An Overview of the Best Small Investment Plans in India

In 2023, investments have become pivotal in securing one's financial future, as they help not only in growing wealth but also in achieving financial goals and combating inflation.

This article is specifically tailored for those looking for the best small investment plans in India. We will be going through some insights into schemes where one can invest small amounts yet yield decent returns.

While these plans are not categorised by any official investment institutes, they hold substantial value for individuals seeking flexibility and moderate returns. It is crucial to remember that investments are instrumental in wealth accumulation and financial security, thus emphasising the importance of making informed decisions.

Decoding Small Investment Plans

Small investment plans allow individuals to allocate minimal amounts of money into various schemes, which can, over time, yield satisfactory returns. These plans make for a perfect fit for individuals who are willing to invest but are apprehensive about exposing their finances to the volatile and high-risk markets, or are reluctant to invest substantial sums at once.

Such plans are particularly advantageous for those who prefer a more cautious approach and wish to tread lightly in the investment world. This is because these investment plans help people participate in the investment domain without the intense pressure and anxiety that often accompany high-risk, high-reward investments.

The concept behind these plans is to make investing more approachable and less intimidating. It's about facilitating financial growth — however moderate it might be — for those who are hesitant or new to the investment realm. They provide individuals with a sense of security and control over their financial decisions and future.

List of Small Investment Plans

Mentioned below are some of the best small investment plans -

Systematic Investment Plan (SIP)

A systematic investment plan, or SIP, allows individuals to invest specific sums of money at regular intervals into a mutual fund scheme of their choice. It’s crucial to clarify that SIP itself is not a mutual fund but rather a mode of investing in one. 

This approach can be started with amounts as low as INR 500 or INR 100, making it accessible for many.

Salient Features

• Flexible Investment: An SIP offers the flexibility to invest small amounts at regular intervals
• Low Entry Point: Can be started with as low as INR 100 or INR 500
• Disciplined Saving: Encourages regular and disciplined saving habits
• Risk Mitigation: Reduces risk through rupee cost averaging
• Diverse Portfolio: Allows investment in multiple mutual fund schemes

Public Provident Fund (PPF)

Public Provident Fund is a popular choice among small investors owing to its triad of benefits: retirement savings, guaranteed returns, and investment security. It’s a government-backed scheme, making it a secure long-term saving option that starts with a deposit of INR 100.

Key Features

• Government Backed: Ensures investment security
• Long-Term Savings: Suitable for retirement planning
• Guaranteed Returns: Offers assured returns on investments
• Low Investment: Can be started with a minimum deposit of INR 100

Senior Citizens Saving Scheme (SCSS)

Senior Citizens Saving Scheme is a reliable investment avenue for senior citizens above 60, providing secure and long-term saving options with several benefits. It’s available through banks and post offices nationwide, with an initial term of 5 years that can be extended by 3 more years.

Salient Features

• Age Restriction: Exclusively for senior citizens above 60
• Extendable Term: Initial term of 5 years with a provision to extend for 3 more years
• Government-Backed: Ensures safety and reliability of the investment
• Fixed Interest: Provides stability with fixed interest rates
• Accessible: Available through certified banks and post offices

Post Office Monthly Income Scheme (POMIS)

POMIS, formulated by Indian Post, mandates saving a certain amount monthly, to which interest is then added and paid out monthly. For POMIS, the government fixes the interest rates and can revise them quarterly.

Key Features

• Regular Income: Provides a steady income every month
• Government Formulated: Ensures reliability and stability
• Fixed Interest Rates: Interest rates are determined by the government and are stable
• Revision Possibility: Interest rates can be revised on a quarterly basis
• Low-Risk Profile: Suitable for investors with a low-risk tolerance

National Savings Certificate (NSC)

National Savings Certificate is a fixed income investment scheme that allows investments through any Indian post office. It’s a savings bond initiated by the Indian government, focusing on small investors and offering tax benefits.

Salient Features

• Fixed Income Investment: Offers a stable income through fixed interest
• Government Initiative: Provides reliability and security of the investment
• Flexible Purchasing: Can be bought for self, minor, or another adult as joint holding
• Five-Year Maturity: Comes with a standard maturity period of five years

Each plan within this list has its own unique set of features and benefits, with the suitability of each option depending on the individual investor’s financial situation, goals, risk tolerance, and investment horizon.

Other Key Details of Small Investment Plans

Small investment plans are structured to provide various options for individuals looking to initiate their investment journeys with smaller amounts. They have different minimum initial deposit and investment amount requirements, catering to diverse financial capacities and goals.

Given below is a concise table showcasing the various small investment plans along with their respective initial deposit and minimum investment amounts to help potential investors make informed decisions -

Investment Takeaway

The essence of good financial planning lies predominantly in judicious investment. In this article, we explored the myriad of small investment plans in India that can help you make an informed investment decision. These plans, characterised by their minimal investment requirements, are powerful tools designed for wealth accumulation over time, making them indispensable for individuals with limited financial resources or those wary of high-risk markets.

With options ranging from Systematic Investment Plans (SIPs) that allow disciplined and regular savings to secure and government-backed options like the Public Provident Fund (PPF) and Senior Citizens Saving Scheme (SCSS), there's a diversity to meet varied investor needs and preferences. By making these investments, even the most risk-averse individuals can experience financial growth and secure their future while navigating inflation and economic uncertainties.

With that said, potential investors should approach these plans with a clear understanding of their financial goals, risk tolerance, and investment horizon. This part is necessary to select the most suitable plan for optimal benefits and financial security in the long run.