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Know about some lesser-known investment instruments

Investors in India generally invest in the provident fund, equity, mutual funds, gold and real estate. But, in addition to all these, there are some more investment avenues. The investors may consider these lesser-known investment instruments. Read this article to know more.

With the passage of time, the consciousness about investment has been increasing among Indian middle-class. After crossing the first stage of saving, people have now become more informed about investment. Indian middle-class people have started investing in various widely-known instruments. The most popular instruments among the Indians are:- (a) Provident Fund of different types (General Provident Fund, Public Provident Fund and Employees' Provident Fund), (b) Kishan Vikas Patras (KVPs), (c) direct equity investment, (d) investment in equity and debt mutual funds, (e ) Fixed Deposits, (f) investment in gold (paper gold and physical gold) and (g) investment in real estate. Indian middle-class people generally invest in these popular investment instruments. Some people also take life insurance policies as investment avenues, which is a very wrong approach.

However, in addition to the above-mentioned instruments, there are some more different investment instruments which are still not very popular. But these instruments also give handsome returns to the investors. In the present article, we would know about these not-so-popular but good and reliable investment instruments.

Do you invest in NPS?

National Pension Scheme (NPS). This is an excellent scheme for every earning person. He can invest the money on monthly basis, get tax benefits under Section 80CCD, under certain circumstances withdraw the money, get a mix (Equity-Government bond-corporate bond) according to his own requirement, very little investment cost and safety of his money. The scheme provides regular income after retirement. Indian investors must invest more and more in NPS.

Give the benefits of Sukanya Samriddhi Scheme to your girl-child

This is a very important scheme brought by the Government for the benefits of girl-children. The parents or guardians of girl-child below ten years of age. This account can be opened in a post office or in any public sector bank branch. The minimum deposit is Rs. 1000/- per year while the maximum limit is Rs. 1,50,000/- per year. The current rate of interest is 8.1% per annum. It is a good scheme and less risky than equity or equity-based mutual funds. Investments made towards this scheme are eligible for tax deduction under Section 80C of the Income Tax Act.

Have you heard about Fixed Maturity Plans (FMPs)?

FMPs are close-ended mutual fund schemes. These FMPs invest in various debt instruments. Those investors who invest in Bank FDs will definitely find FMPs more lucrative than the FDs. The invested amount is more or less secure, give better returns than FDs and like FDs, the amount is locked for the pre-determined tenure of the FMP.

ETFs and Index Funds for equity investors

The investors who invest in direct equities and in equity-based mutual funds can consider investing in Exchange-Traded Funds (ETFs) and Index Funds. The ETFs are traded in the market and investment in these ETFs can be made through the demat accounts, which the equity investors do have. On the other hand, an Index Fund takes a particular index as the benchmark and follows that index. ETFs and Index Funds are suitable for those equity investors who like passive investing. Investment in these two types of funds is also cost-effective because the management fee of these instruments is very less compared to other mutual funds.

Also consider Atal Pension Yojna

This useful scheme is backed by the Government. This is a boon to those who work in the unorganized sector. In this scheme, an investor is encouraged to save a pre-determined fixed amount on a monthly basis until he/she reaches an age of 60. Thereafter the contributor will get a pension at the rate of Rs. 1000/ p.m, Rs. 2000/- p.m, Rs. 3000/- p.m., etc., depending upon his/her contribution. In case of the death of the contributor, the spouse and nominee will go on getting the pension.

Final few words

In addition to the well-known investment instruments like provident fund, equity, etc., the middle-class Indians can also explore these five investment avenues. These are flexible, easy to understand, less risky and some of these give tax benefits also. I would advise the investors to know the details of these five investment avenues carefully, and invest in any of these according to their specific needs and risk-taking ability.

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