Best Investment Options for Salaried Person in India 2023

23 February 2023
6 mins read
In this article we cover the best investment options for a salaried person in 2023. As investment planning can be confusing we bring to you the chosen best options in 2023.
Best Investment Options for Salaried Person in India 2023

If you’re a salaried person looking for investment options in 2023, you have various choices to grow your hard-earned money wisely. There are many investment plans for salaried employees in India, ranging from traditional options such as Fixed Deposits, Recurring Deposits, Flexi Deposits, National Pension Schemes (NPS), and Unit-Linked Insurance Plans (ULIPs), to more contemporary options such as investing in equities and cryptocurrencies. To make the most of your investment planning for salaried employees, it’s crucial to choose the best investment options for salaried people in 2023.

The most suitable investment option for an individual typically relies on four key factors: their appetite for risk, time horizon, liquidity needs, and tax bracket. Additionally, investors may consider multiple investment options that align with various financial goals, each having distinct time horizons. This approach can help to diversify their portfolio and maximize their returns.

If you’re seeking a secure investment option, then you may be interested in some of the top investment options available in 2023 in this article:

1. Invest in Fixed Deposits

Investors looking for security and predictable profits may find fixed deposits (FDs) to be a fantastic choice. According to your financial objectives, you can choose between cumulative and non-cumulative FD choices. A cumulative FD can offer higher returns upon maturity if you’re trying to optimize your earnings, but a non-cumulative FD can offer periodic income. It’s important to keep in mind that some institutions may impose fees for early withdrawals, therefore it’s crucial to thoroughly read the terms and conditions. Several businesses provide simple renewal choices and might even offer better interest rates for recurrent investments if you’re thinking about reinvesting your money. Nevertheless, FDs can be a great method to maximize growth potential while lowering risk.

2. Invest in Recurring Deposits

Recurrent deposits (RDs) are a sort of investment choice that functions similarly to fixed deposits (FDs), but with the freedom to invest small sums on a monthly basis rather than all at once. An RD’s interest accrues during the course of its life and is paid out at maturity. Premature withdrawals could be prohibited or might incur a fee depending on the lending institution’s rules. In addition, RDs may provide greater interest rates, which makes them a desirable investment choice for people looking for increased returns. It’s crucial to remember that while RDs offer secure and assured returns, they might not be enough to beat inflation. 

3. Invest in Systematic Investment Plan (SIP)

SIP allows investors to plan a monthly recurring investment in a mutual fund, say Rs 5000 per month, to reap long-term benefits without affecting their lifestyle. Mutual funds carry a high level of risk, but investors can expect a return of 11-14% CAGR if they invest in the right funds. 

SIP has grown in popularity among Indian MF investors because it encourages disciplined investing without concern for market volatility or market timing. The ideal method to enter the world of investing for the long term is unquestionably through one of the systematic investment plans provided by mutual funds. It is crucial to invest for the long term, which means you should get started as soon as possible to optimise your final results. To get the most out of your assets, your motto should be Start Early, Invest Regularly.

Also read: What is SIP: How does it Work?

4. Invest in Public Provident Fund (PPF)

The Public Provident Fund is a government-backed investment option that provides a safe and secure way to grow your funds over time. Contributing to a public fund results in a cumulative return at the conclusion of the investment term when you invest in the PPF. When looking for a long-term investment vehicle, this one is a suitable choice because the period for the investment can last up to 15 years. The PPF is especially well suited for wage earners who like to make small monthly investments. With a range of investment amounts from Rs. 500 to Rs. 1.5 lakh, you have the freedom to select the amount that works with your spending plan and investing objectives.

5. Invest in National Pension Scheme (NPS)

One of the best retirement investment options in India is the New Pension Plan (NPS), which is growing in popularity. Although it is accessible to everyone, government workers must attend. It is highly easy for Indian people because investors can begin with a minimal deposit of INR 500 per month or INR 6000 annually. Although there is no direct tax exemption at the time of withdrawal, NPS can be a viable option for retirement planning since the money is tax-free in accordance with the Tax Act of 1961. Since the Government of India is backing this scheme, investors can invest without taking any risks.

Also read: Income Tax Benefit with the NPS Scheme

6. Invest in Gold

Gold is a popular traditional investment option in India that is hassle-free and offers high liquidity, as well as returns above the inflation rate in the long run. During equity market downturns, gold investment can act as a good hedge since the prices of gold tend to rise. Gold can also be a good investment to pass on to future generations who may not have access to abundant gold reserves. There are various gold investment options available in India, including physical gold investments like buying jewelry, gold coins/bars, and paper gold investment options like gold ETFs and equity-based gold funds. Gold investments in India are considered low-risk and provide moderate returns, making them a popular investment option for risk-averse investors.

7. Bonus: Other Options

  • Voluntary Provident Fund

The Voluntary Provident Fund (VPF) is a supplement to the Employee Provident Fund (EPF) that enables EPF members to voluntarily invest up to 100% of their basic income and dearness allowance in addition to their statutory EPF payments. Like EPF, contributions to VPF are tax-deductible under Section 80C and are also tax-exempt. Both the VPF and EPF interest rates are adjusted yearly and are the same. VPF investments are an option for salaried people who are risk-averse and want a government guarantee with tax efficiency. For those looking to ensure their financial future, VPF can be a smart investment choice thanks to its tax advantages, higher interest rates, and minimal risk.

  • National Savings Certificate (NSC)

Investments in National Savings Certificates (NSC) have a five-year lock-in term and are eligible for Section 80C tax deductions. Investors have an additional level of protection because to the sovereign guarantee provided by the Finance Ministry, which also supervises NSC investments. The interest rate is evaluated every three months, and under Section 80C, the yearly interest component is regarded as an investment. As a result, only the interest collected during the most recent investment year is subject to taxation according to the investor’s tax bracket. NSC is a more appealing investment choice due to its advantage over bank fixed deposits in terms of tax efficiency.

  • Flexi deposits

Fixed deposits are less flexible than flexible deposits. You can choose which tenor ideally suits your financial goals, and the returns on these deposits are guaranteed. Flexi deposits have the advantage of allowing premature withdrawals without incurring penalties. The tenor can be tailored to your requirements, whether you need a short-term or long-term investment. Overall, Flexi deposits are an excellent option for those seeking guaranteed returns while maintaining a degree of flexibility in their investments.

The investment options listed above are suitable for salaried individuals. However, it is crucial to conduct a comprehensive evaluation of your risk tolerance, financial objectives, and current situation before making any investments. For young professionals who have recently started their career, any of the investment options mentioned above can provide both short-term and long-term benefits. It is advisable to diversify your investment portfolio by selecting multiple investment vehicles based on your income, risk tolerance, and future goals. 

To sum up, salaried persons have a variety of investing options at their disposal to organize their resources and safeguard their future. Fixed deposits, mutual funds, equities, the National Pension Plan, National Savings Certificates, gold investments, and other options are among these investment possibilities. For salaried employees, it’s critical to select an investment strategy that fits their financial objectives and risk appetite. Based on market trends and unique situations, the best investment options for salaried people in 2023 may vary. Thus before making any investing decisions, it is necessary to seek advice from a financial advisor and do extensive study. Salary people can reach their financial objectives and live stress-free lives with appropriate investment planning and wise choices.