I love to do things carefree, with no strings attached, just out of my own interest, even if it doesn't pay me a penny. I love photography, astronomy, programming, solving problems in physics and mathematics and so on. However, being in a highly demanding job, I am not able to give enough time for these pursuits which make me immensely contented and happy. My wife is quite supportive of me and always tells me go ahead, but I am sure she won't want me to devote full time into personal pursuits that won't yield income. Luckily, my wife gets accommodation as she works in government. That sort of freed the flat that we bought 6 years back for rent. Using the rent and our savings, I want to invest in another flat as I think getting rent from two apartments will provide for our monthly expenses, and entirely free my salary. I can then pay off the EMIs before term and lose less on interest still saving tax. My wife says she loves a villa with garden around. However, I sort of ruled it out as such villas can only be bought far from the city, having very less prospects of renting it out and we won't be living there anyway as we both work and would like to be near to our places of work. We can buy a villa or whatever anytime by selling off a flat later on, as money invested in property keeps its value unlike raw cash subject to inflation. So I really want to have assured monthly income which is as much as my current salary, growing reasonably with time and for which I don't need to work everyday. I want to invest wisely, so that I can take a retirement as early as possible (may be only in my dreams!). I want to free my time fully so that I can pursue my interests without having to bother about family finances! Now my question is what do you think is best investment in Indian context, that will provide an assured income? 1. Land may be the best but if you are working it is difficult to keep an eye on the property always, unless you build something over it. Getting land near where there is some economic activity is very expensive, unless you have political connections to get it cheap somehow. Moreover, you can't save tax on money invested in land. It needs more money to buy land and build a house on it and yet difficult to get good rent out of it, as buying land at reasonable rates means buying far away from city. On the other hand, if one can buy land at reasonable rates and builds a nice house on it, in future the area may develop well and property value may increase by leaps and bounds. However, this is not much different from speculative investment. 2. Unlike readymade ones, apartments under construction are sold at reasonable per sqft rate. First time investment is exempt for tax on principle 1 lac and interest 1.5 lacs, no rental income need to be shown for tax (deemed occupied). Second time investments can be shown for some rental income while claiming tax benefits and the full interest component of loan is tax exempted (read here). Easy to get low interest loans from banks and if properly invested in apartments near good companies, one can get assured rental income. However, this would need a great deal of research as under construction apartments by builder with good track record in right places with good rental value are difficult to come by. 3. Investing in fixed deposits. Banks pay about 600-700 per month on a lac invested. So if someone is buying a flat for 70 lacs, they could as well deposit the EMI in a bank as recurring deposit and get an assured income of 40 to 50 thousand per month, towards the end of investment. However, one needs to wait for the principle to increase to 70 lacs before getting full monthly income. Principle doesn't grow unless reinvested and even then it may lose value because bank interest rates are below inflation rate. No tax savings as in case of home loans. 4. Valuable metals, gold and silver. Ever increasing and constant high price means gold is not as good investment as property. One can land a better deal with property and the only way to land a better deal with gold is to buy when its price falls down. However, there is not much saving there. In fact, I think buying gold takes money away from better and high yielding investments like property and the value doesn't grow as much. So buying minimum gold to keep wife happy in my opinion is a better way. 5. Investing in mutual funds, ULIPS or shares. These days shares are not growing as much as they used to in early 2000s and moreover any gains are only short term and not really helping long term investors. It is quite difficult to catch good investments when the companies are still growing. There is always risk of losing your capital. However, buying some insurance and ULIPs is essential as much as is needed to have coverage for your family, in the event of your death. Beyond that I think, investing in policies is as much as investing in dead capital. Please feel free to add any other options for investment and please do share your opinion.
Investments in ULIPs are the worst option as they charge 3-5% every year. The best option is to buy a term insurance and invest in mutual funds.
You may want to add option of PPF, Sukanya Samriddhi and NPS too. If you are employed then VPF is additional option. There are post office MIS schemes too, though they have limitation on invested amount.
