Best Investment Options For Salaried Person
Hey there, fellow salary earner. Planning smart moves for your money is a big deal, right? Well, we are at the end of 2023 and we’ve got various options to make your cash work for you. This blog is all about breaking down the easiest and best investment choices for someone like you.
We’ll talk about what you can gain, what you might risk, and how to make taxes less of a headache. So stick around if you want to make the most out of your salary – let’s dive into the top picks for the best investment options for salaried persons.
List of The Best Investment Options for Salaried Employees
- Mutual Funds
- Public Provident Fund (PPF)
- Unit Linked Insurance Plans (ULIPs)
- Fixed Deposit
- P2P Lending
- National Savings Certificate (NSC)
- Capital Guarantee Plans
- National Pension Scheme
1. Mutual funds
Mutual funds are an affordable choice if you are relying on a steady paycheck; with investment starting as low as Rs. 500 per month, you can invest in mutual funds through a Systematic Investment Plan (SIP), along with a variety of options from stocks to bonds, are a practical choice for individuals depending on a consistent paycheck.
Mutual funds are pretty flexible—they’re like the chameleons of investments. This means if you’re on a salary, you can cash out whenever you need to.
Mutual funds offer a variety of investment options there’s equity, debt, and hybrid funds. This buffet of choices lets employees with regular paychecks pick what works best for their comfort level with risk and their money plans.
2. Public Provident Fund (PPF)
PPF is like that dependable friend who always comes through. It gives you guaranteed returns of 7.1% per year, and the government sets these rates every few months. If you’re on a salary, here’s something you would like: you can get tax deductions on your PPF contributions, up to Rs. 1.5 lakh, thanks to Section 80C of the Income Tax Act, 1961. Plus, the interest you earn and the money you get when it matures? All is tax-free. It’s a long-term commitment with a lock-in period of 15 years. The best part is you can start with just a minimum contribution of 500 rupees per year. And you’ve got the freedom to add more whenever you like it, without any pressure.3. Unit Linked Insurance Plans (ULIPs)
ULIPs are like a two-for-one deal investment option for salaried persons—they’ve got your back for both investing and insurance. You can choose from a bunch of funds based on what is ideal for you in terms of risk and what you’re aiming for. Oh, and here’s a nice bonus: you can chuck in premiums up to ₹1.5 lakhs each year for ULIPs , and it won’t get taxed, thanks to Section 80C of the Income Tax Act, 1961. And when it’s time to cash in, that money’s tax-free too, thanks to Section 10(10D) of the IT Act. You get a five-year lock-in period with ULIPs. It’s best for thinking long-term and saving with a plan. Now, when your policy ends, there’s a nice treat waiting for you—the maturity benefit, which includes what your funds have grown to. And in case something uncertain happens in your, don’t worry. If something happens to you, your loved ones get the bigger slice between the assured sum or what’s in the funds, ensuring they’re taken care of financially.4. Fixed Deposit
FDs are one of the best investment options for a salaried person who is like a safe bet for salaried employees who aren’t into risks. You can count on them to keep your money safe and get you back predictable returns. Banks and other money places offer FDs for different amounts of time, and the interest rates stay put from the get-go. But here’s the catch—even though FDs are reliable, the interest you rake in gets taxed based on how much you make.5. P2P Lending
Looking for a new way to grow your money? P2P lending might be one of the best investment options for salaried employees. With returns potentially hitting up to **15% per year, it’s like planting seeds in a high-yield garden. It’s a non-market-linked investment move that’s been winning hearts for its knack for balancing risk and rewards. Peer-to-peer (P2P) lending is an emerging investment option that connects borrowers with individual lenders, bypassing traditional financial institutions. We’ve got the biggest P2P lending platform in India, making it super easy for you to jump on board.6. National Savings Certificate (NSC)
The NSC stands out as a reliable investment option, offering a fixed return of 7.7% per annum, a rate determined by the government every quarter. With a lock-in period of 5 years, NSCs provide an appealing choice for salaried individuals who are seeking to build a nest egg for retirement NSC holders have the privilege of nominating a beneficiary to receive the maturity proceeds, ensuring a seamless transfer of benefits. NSC certificates can double up as collateral. So, if you’re looking for a loan, these certificates might just open that door for you at the bank.7. Capital Guarantee Plans
Capital Guarantee Plans ensure your investment’s safety, no matter how the market moves. Even better, while your capital stays protected, you can still catch a ride on the market’s growth and get those market-linked returns. But that’s not all – these plans come with a life cover. So, if the unexpected happens and you pass away during the policy, your loved ones get a lump sum amount. The best part? Salaried individuals can enjoy tax benefits on the premiums they pay for these plans under Section 80C of the Income Tax Act, 1961. And when it’s time to cash in, the benefits received also qualify for tax benefits under Section 10(10D) of the IT Act.8. National Pension Scheme
For employees who are drawing a salary, setting aside funds for retirement starts with a minimum monthly contribution of just ₹500. What’s even better? NPS accounts are portable, meaning, that salaried persons can transfer their accounts between different employers and locations without losing any benefits. The tax advantages are on point too. Salaried individuals can claim deductions of up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act for their NPS contributions. And also the contributions employers make to NPS are tax-exempt for salaried employees. With NPS, the potential for market-linked returns means those on a salary could potentially get higher returns over the long haul. Upon retirement, there’s another choice in the cards. Salaried individuals have the freedom to select an annuity from PFRDA-approved providers, granting them flexibility in choosing the annuity plan that aligns best with their retirement goals.Conclusion
When choosing best investment option for salaried person, precision matters. Think about it, consider your needs, understand the instrument, and measure your risk appetite. An investment option might promise attractive returns but might not align with tax deduction benefits. If tax deductions are your aim, focus on tax-saving investments. Are you someone who is seeking income? Look toward ULIPs, P2P investments, or equity investments, but remember, these avenues can carry substantial risks. Balancing return expectations with risk levels is crucial in such scenarios. A term insurance policy can serve as a frontline defender among financial products if your life is at risk. It shields and safeguards your loved ones in unforeseen circumstances, prioritizing protection over other aspects. Remember, each investment option serves a distinct purpose. Identifying your financial goals and aligning them with the right investment option leads to a well-rounded and balanced portfolio. Assess, analyze, and invest wisely to build your financial future.FAQs
1. How to Plan Investments for Salaried Individuals?
Know Your Finances: Understand your income, expenses, debts, and financial goals.
Start Early: The sooner you begin investing, the more time your money gets to grow.
Invest Regularly: Make investing a habit. Consider a Systematic Investment Plan (SIP) for consistent investments.
Diversify Your Investments: Spread your investments across different options to lower risks.
Choose Wisely: Pick the right investment products that match your needs among the variety available.
2. Why is understanding your financial situation crucial before investing as a salaried person?
Understanding your financial situation helps in evaluating how much you can invest, identifying financial goals, managing debts, and creating a roadmap for your investments aligned with your needs.
Team LenDenClub
LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping investors diversify their investments beyond traditional investment instruments ever since.