Best Investment Plans for 5 Years

Types of Investment Plans in India

India offers a diverse range of investment options that cater to different financial goals, risk appetites, and investment horizons. The most suitable plans typically include a mix of equity-based instruments for growth and debt products for safety. Here are the key types of investment plans available:

• Equity Mutual Funds (especially via SIPs): These funds invest in a diversified portfolio of stocks, offering long-term capital appreciation. SIPs (Systematic Investment Plans) help in disciplined investing and averaging out market volatility.
• ELSS (Equity Linked Savings Scheme): A tax-saving mutual fund with a 3-year lock-in, ELSS is ideal for investors looking for high returns along with tax benefits under Section 80C.
• ULIPs (Unit Linked Insurance Plans): These are hybrid products combining insurance with investment in equity and debt markets, suitable for long-term financial planning.
• Fixed Maturity Plans (FMPs): Closed-ended debt mutual funds with a predefined maturity, offering relatively stable returns and tax efficiency through indexation benefits.
• National Savings Certificates (NSC): A government-backed small savings scheme with a fixed 5-year tenure, offering guaranteed returns and tax deduction under Section 80C.
• Liquid and Short-Term Debt Funds: Suitable for short-term goals or emergency funds, these funds invest in low-risk money market instruments and provide better liquidity than traditional fixed deposits.
• Direct Equity (Stocks): Investing directly in shares of listed companies can yield high returns, but it requires market knowledge and involves higher risk.
• Fixed Deposits (FDs): One of the safest traditional investment options, FDs offer fixed returns over a specified tenure, ideal for risk-averse investors.
• National Pension Scheme (NPS): A retirement-focused government scheme offering market-linked returns and tax advantages, ideal for long-term savings.
• Public Provident Fund (PPF): A government-backed savings scheme with a 15-year lock-in period, PPF offers tax-free returns and is suitable for conservative investors.
• Real Estate and REITs: Investment in property or Real Estate Investment Trusts (REITs) can provide rental income and long-term capital appreciation.
• Sovereign Gold Bonds (SGBs): Issued by the RBI, SGBs are an alternative to physical gold, offering interest income and capital gains linked to gold prices without the risks of storage.

Each plan differs in terms of returns, tax benefits, liquidity, and risk profile, and should be chosen based on one’s investment strategy.
 

Which Investments Are Best For 5 Years?

Over 5 years, you require instruments that offer relatively high returns but still protect capital to an extent. The best options include:

1. Equity Mutual Funds (via SIP)

Investing regularly through SIPs (Systematic Investment Plans) can reduce market timing risk. Some of the best SIPs to invest in for 5 years include:

• SBI Small Cap Fund
• Axis Growth Opportunities Fund
• ICICI Prudential Bluechip Fund

Equity mutual funds allow you to invest in a diversified portfolio of stocks through SIPs, helping reduce the impact of market volatility and building wealth steadily over a 5-year horizon.

2. ELSS

While it comes with a 3-year lock-in, staying invested for 5 years can maximise gains and leverage tax benefits under Section 80C.

ELSS funds are tax-saving mutual funds with a 3-year lock-in period, and staying invested beyond this period, such as for 5 years, can lead to better compounding returns and dual benefits of wealth creation and tax savings under Section 80C.

3. FMPs

These are debt-oriented mutual funds with a fixed maturity aligned to your investment horizon. They offer better returns than FDs with indexation benefits on taxation.

FMPs are close-ended debt mutual funds designed to mature after a fixed period, offering predictable returns with lower risk than equities, and they benefit from indexation when held for more than three years, reducing long-term capital gains tax.

4. NSC

The NSC is a government-backed fixed income investment with a 5-year maturity, offering a guaranteed return (currently 7.7%) and eligibility for tax deduction under Section 80C, making it a low-risk option for conservative investors.
 

How Can I Double My Money In 5 Years?

If an investment grows at a compounded annual growth rate (CAGR) of around 14.4%, it would typically double in value over 5 years.

While mutual funds have delivered strong returns over the past 5 years, it must be noted that since Covid-19, the recovery in the overall market has been outstanding, and a replication of this in the near term is less likely and thus doubling your money in the next 5 years has a lower probability.
 

Mutual Funds: The Best Bet

Equity mutual funds, especially small and mid-cap oriented funds, can deliver annualised returns in the range of 12-16%, provided market conditions remain favourable. SIPs reduce market volatility risks and provide rupee cost averaging.

Avoid schemes or plans that promise assured doubling in 5 years, as they may involve high risks or could be fraudulent.
 

Which Investment Has The Highest Return?

Historically, equity and equity-linked investments (like direct stocks and mutual funds) have offered the highest returns.

Equity Mutual Funds:

• High-risk, high-return category
• Ideal for aggressive investors
• Average 5-year CAGR: 12% - 18% depending on fund and market cycle

Direct Stocks:

• Requires deep market knowledge
• Volatile but rewarding for experienced investors

Note: These returns come with market risks and are suitable for long-term and high-risk appetite investors only.
Investing in a good plan helps you have enough money when you need it. The returns you earn can support you during retirement and help you stay financially independent. Big goals like paying for your children’s education or planning for retirement are easier to reach with a smart investment strategy. Picking plans that match your goals and risk level gives you confidence that you’ll have enough money when it matters. It also helps you stay prepared for rising prices and unexpected expenses.
 

Which Is The Best Monthly Investment Plan?

If you're aiming for monthly contributions with decent long-term returns, consider the following:

1. SIP (Systematic Investment Plan)

• Most flexible and scalable plan
• Can start with as little as ₹500 per month
• The best SIP plan for 5 years depends on risk appetite and fund performance.

2. Recurring Deposits (RDs)

• Safe, fixed-income monthly investment plan
• Low returns compared to equity-based options

3. Post Office Monthly Income Scheme (POMIS)

• Steady income with government backing
• Limited growth potential

4. Pradhan Mantri Vaya Vandana Yojana (for senior citizens)

• Monthly pensions with minimal risk
• Documents Required to Buy Investment Plans in India

To invest in any financial product in India, you'll typically need:

To invest in any financial product in India, you'll typically need essential documents such as a PAN card, Aadhaar card, passport-size photograph, and bank account details with IFSC code. Additional KYC documents like identity and address proof, along with a cancelled cheque, are also required to complete the registration process.

To invest in any financial product in India, these documents are typically required for offline registration, though most platforms also offer convenient online registration options with e-KYC.

Mutual fund houses and insurance companies also offer paperless e-KYC options for hassle-free investing.

Conclusion

A 5-year investment window offers a balance between short-term liquidity and long-term wealth creation. Choosing the best investment plan for 5 years depends largely on your risk appetite, expected returns, and financial goals.

For growth-seeking investors, SIPs in equity mutual funds, ELSS, and ULIPs are ideal. Risk-averse investors may prefer NSCs, FMPs, and FDs. A diversified portfolio combining both equity and debt options ensures better returns with risk mitigation.

There are several types of investment plans in India, and each is designed to serve a particular financial need. Investment Plans allow you to invest in different assets, such as not only equity, debt, bonds, but also government securities, but you need to choose according to your risk appetite.   

Make sure you take advantage of the investment plans in India, such as PPF, life insurance, mutual fund, bonds and others to diversify your investment portfolio and maximise returns as per your goals and risk appetite.

Before starting your investment journey, one should understand their financial goals. The goals could be children’s education, buying a home, retirement planning, emergency funds, reason being planning a foreign trip, etc. Each goal has a different strategy.

You should be aware that all investment plans come with their associated fees. These do impact returns, so thoroughly do a detailed analysis of these before investing.