Updated on: 26 May 2023
An important portion of Indian society is made up of middle-class households. According to government statistics, the middle class makes up about 45% of India’s 1.3 billion inhabitants. But the financial landscape has changed drastically in the past few years and several investment savings plans have been made available for middle-class savers to help them build their nests.
Key Takeaways
- The right kind of investment can help middle-class families meet their financial obligations and goals.
- A risk-averse middle-class investor can opt for Public Provident Fund (PPF) or Fixed Deposits as secure and stable investment options.
- Risk-taker middle-class families can invest in Mutual Funds or Unit-Linked Insurance Plans (ULIP) to yield higher returns.
- People with moderate risk tolerance can invest in Debt Mutual Funds or National Pension Scheme (NPS).
- For mid-income seniors, the Senior Citizen Savings Scheme (SCSS) and Post Office Monthly Income Scheme (MIS) are the best savings plans.
- Before making any investment, identify your goals, assess your risk appetite, and gain knowledge about different financial products.
Investing is not a one-size-fits-all process; each investor has unique goals, risk tolerance levels, and financial situations. It is important to consider the individual’s goals, risk perception, and current financial position when making investment decisions. This allows investors to tailor their investment strategy to their preferences and financial circumstances, creating a sound basis for long-term wealth creation.
This article will discuss several investment plans for middle class families that can help them enhance their financial planning. Keep reading to find the best savings schemes in India!
Best Investment Plans for Risk Averse Middle Class Family
A risk-averse individual is highly sensitive to changing market conditions. Even a small change in the market scenario can make them question their investment decision. Therefore, these individuals look out for a safe investment option that offers a guaranteed return. Here are some of the investment plans for middle class investors who are risk-averse:
Public Provident Fund (PPF)
Among all of the long-term investment alternatives offered in India, the Public Provident Fund (PPF) is regarded as one of the most secure options. Compound interest can be earned on the accumulated funds in accordance with current rules, and the interest is tax-free.
With a minimum deposit of ₹1,000, a PPF account may be opened at a bank or post office. For a predetermined period of 15 years, the acquisition is locked. However, by the sixth year, you may take some of the invested funds out. You can extend the deadline by an additional five years at the conclusion of the 15 years.
Fixed Deposit
Fixed Deposits are a popular choice among investors looking for safe investments with stable returns. It offers flexible tenure, competitive interest rates, and a hassle-free deposit process, making it an ideal investment for individuals seeking both long-term and short-term financial goals.
Furthermore, this investment plan also offers added benefits like liquidity, prematurity benefits, tax savings, and attractive interest rates. FD is both a long-term as well as a short-term investment option, as tenure varies from 7 days to 10 months, and is a fixed-income savings plan. It is a safe investment in India with high return.
Best Investment Plans for Risk Taker Middle Class Family
Risk-takers are usually ready to take risks in the expectation of higher returns. They are more patient with the changing market conditions. Here are some of the best investment plans middle class risk taker families:
Mutual Fund
Asset management firms oversee equity mutual funds, where fund managers buy shares in companies in the hopes of increasing their value. While carrying a higher level of risk, equity mutual funds have historically outperformed gold and fixed-income investments in terms of long-term returns.
Unit-Linked Insurance Plans (ULIP)
A ULIP is yet another popular investing tool offered by insurance providers. It combines the advantages of insurance and investing into a single integrated package. In ULIPs, the investor pays a premium that is split between life insurance coverage and investments in equities, debt, or hybrid funds. It is the best savings scheme in India that relies on the relationship between the value of the fund they are invested in and the amount contributed as a premium.
Best Investment Plans for Middle Income Families with Moderate Risk Tolerance
If you do not fall into the risk-averse or risk-taker category, then here are some of the best investment plans for you to invest your hard-earned money in.
Debt Mutual Fund
Debt mutual funds are managed by asset-managed businesses that pool investment contributions from different participants and invest in fixed-income securities like treasury bills, corporate bonds, commercial paper, and other money market instruments. By receiving interest payments from the underlying securities and profiting from changes in interest rates, investing in debt funds hopes to provide capital appreciation.
These are a low-risk investment option that offers predictable returns. The investment tenure of debt funds usually ranges from 1- 5 years.
National Pension Scheme (NPS)
A market-linked retirement plan with voluntary contributions is known as the National Pension Scheme or NPS. The NPS is open to all Indian citizens between the ages of 18 and 65. Contrary to popular assumption, following retirement, you are not permitted to withdraw the entire NPS corpus. A PFRDA-registered insurance company must provide a regular pension from at least 40% of the corpus. Throughout your retirement years, this annuity will give you a steady stream of income. However, you are tax-free to redeem up to the final 60% of your retirement fund.
Best Savings Plans for Mid-Income Senior Citizens
As a mid-income senior citizen, planning ahead for retirement can seem daunting. However, it does not have to be complicated or overwhelming. Investing your money in the right way will ensure a comfortable retirement and one of the best ways to do this is through a mid-income senior citizen investment plan. Below listed are some of the investment plans available for senior citizens:
Senior Citizen Savings Scheme
The Senior Citizen Savings Scheme (SCSS), which provides regular income to senior citizens, is one of India’s risk-free tax-saving investing options. Banks and post offices offer investment opportunities in SCSS throughout the country. The maximum investment required for this scheme is ₹15 lakh. The initial term is five years, although it has a three-year extension option.
Post Office Monthly Income Scheme (MIS)
A program governed by the India Post Office is called Post Office Monthly Income Scheme. It is a safe investment option supported by the government and enables consumers to save each month. With a minimum opening deposit of ₹1500 and a 5-year maturity period, any Indian citizen can create a Post Office MIS account either individually or jointly. This monthly saving scheme offers no tax advantages for the amount invested or interest income.
Things to Consider for Savings Plans for Middle Class
Before making an investment, it is crucial to do in-depth research about different savings plans in India. Here are some of the things that you can consider before making an investment plan:
- The first step is to identify your goals. Make sure you list them out and prioritize them on the basis of importance and when you wish to achieve them.
- After identifying the goals to achieve, the next step is to define goals on the basis of investment tenure. Categorize them based on short-term or long-term goals.
- You must access your risk appetite by taking a risk profiling questionnaire. Based on your risk profile, you can choose the investment plan.
- Apart from this, you must consider that you do not follow the herd and choose the best investment option that meets your needs. You must also gain knowledge about different savings plans in India before making a decision.
Conclusion
Understanding the many investment possibilities on the market is crucial before making any investment, whether it be a long-term or short-term one. A tried-and-true best-saving scheme for generating income and building wealth is investing.
The best savings plan for the middle class in India requires careful assessment of its specific aspects to ensure it meets the needs of the middle class and provides them with the reliable savings and security that they are aiming for. Prudently analyse and compare different options available on the market and choose the best saving plan in India as per your budget and needs.
