It’s common for first-time investors to feel confused as to what, where and how much should they invest. With so many options at their disposal, they often feel lost. It’s important to have a holistic understanding and objectives of the various available instruments to make an informed choice. If you are a maiden investor, you can consider these five investment options:

  1. Bank fixed deposits
  2. To begin with, you can invest in the tried and tested bank fixed deposit (FD). A relatively safe bet, a bank FD gives assured returns. FD is one of the most common offerings from banks and is easy to avail. Just walk into the branch of the bank where you hold an account, fill up the FD form and you are done. You can also do it online through net banking.

    Most banks issue the FD certificate on the same day, outlining the principal amount, rate of interest, tenure and the maturity amount.  However, note that interest income from a bank FD is added to your annual income and taxed as per the existing income tax slab.

  3. Recurring deposit
  4. A recurring deposit (RD) can be another ideal investment option, if you are first-time investor. You can start an RD from as little as Rs. 100 per month. You can automate an RD by giving your bank standing instructions to debit a certain amount each month from your savings accounts and credit it into your RD account, where it earns interest.

    However, note that just like a bank FD, the interest income from your RD is added to your income and taxed as per the existing income tax rates.

  5. Mutual funds
  6. As a first-time investor, you can start investing mutual funds via systematic investment plan (SIP), where a certain amount is deducted from your account and invested in the fund chosen. If you are a conservative investor, you can begin with debt funds which carry a lower amount of risk compared to equities.

    On the other hand, if you want to be a little aggressive, you can opt for an equity fund that has delivered decent returns over a long time period, say 5 to 8 years. Note that to gain from your mutual fund investment(s), you need to remain invested for a long term.

  7. Public provident fund (PPF)
  8. A government-backed scheme, you can open a PPF account in any designated bank or post office. Note that you can deposit a maximum of Rs. 1.5 lakh in a financial year into your PPF account and claim deduction on the same.

    PPF interest rates are decided on a quarterly basis. Also, PPF is an EEE (exempt, exempt, exempt) instrument which means the amount invested, interest earned and maturity amount are not subjected to taxes.

  9. National savings certificate (NSC)
  10. NSC can be another prudent investment option if you are venturing into investment for the first time. Generally, NSCs come with a maturity period of 5 years and you can claim tax deduction on investments made up to Rs. 1.5 lakh.

Note that the interest earned on NSC is taxable as it’s added under the head ‘Income from Other Sources.’ Just like PPF, the interest rate from NSC is revised every quarter.

Learn more about Mutual Funds for a good personal financial management.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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