Team findesh/ November 10, 2023
India is one of the fastest growing economies in the world, with a projected GDP growth of 8.5% in 2024. Investing in India can offer attractive returns and diversification benefits for investors who are looking for opportunities in emerging markets. However, choosing the right investment tools can be challenging, as there are many options available with different risk-return profiles.
Here, We have find out on the basis of our research and experience five best investment tools to invest in India for 2024 based on their potential returns, liquidity, tax efficiency, and suitability for different investors. These are briefly described step by step separately in the below:
- Stocks: Every single person should must have at least 20% of investment in stocks of their total portfolios. The investment in Indian stock market is the best option to invest because it offers the highest potential returns, diversification, and liquidity. Moreover, The Indian stock market has delivered 10.9% return in the last 10 years which is top performing among all global economies. It is followed by US market with 6% (Dow Jones) and 2.5% return by Chinese stock market. Stocks investors can also choose from a variety of sectors, themes, and market capitalizations, depending on their risk appetite and investment goals. Stocks investors can also easily buy and sell stocks through online platforms and brokers. The performance of the Indian stock market in 2021 has been impressive, as the benchmark NIFTY 50 has gained over 24% and SENSEX aroun22% of the return. These statistics show that stocks investment is the best option to invest in the Indian stock market for 2024 and beyond.
- Mutual Funds: Equity mutual funds are pooled investments that invest in stocks of companies listed on the Indian stock exchanges. They offer exposure to various sectors, themes, and market capitalizations, depending on the fund’s objective and strategy. Equity mutual funds can generate high returns in the long term, as they benefit from the growth potential of the Indian economy and corporate earnings. However, they also carry high risk, as they are subject to market volatility and fluctuations. Equity mutual funds are suitable for investors who have a high risk appetite, a long-term horizon, and a goal of wealth creation. They are also tax-efficient, as they are subject to a 10% long term capital gain tax(LTCG) if the INR 1 Lakh in a financial year.
- National Pension System (NPS): NPS is a government-backed retirement savings scheme that allows investors to contribute a portion of their income towards a pension fund. The fund is invested in a mix of equity, debt, and government securities, depending on the investor’s choice and risk profile. NPS can generate high returns in the long term, as it benefits from the power of compounding and the growth potential of the Indian economy. However, it also carries some risk, as it is subject to market volatility and fluctuations. NPS is suitable for investors who have a long-term horizon, a goal of retirement planning, and a willingness to lock-in their money till the age of 60. It is also tax-efficient, as it offers deductions upto 2 LAKH under stion 80C and section 80CCD(1B) of the income tax act, and tax free withdrawls at maturity.
- Gold: Gold is a traditional and popular investment tool in India, as it is considered a hedge against inflation, currency depreciation, and geopolitical uncertainties. Gold can generate high returns in the short to medium term, as it benefits from the increase in demand and supply constraints. However, it also carries some risk, such as price volatility, storage cost, and purity issues. Gold is suitable for investors who have a medium to high-risk appetite, a short to medium-term horizon, and a goal of diversification and protection. It is also tax efficient as it is subject to a 20% LTCG tax with indexation benefits, only if the holding period exceeds three years.
- Real Estate Investment Trusts (REITs): REITs are listed entities that own, operate, and manage income-generating properties such as office spaces, malls, hotels, and warehouses. They offer exposure to the real estate sector, which is expected to grow at a compound annual growth rate (CAGR) of 11.2% from 2020 to 2024. REITs can generate high returns in the long term, as they benefit from the rental income, capital appreciation, and dividend distribution. However, they also carry some risk, such as market risk, regulatory risk, and operational risk. REITs are suitable for investors who have a high risk appetite, a long-term horizon, and a goal of income and growth. They are also tax-efficient, as they are subject to a 10% dividend distribution tax (DDT), and a 10% LTCG tax only if the holding period exceeds three years.
These are some of the best investment tools to invest in India for 2024, based on their potential returns, liquidity, tax efficiency, and suitability for different investors. However, before investing, investors should do their own research, assess their risk profile, and consult a financial advisor if needed.
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