All of us are keen on savings some part of the income, but not every knows how to grow these savings according to the change in time value of money. Simply locking your savings in the locker will not help you to reap benefits, instead it should be wisely invested, and the Return on Investment will be generated on the same.
ROI, otherwise known as Return on Investment will measure the amount of return generated from an investment. It is a very popular metrics due to its simplicity and versatility. This is strong gauging technique of investment’s profitability. ROI will help the investor to calculate whether the investment is profitable or not. This calculation will give results in the form of ratio or percentage, thus it’s an easy way to compare which investment helps in reaping maximum positive returns. Return on Investment is calculated with a simple formula as mentioned below:
ROI = (Gain from Investment – Cost of Investment)/Cost of Investment
Best Investment Options in India for the Year 2017-2018
- Public Provident Fund (PPF): With a minimum of Rs. 500 up to Rs 1 Lakh can be investment and the return on this is tax free. One of the most secure, long term and safest investment option in India is PPF. Investment in Public provident fund is 100% tax free. There are options of taking loan on your PPF amount in case of any emergencies like house constructions, education or even for wedding financing.
- Mutual Funds: if you want to balance your risk of investments by investing in equity and bond, then the best option is to invest through mutual funds. This can be called as a long term systematic planning of investment. The investor can choose the industry in which there should be major portion of his/ her investment. This decision should be made based on the growth and stability of each industry in the current market.
Top 5 Mutual Fund Schemes with their return rates:
| Mutual Fund Scheme | 1 Mo | 3 Mo | 6 Mo | 1 Yr | 2 Yr | 3 Yr | 5 Yr |
| Religare Invesco Gold ETF | -1.5 | 13.2 | 8.1 | 10.7 | 0.9 | 2.4 | 5.6 |
| SBI – ETF Gold | -1.5 | 13.2 | 8.2 | 10.7 | 1.6 | 2.5 | 5.7 |
| ICICI Pru Gold ETF | -1.4 | 13.3 | 8.3 | 10.5 | 1.5 | 2.5 | 5.6 |
| Quantum Gold Fund | -1.6 | 13.1 | 8 | 10.5 | 1.5 | 2.4 | 5.6 |
| HDFC Gold Exchange Traded Fund | -1.5 | 13.2 | 8.1 | 10.3 | 1.4 | 2.3 | 5.5 |
- National Savings Certificate (NSC): With minimum of Rs. 500 deposit, the investor can choose the tenure of deposit as either 5 years or 10 years, rate of interest on the investment differs as per the tenure. The National Savings Certificates are issued in the post offices by government of India. Investments can be made starting from Rs. 500 and thereafter in multiples of Rs. 1000, Rs. 5000 and even Rs. 10,000. There is no maximum limit for investment. On this type of investment interest is compounded on a half yearly basis. Unlike in Public Provident fund, the interest received through NSC is taxable.
- Senior Citizen Savings Scheme (SCSS): With rate of interest close of 8.5%, this is the best investment option for those who are 60+ years. Maturity for SCSS is 5 years. Interest on the same will be paid at the end of each year. For senior citizens this is the best option to invest and also to save tax. Just like any type of fixed deposit report, the interest earned through this is taxable. There is also an option to pre-close the loans, either after one year by deducting 1.5% of the deposit amount or after 2 years by deducting 1% of the deposit amount.
- Bank Fixed Deposit: This is one of the best and widely accepted forms of investment. Though the rules and interest rates slightly vary from bank to bank, it is a very common and simple product for investment. There are different slabs for fixed deposits and rates also depend on the slabs. Different slabs for fixed deposit are :
- FD for Less than 1 Year
- FD for 1 to 2 years
- FD for 2 to 5 Years
- FD for 5 to 10 years
- FD for More than 10 years
| Bank | Description | Interest Rate |
| State Bank of India | 211 days to less than 1 year | 6.75- 6.90% |
| Union Bank of India | 180 day to less than 1 Year | 7.00% |
| Yes Bank | 9 months to < 1 Year | 7.00% |
| State Bank of India | Government Bank Benchmark | 5.50% – 6.50% |
| ICICI Bank | Private Bank Benchmark | 4.00% – 6.50% |
| Yes Bank | 1 Years to <= 10 years | 7.10% |
| IndusInd Bank | 1 Years 2 Months to below 2 Years | 7.05% |
- ELSS Tax Savings: As compared to all other types of tax saving plans, ELSS mutual fund is the best investment option in India. Though the return on this is not 100% guarantee there is chance of 12% to 15% of returns through these investments. The lowest lock-in period for ELSS tax savings is 3 years however, there is option of getting dividend during the lock-in period, and this will help in having regular income through investments.
- Sukanya Samriddhi Account Scheme: It is possible to invest up to 1.5 lakhs as part of this scheme if you have a girl child. And the highlight of this investment is you can earn highest rate of interest. Until the girl child turns 15 years, parents or even guardians can deposit investments and the account will turn matured once the girl is 21 years of age. Deposits are blocked between 16th to 21st Any interest on this investment is 100% tax free.
- RGESS: Those who are earning up to 12 lakhs per annum can make use of this investment option. The maximum amount that can be deposited or invested is Rs. 50,000 and it can be invested into RGESS mutual funds or BSE100. Under section 80C up to 50% of the investment will be tax free for the first year.
- ULIP: ULIP is an investment option as per IRDA guidelines. Insurance companies have reduced their ULIPs administration charges. Though there is no guaranteed returns this type of investment can fetch returns upto 5% to 11% based on the schemes the investment is made. In order to get really good returns on ULIP investments it is important to hold these ULIPs for 10-12 years.
Returns of ULIPS:
| Period | Absolute Returns (in %) | Annualized Returns (in %) | Performance Ranks(within fund class) |
| 1 Week | 1.3 | ** | 32 |
| 1 Month | 2.7 | ** | 23 |
| 3 Months | 3.2 | ** | 14 |
| 6 Months | 1.3 | ** | 6 |
| 1 Year | 2 | 2 | 7 |
| 2 Years | 26.1 | 12.3 | 22 |
| 3 Years | 37.6 | 11.2 | 25 |
| 5 Years | 55.7 | 9.3 | 7 |
- Pension Funds:
Post retirement in order to have a regular income stream pension fund is a great option. There is immediate annuity and deferred annuity. There is option to withdraw the investment in this way of investment. Deferred annuity is where monthly investment is made and immediate annuity plan is a bulk one-time payment and to get monthly return as pension from the very next month.
Investments Options for 2017-2018
Savings taxes are one option of these investments and the other one is maximizing returns to the utmost:
| Investment Options | Maximum Amount | Minimum Amount | Minimum Investment Period |
| Public Provident Fund | 1,50,000/ – (One FY) | 500/- (One FY) | 15 Years |
| Mutual Fund (SIP) | No Limit | As low as 500 | Only applicable in case of close-ended and ELSS schemes |
| Equity Shares | No Limit | No Limit | Not Applicable in this case. |
| Real Estate Investment | No Limit | No Limit | Not Applicable in this case. |
| Gold ETF | No Limit | Variable | Not Applicable in this case. |
| Post office monthly income account schemes (single) | 4,50,000/- | 1,500/- | 5 Years |
| Company Fixed Deposits | No Limit | As low as 2000/- | 12 Months |
| Initial Public Offerings | No Limit | No Limit | Not Applicable in this case. |
| Unit Linked Insurance Plans | No Limit | 1,00,000/- for plans 45 years and below | 45 Years or below |
| Bonds | No Limit | Variable | Variable |
Making more money through you current investment is very much possible if you start planning on investing your income wisely. More money is not just possible by earning more and more but also by wisely investing. It is important to keep in mind, that it’s not possible to earn all through the lifetime. A part of your current earning should be used as savings for the future. Money has the capacity to earn money if it is smartly invested. Make use of the above mentioned options to increase your savings backed with interest.
Among the available investment options, finding the investment options that best suits your requirements is quite essential. Take risk to earn return. The younger you are; taking risk will be easier. The four main strategies to be kept in mind while making investments are tolerance, time frame, knowledge and diversification of investment. Taking risk with the guarantee of getting certain amount of reasonable return is available a good source of having additional income.
