Best Investment Plans for 5 Years To Boost Your Portfolio

The current generation is more concerned with wealth creation as compared to income savings. For the purpose of generating income to cater for certain needs and generate funds for the realisation of certain objectives, individuals consider using investment tools that best suit their needs and risk propensities. This has led to the emergence of investment plans with different characteristics such as the rate of return, term of investment, etc. This enables the individuals to make decisions regarding the finest investment programs to consider for a period of 5 or 15 years with ease depending on their goals. 

 While there are numerous possibilities, the lack of decision about which plan is the best one is a concern. To make things easier, here are the key aspects of the plan and some options to consider. Additionally, individuals should compare the best investment plan for 5 years or so to pick the best one. 

 Popular 5-year Investment Plans

The 5-year Investment plans are financial instruments that have been designed to assist the investors in creating a corpus after a certain period of time. It aids in the development of discipline towards investment and makes individuals more accountable for their savings.

 Investment with an investment period of five years or more is commonly used when planning for a particular goal or event in life. Therefore, it is always recommended to look for plans that are suitable for long-term objectives, low risk, and potential growth. Inflation-protected returns are also more helpful in creating a dependable corpus in comparison to the other plans.

Here are some of the best investment plans for 5 years to explore –

 1.Savings account 

Even today savings account is one of the most common ways of accumulating savings and earning interest on the amount over a period of time. These plans offer great convenience and can be accessed at any time, which makes savings accounts highly liquid. These accounts also do not subject the corpus to any market-related risks. The high liquidity feature of the plan also enables one to invest for the short term in cases where one needs money for a specific purpose or to create an emergency fund.

 2.Fixed Deposit (FD)

Fixed deposits are one of the most preferred instruments to create a corpus for specific needs. In this plan, people invest a certain sum of money for a certain period for which the amount earns an interest at a fixed rate. However, the plan is usually affordable for more people to use, protects invested capital, and ensures a fixed rate of return. These characteristics make FDs ideal for conservative investors who are willing to invest their money to earn a steady income. The FD account can be opened at the banking branch or the nearest post office by any person.

 3.Recurring Deposit

In this plan, one pays a predetermined amount of money at regular intervals to earn interest on the amount saved. These plans are meant for savings mobilisation enabling gradual and systematic savings. In RD accounts, there is an automated debit facility by which a fixed amount is debited from individual savings accounts on a particular date and credited to their RD account.

 4.Liquid Funds

Liquid funds are a variant of debt mutual funds that are known for their high liquidity.

The main objective of liquid funds is to enable people to invest their resources in money market instruments that are associated with short maturity periods including the certificate of deposits, treasury bills, and commercial papers.

This investment option is not only liquid but also provides stable returns to the investors. When you compare liquid funds with fixed deposit accounts, it is viewed that the former provides better returns and can be easily converted into cash. This makes liquid funds more attractive than conventional forms of saving. Also, being associated with money market instruments with appropriate guarantees and backing makes liquid funds less risky for investors than most of the mutual fund schemes in the market.

5.Fixed Maturity Plans

A fixed maturity plan is one of the most commonly used investment plans among retail investors. This plan is described as a closed-ended debt fund that has the same maturity and investment period. These plans invest your funds in fixed-income instruments like bonds and debentures. These plans provide investors with fixed returns and are generally very favourable from a tax perspective. Such features make this plan an efficient investment option to generate reliable returns without exposing themselves to interest risk.

 6.National Savings Certificate

This is a government-backed investment plan with a five-year lock-in term that provides a steady income. NSC provides investors with a consistent income stream while encouraging capital preservation. The National Savings Certificate is suited for individuals with modest risk appetites because it is government-backed and involves less risk.

 7.Monthly Income Schemes

This is one of the best monthly income plan that allows individuals to generate a steady flow of income. This is a debt-focused strategy, and the objective of this plan is to preserve capital and provide regular income in the form of dividends. Therefore, the possibilities of income generation and capital appreciation are the two primary unique selling propositions of MIS.

 8.Unit Linked Insurance Plan

This plan is considered ideal for those who want the best of insurance and investment. ULIPs are meant to provide the features of life insurance, tax exemptions, and the option of transferring insurance from one individual to another. Generally, a portion of the amount paid by the individuals in ULIPs is towards the insurance component and the balance is invested in instruments like debts, hybrid, or equity funds.

9.Mutual Funds

Mutual funds are one of the most popular types of investment tools that provide inflation-adjusted returns and enable people to accumulate capital. Usually, these funds are created when several investors combine their funds in a portfolio of stocks, bonds, and sometimes securities. These funds are associated with different levels of risk, thus enabling individuals to choose the funds that reflect their risk tolerance level. Mutual funds are one of the most effective investment products for accumulating wealth and expanding investment horizons.

10.Equity Linked Savings Scheme

These investment products, which are essentially a subset of equities mutual funds, are eligible for tax benefits under Section 80C of the Indian Income Tax Act. Equity Linked Savings Schemes include equities and equity-linked products. 

Exploring and committing to the correct investment strategies may dramatically improve your financial portfolio and position you for future needs and aspirations. With careful selection based on individual risk tolerance and financial objectives, these investments not only secure your finances but also maximise your returns, presenting a compelling case for why a strategic approach to short-term investment is not only prudent but also required for financial stability and growth.

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