Best Long-Term Investment Plans in 2024

In today's dynamic financial landscape, choosing the right investment plan is important to achieve your long-term goals. Long-term investment options include ULIPs, mutual funds, public provident funds, fixed deposits, gold, and national pension schemes. These choices offer the potential for substantial returns over periods exceeding five years. Whether you're a seasoned investor or just starting out, this article will equip you with the knowledge to make informed investment decisions and secure your financial future.

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Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

What are Long-Term Investments?

Long-term investments are assets that you plan to hold for an extended period, usually more than three years. They're meant to grow in value over time and achieve your long-term financial goals, like retirement or for your child's education. The longer your money is invested, the more time it has to grow through compound interest, where your earnings generate additional earnings.

Best Long-Term Investment Options

Choosing the right investment plan depends on your financial goals, risk tolerance, and investment horizon. Below are the top 10 popular options for long-term investing:

Top 10 Long-Term Investment Options

PPF (Public Provident Fund) and EPF (Employee Provident Fund):

Features:
- Government-backed schemes: These schemes offer a high degree of security as they are backed by the government.
- Guaranteed returns: You receive a fixed interest rate set by the government on your contributions. While the rate may fluctuate slightly over time, it provides a level of predictability for your investment growth.
- Tax-saving benefits: Investments in PPF and EPF qualify for tax deductions under Section 80C of the Income Tax Act in India. This can significantly reduce your taxable income.
- Long lock-in period: PPF has a 15-year lock-in period, while EPF depends on your employment status. This restricts access to your funds but encourages a long-term investment approach and is considered one of the best long-term investment plans.
Suitability: These options are ideal for investors seeking:
- Stable and predictable returns with minimal risk.
- Tax benefits to lower their tax liability.
- A long-term investment horizon to ride out market fluctuations.
Stocks:

Features:
- Potential for high returns: Owning shares in a company allows you to benefit from its growth and profitability. Stock prices can significantly increase over the long term, offering the potential for substantial capital appreciation.
- High-risk long-term investment plan: The stock market is volatile, and stock prices can fluctuate frequently. You could potentially lose money on your investment.
- Requires research and active management: Understanding the companies you invest in and monitoring market trends is important for making informed investment decisions. This can be time-consuming and requires a certain level of investment knowledge.
Suitability: Stocks can be the best long-term investment plan for investors with:
- A high-risk tolerance who can handle potential losses.
- A long-term investment horizon (at least 5-10 years) to ride out market downturns.
- The time and willingness to research companies and actively manage their portfolio.
Mutual Funds:

Features:
- Professionally managed: Mutual funds are a collection of stocks or bonds managed by experienced fund managers who make investment decisions on your behalf. This allows you to benefit from their expertise without needing to actively pick individual stocks.
- Diversification: Mutual funds hold a variety of securities, which reduces risk compared to investing in a single stock. In this long-term investment plan, if one company performs poorly, the overall impact on your portfolio is lessened.
- Variety of choices: Mutual funds come in various types with different risk profiles. You can choose funds that align with your investment goals and risk tolerance. These can include equity funds, debt funds, or hybrid funds.
Suitability: Mutual funds are a good option for investors who:
- Seek a balance between risk and return.
- Don't have the time or expertise to actively manage their own stock portfolio.
Real Estate:

Features:
- Potential for capital appreciation: The value of real estate, like land and buildings, can increase over time, offering the potential for significant gains when you sell.
- Rental income: Owning rental properties can generate a steady stream of income, providing additional cash flow.
- High investment amount: Real estate usually requires a large upfront investment.
Suitability: Real estate can be the best long-term investment plan for investors who:
- Have a long-term investment horizon (10+ years) to wait for potential appreciation.
- Can afford a large down payment and ongoing costs.
- Are comfortable managing properties or hiring professional property management.
Bonds:

Features:
- Regular income: Bonds pay regular interest payments throughout their term, providing a predictable income stream.
- Lower risk than stocks: Bonds are generally considered less risky and the best long-term investment plans than stocks because they represent a loan to a company or government. You are essentially guaranteed to receive your principal investment back at maturity, assuming the issuer doesn't default.
- Interest rates and credit quality affect returns: The interest rate you receive on a bond depends on its credit quality and prevailing market interest rates. Higher-quality bonds offer lower interest rates, while lower-quality bonds may offer higher returns but carry a greater risk of default.
Suitability: Bonds are a good option for investors who:
- Prioritize income generation and capital preservation over high growth potential.
- Have a moderate risk tolerance and seek a balance between risk and return.
- Are nearing retirement and want to invest in a more stable asset class.
Gold:

Features:
- Hedge against inflation: Gold is often considered a hedge against inflation because its price tends to rise along with the cost of living. This can help protect the purchasing power of your investment over time.
- Price fluctuations: The price of gold can be quite volatile, and there is no guarantee of future price appreciation.
- Limited income potential: Gold doesn't generate regular income like stocks or bonds. Your returns come primarily from capital appreciation when you sell your gold holdings.
Suitability: Gold can be considered the best long-term investment plan for investors who:
- Want to diversify their portfolio and protect against inflation.
- Understand that gold prices can be volatile and are comfortable with this risk profile.
- Are looking for a long-term store of value rather than an income-generating asset.
ULIPs (Unit Linked Insurance Plans):

Features:
- Combines insurance and investment: ULIPs offer both life insurance coverage and an investment component. A portion of your premium goes towards insurance protection, while the remaining amount is invested in the chosen fund. It can be considered the best long term investment plan for people who are looking for two in one benefit.
- Risk profile varies: The risk profile of a ULIP depends on the chosen investment fund. You can choose from equity, debt, or balanced funds to suit your risk tolerance.
Suitability: ULIPs might be suitable for investors who:
- Need life insurance coverage and want to invest alongside it.
- Are comfortable with the chosen investment fund's risk profile.
Equity Funds:

Features:
- Focus on stock market growth: Equity funds invest primarily in stocks of companies across different sectors and market capitalizations. They aim to capture the long-term growth potential of the stock market.
- Higher potential returns: Equity funds have the potential to generate higher returns compared to other asset classes like bonds or fixed deposits.
- Types of Equity Funds: There are various types of equity funds catering to different investment styles and risk tolerances. These can include large-cap funds (investing in established companies), small-cap funds (focusing on smaller companies with higher growth potential), and sectoral funds (concentrated on a specific industry sector).
Suitability: Equity funds are suitable for investors who:
- Have a long-term investment horizon (at least 5-10 years) to ride out market fluctuations and benefit from potential growth.
- Are comfortable with a moderate to high-risk tolerance.
- Seek capital appreciation through exposure to the stock market.
Fixed Deposits (FDs):

Features:
- Secure investment: Fixed deposits (FDs) are offered by banks and financial institutions. They offer a guaranteed rate of return on your investment for a predetermined period. This makes them a very low-risk and long-term investment plan because you can choose to stay invested for up to 10 years.
- Lower interest rates: Compared to some other investment options, FDs offer lower interest rates. This may not keep pace with inflation over time, resulting in a decrease in purchasing power.
- Limited growth potential: Your returns with FDs are locked in at the time of deposit. There's no opportunity for additional growth beyond the predetermined interest rate.
- Early withdrawal penalties: If you withdraw your money before the maturity period, you may incur penalties, reducing your overall returns.
Suitability: Fixed deposits are a good option for investors who:
- Prioritize capital preservation and guaranteed returns over high growth potential.
National Pension Scheme (NPS):

Features:
- Government-backed pension scheme: NPS is a voluntary pension scheme backed by the Indian government. It offers tax benefits and a systematic approach to retirement planning.
- Tax benefits: Contributions to NPS qualify for tax deductions under Section 80C of the Income Tax Act. Additionally, there are tax benefits on maturity.
- Lock-in period: Your contributions to NPS are locked in until retirement, with limited withdrawal options before then. This encourages long-term saving for retirement.
- Professionally managed: NPS offers various investment options managed by professional fund managers. You can choose a fund that aligns with your risk tolerance.
Suitability: NPS can be a good long-term investment plan for investors who:
- Are planning for their retirement and want a disciplined savings approach.
- Seek tax benefits to reduce their tax liability.
- Have a long-term investment horizon until retirement.
- Are comfortable with a lock-in period for their contributions.

Benefits of Long-Term Investment Plans

Power of Compounding: Long-term investing allows your returns to grow exponentially (compound interest), which can significantly fasten your wealth creation over time.
Reduced Risk from Market Volatility: The stock market experiences ups and downs, but history shows a general upward trend over the long term. Long-term investing allows these short-term fluctuations to even out, reducing the overall risk to your investment.
Peace of Mind: Knowing your investments have a long runway allows for a better approach. You're less likely to make impulsive decisions based on market movements when you have a long-term perspective.
Goal Achievement: Long-term plans can be customised towards specific goals like retirement, education, or a down payment on a house. The disciplined saving and potential for growth help you achieve these long-term financial objectives.
Tax Benefits: Many long-term investment options offer tax advantages, such as tax deductions on contributions or tax-deferred growth. These benefits can help you save more money and grow your wealth faster.
Convenience: Many long-term investment plans offer automatic investment options, allowing you to set up regular contributions and forget about them. This makes it a convenient and hassle-free way to save for your future.

How to Calculate Returns On Your Long-Term Investment Plans?

You can use an SIP (Systematic Investment Plan) calculator to calculate returns on your long-term investment plans. An SIP calculator helps you estimate the future value of your investments by inputting details like the monthly investment amount, investment duration, and expected annual return rate. This tool simplifies the process and gives you a clear picture of potential returns over time.

Conclusion

You can invest in any of the above-mentioned long-term investment plans/schemes for wealth creation. Before you start investing, you must seek advice from a financial expert who will help you maintain your financial portfolio. You can always search online, review the market statistics, check historical returns, and read about other investors’ experiences to make the correct financial decision. This way, you can make informed investments and get returns to help you meet your outlined goals.

FAQs

How do I choose the right long-term investment option?
Consider these factors:
- Financial Goals: Are you saving for retirement, a down payment, or a child's education?
- Risk Tolerance: How comfortable are you with potential losses?
- Investment Horizon: When will you need access to your funds?
- Investment Knowledge: How comfortable are you managing your own investments?
How much should I invest for the long term?

This depends on your goals and financial situation. However, it's wise to invest consistently, even if it's a small amount to start. Aim to increase your contributions as your income grows.
What are some tips for successful long-term investing?
Here are some key tips:
- Start Early: The sooner you start, the more time your money has to grow.
- Diversify: Spread your investments across different asset classes to reduce risk.
- Invest Regularly: Consistency is key, even with smaller amounts.
- Rebalance Regularly: Periodically adjust your asset allocation to maintain your desired risk profile.
- Don't Panic Sell: Avoid making impulsive decisions based on market fluctuations. Have a long-term perspective.
- Do Your Research: Understand the investment options before committing your money.
Are long-term investment plans safe?

Yes, investments with fixed interest rates are generally considered safe because they are less volatile in the short term.
What are some long-term investment options?

PPF and EPF, Stocks, Mutual funds, Bonds, Gold, ULIPs, Equity Funds, Fixed Deposits, and the National Pension Scheme (NPS) are some long-term investment options.

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

Past 10 Years' annualised returns as on 01-11-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%

¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.

**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).