Best Long-Term Investment Plans with High Returns

calendarJune 27, 2024
Best Long-Term Investment Plans with High Returns

Investing has now become an essential move if you want to grow your wealth and secure your financial future. Investing in the right funds at the right time can help your money grow significantly and achieve your future goals. As a first-time investor, you might feel overwhelmed by market fluctuations and if you will get the expected returns for your investment, but history shows that patient investors who stick to well-chosen long-term plans often see great results.

When we talk about "long-term investment plans with high returns," we're talking about ways to grow your money significantly over many years. It's not just about saving your hard-earned money but making it work harder for you over time. In today’s financial market, there are a lot of options for an investor, but not all of them would generate your expected returns. Let’s explore some of the best long-term investment options that have, over the years, provided high returns and discover how you can put your money to work for you over the long haul!

Why long-term investments?

Before diving into the best long-term investment plans with high returns, you need to understand why long-term investment plans are so effective. Long-term investments generally generate compound interest, where your returns generate their own returns over time. Long-term investments are also less affected by short-term market fluctuations. There might be ups and downs in the short run, but on a long-term basis, the returns generated are significant and would fulfil your financial goals. According to JP Morgan, stock markets have rewarded long-term investors. Additionally, in many jurisdictions, capital gains from long-term investments are taxed at a lower rate than short-term investments.

  • Index Funds

Index funds are a popular choice for long-term investment due to the high returns they give and the low fees they charge. These funds track broad market indexes and specifically invest in those companies, giving you a slice of the whole market in one investment. They're like buying a little bit of every company in a major stock index. There are many index funds reflecting the returns of underlying indices such as BSE SENSEX and NIFTY 50. This is preferable for investors who want to invest without taking a lot of risk and want to get predictable returns. These index funds are passively managed and try to match returns offered by the underlying index.

In India, the NIFTY 50 Total Return Index has generated a return of 11.8% CAGR over the last 15 years, and the average returns since 1990 have been 14.2% CAGR. This showcases that Index funds are one of the best long-term investment options for investors. As economies expand and companies grow over time, this fund reflects growth in its value with steady long-term appreciation.

  • Exchange Traded Funds (ETF)

ETFs are similar to index funds, but they can be traded like individual stocks on stock exchanges. You should not pool all your money in just one single investment option; instead, you should go for diversification. ETFs provide that much-needed diversification to your portfolio with the flexibility of stocks. They can be brought and sold throughout the trading day. Their advantages include low cost, liquidity, and tax benefits from holding an ETF for over three years.

There are several high-return ETFs for new investors, like NIFTYBEES, KOTAKNIFTY, BANKBEES, etc. NIFTYBEES has given the highest total turnover among all ETFs of 2583.85 lakhs since it was launched. This showcases that ETFs are highly reliable and also generate significant returns on investment. They are also much safer than other long-term investments. It helps you diversify your investment in bonds, equity, gold, etc. while giving you the perfect market exposure. Remember to consider ETFs as a strategic roadblock for your investment portfolio.

  • Equity Mutual Fund

An Equity Mutual fund is like a basket of loans which lets you invest in a diversified pool of equity stocks through a single investment. However, unlike debt mutual funds, they focus on equity instruments and invest in stocks and shares of companies. These funds generate a very high interest rate if you invest in them for a long period of time.

Unlike fixed deposits, which are like putting your money in a safe with a fixed interest rate, equity funds have the potential to grow much more because they’re invested in the stock market. According to CRISIL, top large-cap equity mutual funds in India generate a return of around 11%-14% per annum from its inception. Some funds like Mirae Asset Great Consumer Fund Regular-Growth Returns even generate returns of around 20% on your investment. They research companies thoroughly and can often spot good investment opportunities that individual investors might miss.

Yes, the market can be a roller coaster with ups and downs, but over the long term, it tends to go up. So, if you have a high-risk appetite, equity mutual funds are certainly an option you can choose from. The money is invested strategically in varied stocks and hence is much safer than directly investing in the stock market.

 

 

  • Real Estate Investment Trusts (REITs)

REITs are a relatively new and unique form of investment, but they offer the opportunity to invest in real estate property without investing a large lump sum of amount. REITs help investors invest in real estate without directly purchasing property. It is a relatively new concept in India, but it has already shown very promising returns. Indian REITs typically invest in commercial real estate like office spaces and shopping malls. They offer two main benefits: regular income through dividends and potential capital appreciation over time. REITs are regulated actively by the Securities and Exchange Board of India, showcasing that they are a secure and genuine investment option. They can be brought and sold through stock exchanges like NSE and BSE.

Some of the popular REITs include Embassy REIT, Mindspance REIT, Brookfield REIT, etc. Brookfield is expected to yield a return of around 8% in the current financial year. It's worth noting that Indian REITs are required by law to distribute at least 90% of their rental income to investors as dividends. This ensures a steady income stream for investors.

While past performance doesn't guarantee future results, Indian REITs have shown potential for both income generation and capital appreciation. They offer a way to diversify your investment portfolio and gain exposure to the real estate sector without the hassles of direct property ownership.

  • Dividend Growth Stock

Dividend growth stocks have become increasingly popular among long-term investors. These are shares of companies that consistently increase their dividend payments over time, offering both regular income and potential capital appreciation. Dividends provide a steady cash flow, which can be especially valuable when the market suffers liquidity shocks. Companies that consistently raise dividends often have strong financials and steady business models, which ultimately leads to an increase in stock price over the long term. Hence, you will be receiving dividends and a better stock price if you invest in it for the long term. There are also tax benefits for investors gaining dividends, making it an attractive investment option.

In India, dividend yields typically range from 1% to 5%, with some companies offering even higher yields. For example, Coal India provides a dividend yield of 4.9%, while Gujarat State Fertilizers & Chemicals Ltd and Gujarat Narmada Valley Fertilizers & Chemicals provide a dividend yield of 4.7% each. This makes Dividend growth stock one of the best long-term investment plans with high returns.

 

Conclusion

Investing in the long term is the best strategy to build your wealth and attain your future goals. It keeps you at ease in times of emergency and builds a secure future. As the Indian financial market offers several options, it is difficult to determine the best long-term investment plan with high returns. Every investor's financial needs and goals are different, and hence, it is important to examine each investment plan and choose one that works best for you. Remember, the key to successful long-term investing is patience, diversification, and consistent investment. While past performance doesn't guarantee future results, over time, records have shown that staying invested in diversified quality assets over long periods can lead to significant wealth accumulation. Start your investment journey today with our assistance and help yourself achieve a secure and prosperous financial future.