6th year. Also, the investor may lengthen the tenure of the policy by another 5 years.
- Senior Citizens Savings Scheme (SCSS ) – This is another risk-free investment option that allows the investor to save tax. Dedicated specifically for senior citizens, SCSS offers regular income to the elderly members of the society. The interested individual can open an SCSS account anywhere across banks and post offices in India. Rs. 15 lakh is the maximum amount that can be invested under this scheme. The tenure of the plan in 5 years, which can further be extended by another three years. This is one of the short term investment options as compared to PPF.
- Fixed Deposits (FD) in Banks – Bank fixed deposits have always been among the most common and traditional sources of investment among middle class people. The FDs are a good source of fixed income and they allow contracted returns in the form of interest over the entire term of the investment. In addition, FDs are available with both cumulative as well as non-cumulative choices of investment. Also, the rate of interest in FDs can be reinvested and rewarded to the investor at the time of FD maturity. The investor can avail the interest annually, quarterly or monthly for the cumulative option.
- National Pension Scheme (NPS) – NPS is a market linked retirement scheme that is available for Indian citizens between the age group of 18-65 years. Under NPS, the investor is not allowed to withdraw the entire money invested after retirement. Rather, the investor is likely to keep aside 40% of the capital to receive as a regular pension from PEFDA or Pension Fund Regulatory and Development Authority. This amount is expected to allow the investor to have a consistent flow of cash throughout their retired life. On the other hand, the rest of the 60% of the retirement capital can be availed as tax-free corpus by the investor at the time of retirement. Thus, NPS serve as one of the best tax saving investment options.
High Risk Investment Options for Middle Class:
- Equity Mutual Fund – Equities are market linked investment options which assure high returns. For a common man, mutual funds are regarded as an ideal middle class investment option because they ensure risk diversification. Here, the investor has several investment platforms like large, mid or small caps or index funds or in a combination of funds to invest on. These funds are designed in a way to protect your capital while generating stable returns over time.
- ULIP or Unit Linked Investment Plan – ULIP comes with the double advantage of insurance as well as investment. This is another investment that is considered to offer good return on investment. Here, the amount that is invested by the insured is divided into two parts. One of the portions is used for insurance purposes, while the remaining amount is floated in the market as linked instruments. ULIPs generally offer 3 to 5 years of minimum lock in period. Some plans allow investors to keep their investment intact for up to 10 years. Further, you also get additional benefits of tax exemption with ULIPs. However, ULIPs have a complicated structure of expenditure, which is something to take note of.
- Direct Equity – If you are looking for an investment option for a long tenure, you must do some substantial research and invest on a plan that allows a financial cushion. Being a high-risk investment plan, Direct Equity allows high returns in the long run. This investment option also gives the investor the right of ownership in an organization and makes the investor entitled for bonus, dividends, shares etc.
- Crypto currency Investment – In recent times, Crypto currencies have emerged as high-risk digital assets offering high returns. Considered as best investment options in India 2022, this is a short-term, volatile investment with fluctuating value. Investors are required to consider regulations of government and the varied risks that are linked to it before investing in this plan.
Read More: How to Earn 5000 Rupees Per Month with Investment?
To Sum Up
When it comes to investment options for the middle class in India, it is important to understand the policies well to know if it is a long-term plan or a short-term goal. Thus, it is advised to read and compare the available plans in the market and buy the best option to invest money. It is better to look at the best time-tested methods of generating additional income to create wealth.
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