Nowadays, people have become more interested in investing rather than just saving after the Indian Financial Budget, 2020. Many people now set their mind goals just not to save money but also planning to multiply it with low risks investment options. Investment can make you and your money grow more and makes you achieve your financial goals, needs, and desires. The more you can invest money in the market, the more you can earn profit from different ways based on the plan you choose for your investment.
Persons choose the investment plans according to their needs, capacity, or depending on their risk tolerance level. Here, from the context of this article, we are going to discuss some plans and schemes which can be helpful to Middle-class people, suitable for their financial resources, and will help achieve their future goals. The investment plans in India are relatively low risks and provide decent returns to Middle-class people also. Let us have a look at these Investment Plans, their features, and benefits, etc.
Benefits of Investment for Middle-Class or Salaried-Person
The benefits of investment for the Middle-class or Salaried-person are listed below:
- The investment plans help a person to achieve their better requirements or goals in life.
- A better investment plan can also save the Income Tax of the investor.
- It also protects from uncertainties in life which may happen anywhere, anytime.
- It also promises you the guaranteed returns which may be beneficial for you in all aspects.
- The investment plans can also secure your retirement with some specific Pension Plan.
- The investment plans can also build health and can multiply your money for your secure future.
Top 5 Investment Plans for the Middle- Class
In India, there are lots of financial institutions run by the government and non-government organizations as well, providing investment facilities with many other additional features. Here, we have mentioned the Top 5 plans for Middle-class persons which will surely help them in their better investment plans. The Top 5 Investment Plans for Middle-class persons are explained further in detail.
1. Public Provident Fund (PPF)
In the Indian population, one of the most popular investment options which are mostly preferred by the Middle-class section is Public Provident Fund (PPF). The account of the Public Provident Fund can be opened by any financial institution, authorized banks, or any post office located near you. The minimum investment starts from Rs.100 per year which is the lowest amount that can be afforded by anyone easily. One can be earn guaranteed tax-free returns. It is a Saving Scheme which is offered by the government of India. The employed person who is in the informal sector is allowed by the government to invest in the Public Provident Fund scheme.
In a Public Provident Fund account, the investor is guaranteed to receive a fixed rate of returns by the Indian Government. Therefore, it is considered a safe mode of investment. The lock-in period of Public Provident Fund investment is 5 years. However, it is allowed to withdraw the amount during the prematurity period to meet some specific conditions. One can also extend its lock-in period if required. The minimum investment in Public Provident Fund is Rs.1000 per year to the maximum investment of Rs. 1.5 lacs per year. The Public Provident Funds are suitable for the requirement of the long-term investment such as Child’s higher education plan, child’s marriage plan or retirement plans, etc. It provides assured Annual Interest with sovereign guarantees.
Therefore, the Public Provident Funds plan can be an excellent option for Middle-class persons who are looking for long-term financial planning.
2. National Pension Scheme (NPS)
The National Pension Scheme (NPS) is one of the efficient tool-kit for Middle-class persons as it is a pure retirement product for those who are planning long-term investment for their future as it provides high returns based on the long run. It also provides tax-free returns which can be helpful for Middle-class people. The NPS also has the Tax-Rebate feature which is very beneficial for its investor. To open the NPS account, one must be 18-65 years old, the resident of India or NRI can also easily apply for this scheme. One can apply online at www.enps.nsdl.com either can visit any branch of NPS.
The authorized bank of NPS is “Point of Presence” (POP) where a person (private or government sector) can submit KYC documents and other important documents such as PRAN (Permanent Retirement Account Number), Aadhar card, the signature of the scanned image, passport size photo or any other documents required. The minimum amount one can deposit is Rs. 500 to keep its account active during the process of opening the NPS account. The maximum time period for the NPS account is until the age of 65-70 years. But, a person can also exit from its NPS account by taking the lump-sum amount of 60% of the NPS and can receive a Monthly Pension of its rest 40% from its investment funds. One will receive his rest of the money in the form of Monthly Pay-out for the rest of their life through Annuity Pension Plan.
Therefore, It is one of the best options for the Middle-class person planning for their retirement or long-term investment with low risks and high returns.
3. Post Office Scheme (MIS)
The Post Office scheme (MIS) is also a Monthly Income scheme. This scheme refers to those individuals who have the limited resources but want to invest their money to meet their future requirements and these peoples usually belong to the salaried class or middle-class section of society. This scheme provides a kind of fixed monthly income on their Fixed Deposit (FD). Yes, one needs to invest a Lump-sum amount of money in the form of FD to his account to ensure the monthly returns with low risks at a particular period of time. This is the best option for the Middle-class person as it can help to meet one’s need and requirements per month with an assured fixed deposit. A person can open the (MIS) account to the minimum amount of Rs. 100 and the maximum amount of Rs. 4,50,000 as per a single account but, it has the joint account then one can deposit the total amount of Rs. 9,00,000 per annum.
The maturity period of the Post Office (MIS) scheme is a maximum of 5 years but one can exceed it after its maturity. An individual can take his payout per month by auto-credit into its saving account of the same post office, PDC, or through ECS. One can open his account by cash or by cheque as well. The premature closure of this scheme is also allowed after the time period of one year but the charges may be applicable. The nomination facility is also available in the (MIS) scheme. The interest rate of (MIS) scheme is 6.6% per annum which is Monthly Payable. According to Section 80C, there is no tax benefit in this scheme. A person can visit the nearest post office to open its account in (MIS) scheme and can fill-up the form available there. The documents required are an Aadhar card, PAN-Number, and passport size photo. Online banking has not been started in this scheme yet. So, one must have to do the process of opening the account into (MIS) scheme manually.
Therefore, the Middle class or Salary based people can enjoy its monthly returns for the long-term as well as for the short-term period as according to their preferences.
4. Fixed Deposit (FD)
Fixed Deposit (FD) is one of the most preferred investments product which is offered by every banking as well as the non-banking institution. One can invest the amount and time period according to their comfort. It provides a higher rate of interest than other savings accounts. It can be open by both as a separate account or as a joint account. The amount of money one invests at a time, cannot be withdrawn from the Fixed Deposit until the date of its maturity period. Many financial institutions also provide the loan facility and lower rate of interest on the FD Certificates to offer additional services to their FD investors to attract more investors.
Investors can invest in this scheme for the short-term as well as for the long-term depending on their own choice. The lock-in period of the FD may vary from a minimum time period of 7 days to a maximum time of 10-15 years. In case of premature withdrawal of the investment of its FD due to some reason, the amount may be deducted according to the criteria followed by the institution. This investment also covers the “Deposit Insurance & Credit Guarantee Corporation” (DICGC). As FD (DICGC) offers some income-tax and wealth-tax benefits, needs its legal documents such as Aadhar card, PAN-Number, passport size photo, to register for the FD account in any bank or post office. Hence, It can be a better option for Middle-class persons to invest in Fixed Deposits (FD).
5. Investment in Gold
Gold is one of the most traditional and old investment option suitable for the Middle class or Salary based people as it is the secured and tangible investment which is against the market volatility and its inflation or deflation depending on the market conditions. The investment in gold is always an excellent choice for Middle-class people as it never reduces to zero besides experiencing an occasional fall sometimes. For people who are looking for a long-term investment with low risks then, investing in gold is always a fruitful option. It also provides liquidity. Investors can invest in Gold ETF, Gold Deposit Scheme, Gold Bar & Gold Mutual Funds as per their choice.
In Gold Deposit Scheme, One should deposit the replacement of “Gold Bonds” which is a minimum of up to 200gm. In this scheme, a person can be provided a tax-free interest rate of 3-5% respectively. The lock-in period of this scheme is a minimum of 3 years to a maximum of 7 years. One can invest in Gold Bond Scheme in any form such as cash or gold according to their preferences. Besides this, investing in Gold Bar or Gold Coin is also the best way of physical investment by the middle-class people earning high returns with low risks for a long period of time.
Frequently Asked Questions
Q1. What factors should be considered for the Middle-class person before investing in any investment plans?
Ans. One should always check the following points before going to invest in any investment plans:
- A person should gain sufficient knowledge about the plan and its concepts to be aware of the scammers who are a threat in the investment markets as cheats and can take your money away.
- One should have enough knowledge to calculate his amount. If it would be profitable in the future or not and if yes, then how much it would be?
- A person has to analyze various schemes and plans properly based on its returns applicable.
- A middle-class person is not advised to invest his/her whole salary in the investment to achieve its future goals. One should choose the plan which may be affordable and suitable according to their monthly salary package and the wealth’s goal. One should make a balance between the two.
Q2. List some best Investment plans according to the Middle-class population.
Ans. Some of the best In plans according to the Middle-class population are listed as under.
| Investment Asset | Time Horizon | Returns | Risk |
| Public Provident Fund (PPF) | 15 years | 7.9% | No risk |
| National Pension Scheme (NPS) | 18-65 years | 10-15% | Low risk |
| Sovereign Gold Bonds (SGB) | 3-8 years | 2.5% | Low risk |
| Post Office Monthly Income Scheme (POMIS) | 5 years | 6.5% | Low risk |
| Fixed Deposit (FD) | 10-15 years | 6-7% | Low risk |
| Real-Estate Investment | Relative | Relative | Low risk |
| RBI Bonds | 7 years | 7.15% | Low risk |
| Savings Account | Relative | 3%-4% | No risk |
| Recurring Deposit Account (RD) | 6 months | 6%-7% | No risk |
Q3. Explain in brief about (ETF) investment.
Ans. Exchange Trading Fund (ETF) involves the investment of different types which are pooled together in a single entity.
Q4. What are Hybrid Funds?
Ans. Hybrid Funds may be defined as asset allocation funds that are produced by a diversified portfolio. It is a classification of mutual funds or ETFs. Through a single fund, an investor can invest in multiple asset classes.
Q5. List some investment tips for Middle-class investors in India.
The tips for the Middle-class investors in India are as follows:
- A person has to be patient, as good returns can take time.
- Read all the terms and conditions carefully before investing in any plan or scheme.
- Don’t spend your money unless it is necessary.
- Make sure to invest a small sum of amount in multiple accounts rather than investing a big amount in a single account.
