5 investment savings which can provide more than 8% return

In an emerging economy wherein the inflation rate is growing by 6%, investing money in traditional saving schemes is a sub-optimal strategy. As inflation is eating the returns accrued from the investments made in varied asset classes. If the returns are less than the inflation rate, then you should revisit the investment strategy and consult a financial advisor. Some of the options that can deliver more than 8% are:

Fixed Deposits (FD):
Even though most of the PSU and private banks are offering FD rates up to 7.5%, there are newly launched banks which have introduced 8% returns on the investments. In order to lure more consumers to open the account in their bank, these banks are offering an attractive rate of interest with no prepayment penalty charges. As the monies invested in fixed deposits are secure and fixed, many people opt for these traditional savings. For instance, Axis Bank offers 7.4% interest rate 1 year 5 days < 1 year 11 days’ tenure. Do remember that the FDs are fully taxable and tax totally depends upon your income tax slab.

Company Fixed Deposit:
These fixed deposits are similar to other FDs offered by banks. These FDs are beneficial for those investors who are looking to invest for a fixed period of time, with a little risk. Although, the returns are secure, but, at times, there are serval companies which have defaulted in repaying the amount. The returns are also on the higher side compared to bank FDs. For instance, Mahindra Finance’s FD scheme offers 8% for 20 months, 8.5% for 27 months, and 8.75% for 33 months. Similarly, Bajaj Finance, fixed deposits provide a lucrative interest rate of 8.40%. Do remember to check the credentials of the company before investing in such products as the company will be unable to repay if faced with any financial difficulties.

Non-convertible debentures (NCDs):
The NCDs are beneficial for investors having moderate to high-risk appetite, looking to invest in fixed income schemes. There are several NCDs schemed launched by companies such as Indiabulls, TATA Capital, Edelweiss group offering an interest rate up to 9% per annum. You should consider the credit rating, liquidity and financial condition of the issuer as the issuers having lower credit ratings have high default risk. So, they pay a higher interest rate to the investors. Although, NCDs are traded on stock exchanges, but have low liquidity. Any unforeseen circumstances may lead you to sell these NCDs at a discount rate so it is always advisable to wait for the maturity time.

Mutual Funds:
Many equity funds offer double-digit returns depending upon the market cycles. But, large-caps, multi-cap, midcap, small-cap mutual funds offer more than 8% return on investment, if invested wisely and regularly via SIP or lump sum. However, the returns do not guarantee returns, but most of the large caps do deliver more than 10% return on investments. In simple terms, higher the risk, high the reward/return. Even a tax deduction of 10%, these funds do offer attractive returns to investors. You should diversify your mutual fund portfolio to gain maximum in the volatile market. A bias for large-cap equity fund and Hybrid equity funds in current times of volatility can give a higher return in the long run.

National Pension System (NPS):
Investors who are looking to invest for their retirement (60 years) can consider this option. Like mutual funds, the returns from NPS are market-linked. The funds contributed by the investors are invested with PFRDA-registered Pension Fund (PFs). The amount is invested in three securities namely corporate bonds, government securities, and equities. The NPS plans have given returns more than 8% in last one year. Under the NPS scheme, you can withdraw 60% of the amount, but 40% of the corpus should be used to purchase an annuity. If the amount is less than 2 lakhs, then you can withdraw the whole amount.

There is an array of options available to get a return of more than 8% per annum. A diversified portfolio can help you generate higher returns without exposing to any financial risk. Invest regularly and keep an eye out on the opportunities to maximize returns on your investment.

If you are talking about savings, you should discuss debt mutual funds, not equity based. Else there are many investment options that can give above 8% returns

Investment savings which can provide more than 8% return

Debt Funds: Another diversified route to invest in a basket of securities such as corporate FDs, NCDs, commercial papers, etc, is to invest in short-term debt funds. The ideal holding period for such investments is 1-3 years. Short term debt funds offer a yield higher than most bank FDs and you can withdraw the investments in most cases without a penalty. Hence, they offer better liquidity than FDs.

Hybrid Mutual Funds: Some may not be satisfied with the low rate of return earned on fixed income investments, for them, hybrid mutual funds can give them the edge of equity. Under the hybrid fund category, there are several options, but Balanced Advantage Funds and Equity Savings Funds would be best suited for a three year period. A Balanced Advantage Fund can vary the unhedged equity exposure between 0-100%, while Equity Savings Funds limit the unhedged equity exposure to 25%. Such funds dynamically manage the assets based on the prevailing market environment. Hence, offer good risk-adjusted returns.

Long-Term (Above Three Years)
Individual Stocks: If you have a long investing time horizon, investing in shares of top-quality companies can help you generate substantial wealth. The key lies in finding companies with low or average valuations and consistent cash flows that indicate the potential for solid, steady growth.

Shares of large diversified companies can make great investments. For those who have a longer investment horizon, purchasing shares of smaller, more volatile companies can be quite profitable but can come with additional risk.

Equity Mutual Funds: Selecting and maintaining a portfolio of stocks might not be your cup of tea. In such cases, you can save yourself the trouble of selecting stocks and instead pick equity mutual funds designed to match your investment goals.

With the regulator’s new categorization norms, picking the right mutual fund for your investment goals is much easier. A well-managed fund can generate an average return of over 14 percent over the long term. Select funds that have a proven track record of performance, across market cycles.