Where To Invest Your Money For High-Interest Returns?
Every investor in India invests with a notion of availing maximum return in a specific tenure with minimum risk involved. Some invest keeping in mind their financial security while some go for investment goals. Generally, investors invest money for high-interest returns. In this article, you will get an insight into these investment plans and their sustainability in the market.
Where To Invest Your Money For High-Interest Returns?
Let us analyze and understand the best investment options with high returns in India step by step
Why invest?
Investment is considered as an extra source of income that funds your retirement or helps you at the time of financial crisis. It is wise to invest your money as per the investment options available keeping in mind your needs and requirements. From low-risk to high, from short-term to long, all kinds of investment plans are available in the market.
Let us look at some of the investment plans:
Mutual funds
One of the most popular investment options these days, mutual funds refer to a pool of accumulated sums by various investors. A mutual fund is an investment vehicle formed when an asset management company (AMC) or fund house pools investments of various individuals to earn a return on their capital over some time.
The returns are generated as per the market performance of the fund. Even though the risk exposure in mutual fund investment is higher, it offers much better returns as compared to other best investment options in the market.
Type of Mutual funds
Debt Funds
Equity Funds
Hybrid Funds
Features Of Mutual Funds
Offers a diversified investment portfolio
Every scheme has an allocated fund manager who helps you to choose a lucrative investment for the scheme
Exemption from wealth tax
Transparent investment
Public Provident Fund (PPF)
Being a government-backed scheme, PPF is one of the most secured and trusted investment plans in India. A tax-free investment, a PPF account can be opened in your nearby bank or post office. The invested money is locked for the tenure of 15 years. Moreover, in this investment option, you can earn compound interest on the accumulated money. You can also extend the time frame for the next five years.
PPF Interest Rate From 2012 to 2021
Financial Year
Interest Rate
2012-2013
8.8
2013-2014
8.7
2014-2015
8.7
2015-2016
8.7
2016-2017
8.1
2017-2018
7.6
2018-2021
7.6
Features of Public Provident Funds
The principal amount along with the interested amount in the account is safe and guaranteed
It has a lock-in period of 15 years which can extend for up to 5 years post the completion of the lock-in period
The minimum premium amount invested can be from Rs 500 up to Rs 1.5 lakh annually
Offers benefit to avail loan against the amount of investment
Bank Fixed Deposits
For investors looking for good returns with minimal risk involved, bank fixed deposits are the best options to invest in. By investing in FD, you can get assured returns at a fixed interval of time. The profits are payable month to month, quarterly or yearly, according to the bank rules.
Parameters
Fixed Deposit
Tax Savings on Returns
Returns are taxable
Tax Savings on Premium
The tax savings Fixed Deposits offers tax exemption
Long Term Capital Gain
Fully Taxable
Life Cover
No life cover benefits
Historical Returns
5%-6%
Lock-in period
A lock-in period of 5 years
Features of Fixed Deposits
Offers financial stability which lets you earn high returns on a surplus fund
The renewal is easy and certain banks provide overdraft facilities against fixed deposits
The market fluctuation does not affect the fixed deposit and the returns are fixed as well
National Pension Scheme (NPS)
Regulated and administered by the Pension Fund Regulatory and Development Authority(PFRDA), National Pension Scheme is a reliable government-backed plan. Any individual aged between 18 years and 60 years can open the National Pension Scheme Account.
2 options available under NPS are:
Auto Choice
It is a default option available to subscribers
The asset is allocated automatically depending upon your age
You cannot decide the proportion of allocation under auto choice
Active Choice
Where you decide asset allocation in
Equity
Corporate Bonds
Government Securities
Different percentages can be allocated in different classes
A maximum of 75% can be allocated towards Equity
Subscribers can switch investment options as well as the fund manager
Features of National Pension Scheme
It offers the flexibility of choice between auto and active
Permits the investors for partial withdrawal of funds
Let’s you remain independent even after you retire
Senior Citizen Savings Scheme
A Government-sponsored savings option, specifically designed to provide financial security to the senior citizens of the country. The Senior Citizen Savings Scheme offers regular income to Indian residents aged 60 years and above even after retirement. The deposits under the scheme are invested for the tenure of 5 years and also can be extended once by the addition of 3 years.
SCSS is available across India through post offices and banks. The maximum amount one can invest in this scheme is 15 lakh rupees.
Eligibility under Senior Citizen Saving Scheme
For Senior Citizen Saving Scheme eligibility, you need to fulfill the following criteria.
An Indian citizen with the age of 60 years or above.
An applicant can be in 55-60 years of age, provided the person has been retired under the VRS category. The retired policyholder must have a Senior Citizens Saving Scheme account within 1 month of enjoying the retirement benefits. Also, the invested amount cannot be more than the amount of the retirement benefits.
If there is a joint account, the eligibility is determined based on the aforementioned age criteria of the primary account holder. Age restrictions do not apply to the secondary policyholder.
Features of Senior Citizen Savings Scheme
At the time of opening an SCSS account, the nomination facility is accessible
The scheme offers a high rate of interest that is 7.4%
Funds can be withdrawn prematurely, in case of emergency
The tenure of this investment scheme is flexible
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
Pradhan Mantri Vaya Vandana Yojana is a non-participating, non-linked pension scheme that is launched by the Government of India. The modified scheme includes pension rates and an extended period of sale of this policy for an extended time of 3 years from the financial year 2020-21 up till 31st March 2023.
Pradhan Mantri Vaya Vandana Yojana offers a loan and the interest on it would be recovered from the pension sum, payable under the plan. The applicable rate of interest should be based on options that are approved by the IRDAI.
Eligibility under Pradhan Mantri Vaya Vandana Yojana
For buying the Pradhan Mantri Vaya Vandana Yojana scheme, you need to be eligible in the following criteria:
Parameters
Details
Policy Tenure
10 years
Premium Paying Term
10 years
Premium Paying Mode
Yearly, Semi-Annually, Quarterly, and Monthly.
Entry Age
60 years
Maturity Age
70 to 10 years after the entry age
Grace Period
30 days
Sum Assured
A maximum pension of ₹1,11,000/ can be availed
Liquidity
The loan can be availed under this plan
Features of Pradhan Mantri Vaya Vandana Yojana
Regular pension for the senior citizen at a regular point in time
When you have the scheme hold for 3 years, a loan can be taken upon 75% of the purchase price
The scheme also offers a free look period and assured pension is provided
These are some of the top investment plans one should consider if you are looking to invest your money for high-interest returns.
However, there are some more plans that you can look out for referring to the table below.
Investment Options
Period of Investment (Minimum)
Who Can Invest
Risks
Returns Offered
Direct Equity
NA
An investor who knows to balance risk and return
High
NA
Mutual Funds
Within a scheme like ELSS a lock-in period of 3 years
An investor who has an appetite for medium to high risk
Low-High
Market-Linked
National Pension Scheme
60 years
An investor looking forward to retirement plans
Low-High
Market-linked ( 8 to 10 percent)
Public Provident Fund (PPF)
15 years
Long-term investment goals
Nil
7.9 percent
Bank Fixed Deposits
7 days
One who doesn’t wish to take the risk or be exposed to an equity
Nil
Fixed Returns, different from bank to bank
Senior Citizen Savings Scheme (SCSS)
5 years
Senior Citizens
Nil
8.7 percent
Real Estate
5 years
Anyone
Medium
19-15 percent
Gold ETF
NA
Anyone
Low – Medium
Market-linked
RBI Bond
7 years
Indian Citizen
Nil
7.75 percent
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
10 years
Senior Citizens
Nil
7.4 percent
Unit Linked Insurance Plan (ULIP)
Less or equals to 45 years
An investor keen on wealth creation and life cover
High
Depending on the investor’s profile
Post Office Monthly Income Scheme (POMIS)
5 years
Indian Citizen
Nil - Low risk
7.7 percent
Initial Public Offerings (IPO)
NA
An investor should have a Demat cum trading account
Moderate-High
NA
Wrapping it up
The thumb rule of making a smart investment is to keep a proper understanding of the different types of investment options available in the market. For most investors, the purpose of the investment may vary depending in terms of financial objective, period, and risk levels, so forth. Thus, to make the money grow, an individual needs to invest in smart investment options that can generate lucrative returns in the long term.
˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. 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. 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 01-04-2025
^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
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^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).
Generate wealth Earn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^ On premiums (under 80C) and on maturity (under 10(10D))
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