Best Investment Options for Salaried Persons in India

Investments are a very important part of the financial discipline. You must regularly invest money in different assets to have a strong financial foundation. This also helps you during your retirement and other emergencies you may encounter. Today, many people in India are in the service sector. Every month, a fixed portion of the salary of the salaried person is contributed towards the employee provident fund and employee pension scheme. But, this is not sufficient, and you should be regular with the investments. Today, we will talk about the best investment options for salaried persons in India in 2023. Go ahead and check it out now.

Investment Buckets

Before we share more information about the investment plans, we would like to mention that you should segregate your investments into three different categories. These buckets should be low-risk investments, medium-risk investments and high-risk investments. The allocation to these buckets should depend on your risk appetite and current financial position. You can learn more about the available options in these buckets in the section below –

Low-Risk Investment Options

Low-risk investment options are the ones which would offer you a guaranteed return. These assets are less volatile, and you can certainly opt for these options without worrying about losing money. Check out the available options below. You can allocate between 30% to 50% of funds to low-risk investment options.

  • Fixed Deposit and Recurring Deposits – The most popular option is fixed deposit. You get fixed returns from the bank deposits, which are very low risk. You also have high liquidity when it comes to fixed deposits, which means that the fixed deposit can help you during emergencies. You can also start a recurring deposit, as this can get you in the habit of investing the money every month. You can opt for the fixed or the recurring deposit through your salary account, or you can opt for post office schemes since they offer a little higher return.

fixed deposits

  • Sovereign Gold Bonds or Gold – Gold is yet another popular option for investment. You can buy gold, and it is also a liquid in nature. In addition, gold can be procured in small quantities and generally has an appreciating trend. Another advantage of gold is that you can use the same gold during your child’s marriage or any other big event in your life. If you don’t want the hassle of dealing with physical gold, you can also opt for sovereign gold bonds or digital gold. Both of them are secure and safe options for investment.
  • PPF and NPS – You already have salary deductions for the provident fund. You can increase the deductions in the form of voluntary contributions, or you can also start investing in PPF. These investments come with a lock-in period but have a great return. In addition, you can also withdraw money from PPF under certain conditions. Another great option that you can consider from a retirement perspective is a national pension scheme. You can explore these options, and they are certainly low-risk investments. These are good to have from a retirement perspective as this will allow you to enjoy your gold years.

Medium Risk Investment Options

The next bucket is the medium-risk assets. Before you move further, please note that we have not added real estate to this category. As a salaried person, you must consider a real estate option only if you have excess funds and don’t intend to take a loan. With the loan, the cost of property shoots up a lot and real estate always has some liquidity risk.

  • Balanced Mutual Funds – When exploring medium-risk assets, you can opt for balanced mutual funds or any other mutual fund that invests your money in blue chip stocks. These are relatively stable options, and they also offer you higher returns. You will most likely be able to beat inflation with this. Instead of investing lump sum money in mutual funds, you must opt for SIP (Systematic Investment Plan). These are like the good EMI or the RD plans. The only difference is that the money deducted from your account is invested in mutual funds.
  • Index Funds – We understand that as a salaried person, you may not have enough time or knowledge to manage stocks and investments. You can still enter the stock market using the index funds. These index funds replicate the behaviour of market indexes, offering you a great return in developing economies. It is certainly a preferred option, and you don’t have to manage your portfolio actively. Moreover, you can add monthly amounts to index funds, and your portfolio will grow.

High-Risk Investment Options

A small portion of your salary should also be invested in high-risk assets. This can be as little as 5% or 10%. You can increase the high-risk assets in your portfolio depending on your risk appetite and other factors. Check out the recommended options below.

  • Stocks – We usually categorize equity as a high-risk investment option. The reason is that things can go wrong in a stock market. In such a case, if you don’t have enough knowledge of the stock market, you should stay away from the same. It would be more like a gamble to invest money in the stock market without proper knowledge. However, if you know, please feel free to invest.
  • Mutual Funds – Many options are available in high-risk, high-growth mutual funds. These are mainly mid-caps and small-caps mutual funds. You can also explore these options for the investment you want. They can offer you amazing returns in the long term.

Final Take

These are the different investment options for salaried persons in India. Companies are becoming more agile; today, layoffs are considered business as usual. In such a case, it is also very important for the salaried person to maintain an emergency fund. The emergency fund should be a minimum of 6-month salary. This can help you sail through during recession or tough time. You can park this money in a liquid investment like a fixed deposit. With this, we would conclude the page. Please note that the investment options shared are per our expert’s opinion. You should take the final decision after carefully analyzing the pros and cons of these investment plans.