Best Long Term Investment Options In India For 2023

Investing money wisely is part science and part art. You want the best return on your investment but also want to minimise risk. Broadly speaking there are two kinds of investments – long term investments and short term investments. Long term investments require more patience but can often get more satisfying returns.

What Are The Best Long Term Investments?

Hold your horses! Let’s first understand what long term investments are. Long term investment options offer benefits of healthy returns and lower risks.

Some of the best ways to invest for the long term are stocks, high return mutual funds, good real estate and high-quality bonds. These require you to set aside a lump sum or regularly invest small amounts for long periods of time.

The return on these investments is generally realized after 5 or 10 years only.

When To Invest In Long Term Investment Plans?

If you’re a new investor and are aiming to create wealth – long term investments are a safe option. They are also a great way to grow wealth or create a retirement fund for yourself. If you have a financial goal such as homeownership, a wedding fund, or higher education fund then you must invest for the long term.

You must have a steady income flow and should be able to set aside money on a regular basis for long term investments.

Best Long Term Investments

The following options are the most popular long term investment options in India:

1. Equity Mutual Funds

These are high return mutual funds which are linked to the market and have historically managed to beat inflation. They can offer anywhere between 10% to 25% returns depending on the fund you choose. Read more about the Best Equity Funds To Invest In 2021.

2. Public Provident Fund

A Public Provident Fund or a PPF is one of the safest long term investment options. However, they also have generally low returns. The one benefit is that returns for PPF are tax-free so you will get anywhere between 6% to 9% depending on the internet rate applicable when you Invest.

3. Real Estate Investments

Real estate investment is generally considered a good idea because you own something physical and tangible. The initial investment, however, is generally large and you need a lot of capital to invest.

The other option is to take a loan and then the return on your investment is rather unpredictable as property prices can go up or down depending on a wide number of factors.

4. Long Term Stocks

Stocks are a direct way of participating in the market and generally offer higher returns than mutual funds. However, the risk involved is also higher and the expertise required is more exhaustive. You will also need a good stockbroker to help you with your investments.

5. Long Term Bonds

A bond essentially means you’re investing in debt instead of equity. The returns are generally healthy if you’re in it for the long run. If the company you’ve bought bonds for, goes bankrupt then bind owners and debt holders are given precedence over stock owners.

6. National Pension Scheme

A government scheme, the NPS is a safe and secure way of creating a retirement corpus. It is a voluntary government scheme that requires regular and long term investments. The returns are tax-exempt under sections 80C of the income tax act. Read about How To Save Tax Under Section 80C here.

7. Post Office Savings Scheme

Post office savings schemes start at as low as Rs.200 a month. The return varies from 6% to 8% but this is a safe investment as it is also government-backed. There are multiple schemes with varied durations that can be availed by long term investment seekers.

8. Higher Return Fixed Deposits

Many private banks offer high return Fixed Deposits that are good long term investment options. These can be used to compliment riskier investments like stocks and even short term investments.

9. Gold Coins, Gold Bars & Gold Jewellery

Gold is one of India’s most popular investment options. It is slow in growth but is believed to be a good investment as most currencies world over are or used to be backed by gold reserves at some point.

The trouble comes when you think of storage and safety. This is why Gold ETFs and Digital Gold are gaining popularity. Read more about gold and is gold a good investment?

10. Land Ownership

Riskier than real estate and often skipped by people, land has always been a great investment. Sadly, in India investing in land means you have to be extra careful about documentation and must be empowered to protect your land. If you have the stomach and time for it, land can be a great investment for the very long term.

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How We Select The Best Long-Term Mutual Fund Investment Options

This list of mutual funds is the current top recommendations of the best long term mutual funds in India for 2022 because they have delivered and will likely continue to deliver consistently higher returns than other funds in their category.

These funds are picked based on multiple factors, like consistent historical high returns & potential to continue delivering same results. Our world-class advisors at Wealth First helped build the list based on their mutual fund selection process, undertaken using two parameters:

1. Qualitative Parameters

• AMC comfort – Pedigree, Credibility, Compliance, Process and Ability to Retain Top Management & Talent
• Fund Manager comfort – Experience, Reputation, Performance and Continuity Record (We have had 170+ investment and marketing team interactions in the last 1 year)

2. Quantitative Parameters

• Scheme Aesthetics – Fund Size & Recent AUM Growth, Concentration Analysis, Clarity of positioning
• Performance – Historical performances (SIP, Last 20-Quarters, 3-Year and 5-Year Numbers), Risk-adjusted returns, Sharpe, Beta and Other Statistical Ratios
• Negative Criteria – Cash Calls, Outlier Performances, Recent Management Changes, etc.

Now that you are well aware of the factors involved in picking the top-performing mutual funds, without further ado, let’s dive into Cube Wealth’s current top picks.

While we update our blogs regularly, we recommend you download the Cube Wealth App to see the latest and most accurate data.

See Investment Options

List Of Best Long Term Mutual Funds

1. Mirae Asset Large Cap Fund

This fund primarily invests in large-cap stocks.

• Type: Large-cap fund
• 1-year returns: 56.11%
• 3-year returns: 14.54%
• 5-year returns: 15.87%

2. Canara Robeco Emerging Equities Fund

• Type: Large & mid-cap fund
• 1-year returns: 63.35%
• 3-year returns: 15.01%
• 5-year returns: 18.08%

3. Axis Focused 25 Fund

• Type: Flexi-cap (focused) fund
• 1-year returns: 56.04%
• 3-year returns: 14.48%
• 5-year returns: 17.70%

4. Invesco India Growth Opportunities Fund

• Type: Large & mid-cap fund
• 1-year returns: 51.17%
• 3-year returns: 12.39%
• 5-year returns: 14.76%

5. Mirae Asset Focused Fund

• Type: Flexi-cap (focused) fund
• 1-year returns: 71.77%

6. Motilal Oswal Midcap 30 Fund

• Type: Mid-cap fund
• 1-year returns: 68.09%
• 3-year returns: 11.43%
• 5-year returns: 11.59%

7. Kotak Equity Opportunities Fund

• Type: Large & mid-cap fund
• 1-year returns: 58.39%
• 3-year returns: 15.59%
• 5-year returns: 15.96%

8. SBI Flexicap Fund

• Type: Flexi-cap fund
• 1-year returns: 62.05%
• 3-year returns: 13.45%
• 5-year returns: 14.41%

Taxes On Long Term Investment Options

Long term investments are often tax-free or attract long term capital gains tax. The returns here are generally healthy enough for you to ignore the tax that you will pay.

How To Evaluate Best Long-Term Investment Plans?

Key factors to consider while making a long term investment are the returns, risk and taxation at the time of withdrawal. You must also consult a wealth advisor or use a wealth management app like Cube Wealth to ensure you get the most value for your money.

Some questions to ask yourself before investing for the long term:

• What is my financial goal?
• What is my risk appetite?
• What is my ideal time period?
• What tax implications does an investment have?
• Is this the right fund to invest in?
• What sum of money will I accumulate?

Here is an episode of The Cube Wealth Show which will also help you understand the benefits of investing for the long term.

How To Invest In Long-Term Investment Options?

You can invest in long term investments like mutual funds, stocks, and digital gold online using an investment app like Cube. Most apps will require you to go through a KYC process and the sign-up speed will vary from app to app.

For NPS and PPF, you'll have to visit either a Post Office or a registered Point of Presence (POP) to get started. However, several banks and platforms allow you to register for NPS or PPF online. Bank FDs can be bought offline or online.

Most investors like to buy gold coins, gold bars & gold jewellery by going to a trusted jewellery store, but there is the option to invest in gold online through e-commerce platforms as well.

Furthermore, alternatives to physical gold like digital gold and gold ETFs are open for investment online through investment apps. As for land, it's far more complicated that investing in, say, mutual funds or stocks.

You'll need to do thorough due diligence when buying non-agricultural land. Moreover, you'll need the help of professionals to ensure that all documents are thoroughly vetted and legitimate.

For example, you'll need the title deed, sale agreement, stamp duty, tax certificates, etc. to ensure that the land purchase goes through.

FAQs 

1. What are some traditional long-term investment options in India?

Ans. Traditional options include Fixed Deposits (FDs), Public Provident Fund (PPF), National Savings Certificate (NSC), and Employee Provident Fund (EPF).

2. What are some market-linked long-term investment options?

Ans. Market-linked options include Equity Mutual Funds, Unit Linked Insurance Plans (ULIPs), and Direct Stock Investments.

3. Are there tax benefits associated with specific long-term investment options?

Ans. Yes, some options like PPF and NSC offer tax benefits under Section 80C of the Income Tax Act. Equity-linked investments also offer tax advantages in terms of capital gains.

4. Is it advisable to diversify long-term investments in a portfolio?

Ans. Yes, diversifying your long-term investments across different asset classes can help spread risk and optimize returns.

Conclusion

Investing for the long term is a vital step in achieving financial security and meeting your future financial goals. The list of long-term investment options in India for 2023 offers a diverse range of choices to suit various financial objectives and risk appetites.

While traditional options like FDs and PPF provide stability and safety, market-linked investments like Equity Mutual Funds and direct stock investments can offer the potential for higher returns. Tax benefits associated with specific investments further enhance their attractiveness.

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Cube Wealth Investment Quotes

Do something today that your future self will thank you for. - Anonymous‍

Note: Always invest after analyzing your financial goals, investment horizon, and risk appetite.

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