Investment: This word is mostly misunderstood as a term which denotes making money easily without taking much risk to get a hefty reward
In reality, Investment comes only after 2 important things are taken care. A person earns Income through salary or business; he then has to allocate funds for meeting his personal/professional expenses.

The balance amount which remains in his hands is called as Savings. This amount is liquid in nature lies in bank accounts so that it can be withdrawn whenever he wants to.
If the person decides to keep the savings in a particular instrument over a period of time, then it is called as an Investment.

This Concept must be first understood and accepted before going for any type of Investment. A person who accepts to save money over a pre stipulated time frame is called as an Investor. The main attribute of an investor must be he must be patient for his investment to give the desired return which is the ultimate purpose of any investment.
With this basic understanding, lets see some instruments that can give maximum returns in India

Direct Equity:

Simply means owning a company’s share in ones demat account held with any banks or institution. Underlying understanding must be, if the company where in investment is done grows, my investment also grows and if the company fails, my investments also fail to give returns. Since there is very high risk involved in this, the rewards are also high considering the fact that the investment is done in companies that have a appetite to grow

Equity Mutual Fund:

If an investor does not want take so much risk in direct equity, then he can take this route to ride his investment journey, while the attributes are same as the equities are, the risk is mitigated by diversification. Rather than investment in a single company, the fund manager invests in various companies which have some similarities.

Debt Mutual Fund:

While equity mutual funds have a higher risk reward ratio, for investors who tend to protect their capital to a larger extent, debt mutual funds help.

As the word says, investments happen in debt instruments like government securities, Bonds of corporate, Treasury bills, commercial papers which are fixed interest generating instruments and hence the capital is much safer. It’s to be noted that there is also some risk attached to these investments

National Pension Scheme:

PFRDA had introduced this scheme for employees to comfortably earn an income after their retirement after scrapping the pension system. The investment also goes into passively managed mutual funds, which give decent returns over a period of time.

Only 40% of the total accumulated corpus can be withdrawn at the time of retirement and rest 60% has to compulsorily go into some annuity schemes which gives regular income like pension after retirement.

Bank Deposits/ Post office deposits:

Often considered to be safest form of investment, these deposits are traditional form of investment that every investor seeks. But with the deposit rates going down and income levels going up, these are becoming less attractive.

Still for an investor should always keep funds for his contingency expenses and emergency fund only in a bank/post office deposit and not in any other instrument since these expenses are not meant to earn returns rather kept as an source of liquidity.

Public Provident Fund (PPF) / Employee Provident Fund (EPF) / Voluntary Provident fund (VPF):

Provident funds can be invested in any of these three types based on the employment of an investor. The power of compounding can be easily understood by investing in any of these instruments.

Considered to be safest and earning higher returns over a period of time, this instrument is most sought after bank deposits. Due to its ill-liquid nature it offers higher returns as well as tax benefits. The lock in period of PPF is 15 years, EPF and VPF till the time of retirement of an employee.

Gold / Sovereign Gold Bonds (SGB):

The most traditional form of investment in India is gold which has been considered as an asset that every household must have. In fact gold is the only instrument that has been maintaining the purchasing power since ages now.

Physical gold was considered as a trading commodity and hence it was valued at a higher rate owing to its demand and supply. But since there was risk attached in maintaining the physical gold, huge quantities are always a threat. But now, since they are also available in virtual form (SGB)/ ETFs, it can be considered as an alternative investment option as well.

Senior Citizen Savings Schemes (SCSS)/Pradhan Mantri Vaya Vandana Yojana (PMVVY):

Often considered to be highest interest earning instruments for senior citizens, these instruments come with a maximum cap of Rs.15 Lakhs only per person. These are also lock-in instruments like PPF and hence offer higher interest rates which helps as a source of income for senior citizens to park their hard earned money and get a regular income without any market risk or credit risk involved in these.

Government of India Bonds/ State Development Loans:

Often Government borrows money from public in form of bonds for development of nation and investments into various government schemes. These bonds are either sourced through Reserve Bank of India (RBI) or direct government entities like Power Finance Corporation (PFC), Rural electrification Corporation (REC), National Highways Authority of India (NHAI) etc.,.

These bonds give attractive interest rates and coupons for the investor. Some State governments also provide bonds in form of State Government Loans and offer attractive interest rates. For investors who want fully sovereign investments these would always be a better option.

Real Estate:

The most sought investment instrument after gold is real estate. May it be residential or commercial, every household wish to purchase a real estate property in his name. Mostly considered for own residential purposes the affinity towards this asset class is high in India. However investor needs to hold a good lump sum of corpus before entering into purchase of real estate.

Having seen all the instruments that offer good returns, it’s imperative for the investor to sit with a proper financial planner to understand his risk reward ratio and frame a proper investment proposal before he starts investing and stick to the discipline of investment objective to earn the desired returns.