Best investment options

Six Best Investment Instruments to Earn Money

If you want to grow your money or earn more money, there is no better alternative than investing. Investing your hard-earned in a disciplined manner and for a long period of time will ensure you a brighter future financially. So, if you are looking for ways to grow your money, here are 6 best investment instruments to opt for.

Small Savings

If you want to start with small savings instruments, you can consider Public Provident Fund (PPF) or National Savings Certificate (NSC). If you want to build a tax-free corpus, PPF with the tenure of 15 years with extendable option is what you should go for, as it offers around 8.7% tax free return annually. If you want an assured return over a medium to long term investment, NCSs with two tenures, i.e. 5 and 10 years, will be your best bet. Besides these, Monthly Income Scheme (MIS) backed by the Government, is another good option as small savings instrument.

Bank Deposits

Bank Fixed Deposits offer fixed and assured returns. However, there is no guarantee beyond Rs. 1 lakh (both principal and interest included) per bank. Hence, it is advisable to diversify your deposits among several banks instead of investing a big sum in one single bank. The tenure of fixed deposits generally varies from 1 month to 10 years. You can get the interest income in a monthly, quarterly, half-yearly or yearly basis. However, since the interest income is fully taxable, the inflation-adjusted post-tax return will always be quite low. So, you need to stay invested at least 2 to 3 years in order to meet your financial goals.

Corporate Fixed Deposits

Corporate fixed deposits offer higher returns on investment, hence, they carry higher risk element and are unsecured in nature.So, before investing, it is advisable to check whether the company has a good dividend-paying history or not. The company paper must hold a credit rating “A” to be reliable in the field of investment.


Bonds or debts are considered the safest investment instrument because of their low risk profile. If you are risk-averse, you should go for bonds offered by the RBI or the Government of India. They are the safest fixed-deposit investment options guaranteeing a decent ROI. However, in bonds, there is a lack of liquidity for retail investors, so you should invest only up to the extent you are comfortable.


Stocks or equities are higher in risk profile. However, if you want to invest directly in stocks, always choose the ones that comprise market indices. They are generally less volatile than others and offer higher liquidity. Before zeroing down your money, always evaluate a stock on the basis of a few important ratios like price-earnings, return on equity, operation margins etc. Investment in stocks should be long-term. You should be determined not to exit mid-way even in market downturns as it will fetch you no profit at all investing money in stocks requires patience and persistence in order to reach your financial goals.

Mutual Funds

Mutual funds have become the most reliable investment avenue for retail investors. Mutual funds are more secure than other investment tools in terms of simplicity, liquidity, affordability, diversification and professional management. Based on your risk appetite and financial goal, you can choose from a number of mutual fund schemes available in the market. Mutual funds allow you to choose from various investment strategies such as Systematic Investment Plans (SIP), Systematic Withdrawal Plans, monthly income options, dividend reinvestment options etc. If you are willing to bear greater risk, you can opt for equity schemes, for risk-averse individuals, there are debt funds, and if your risk appetite is neither too high nor too low, investing money in a balanced fund will be your best bet.

If you have a huge financial goal in mind, it is advisable to hire a financial planner before you start investing. If you are an entrepreneur or planning to start a business, you must go for a good investment banking service. Investment banking services help with the capital creation for various companies, governments and other entities. They also provide highly qualified financial advisors to guide your business financially. However, investment banking services are expensive. So, if you are a retail investor and you want professional guidance, you can hire a good financial planner to guide you with your investment strategies.

The Bottom Line

Depending on your risk appetite, preferred time horizon and financial goal, there are a number of investment instruments to choose from. You can start with small savings schemes and then, start investing in equities as you become more financially confident. You can also hire a professional financial advisor to help you with your investment planning or you can just invest in a mutual fund scheme and keep tracking your portfolio from time to time. However, always keep one thing in mind that it is mandatory to stay invested till the end of your investment tenure to meet your financial goals for future.

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