Investment options in India: how each one works

What are the main investment options in India?

The main options are bank and company deposits, post office savings schemes such as PPF, mutual funds, NPS, gold, bonds, shares and property. They differ in who stands behind your money, how long it is locked in, how quickly you can get it back and how the return is taxed.

Looking beyond an FD? The table sets every option side by side.

A lock-in is a period when you cannot take your money out. A slab rate is the tax rate for your income band. The old regime is the version of income tax that allows deductions such as section 123 (the old Section 80C).

An ETF is a fund whose units trade on the exchange, and an FoF invests at least 95% in an ETF's units. T-bills are short-term government debt. A long-term gain is profit after the holding period shown, a short-term gain profit before it. Small amounts: ways to invest ₹1,000.

Which investments are backed by the government?

Post office savings schemes and government securities are the Government of India's own borrowing. The RBI says government securities carry practically no risk of default, but their price can move with interest rates before maturity.

DICGC deposit insurance does not apply to post office schemes. The MIS (monthly income scheme) pays interest every month and the SCSS (Senior Citizens Savings Scheme) every quarter. See monthly income from mutual funds.

For 1 October to 31 December 2026, PPF pays 7.1% and the National Savings Certificate (NSC) 7.7%. A time deposit, MIS, SCSS, NSC or KVP locks in the rate on the day you open it. PPF and Sukanya Samriddhi move with each quarter's rate.

NRIs cannot open new post office accounts or buy NSC or KVP. For a girl under 10, Sukanya Samriddhi takes ₹250 to ₹1,50,000 a year. PPF can also be opened in a child's name, but it shares the parent's ₹1,50,000 limit. See post office schemes for a child.

RBI Retail Direct lets you open a free government securities account using your PAN and Indian bank account, and bid from ₹10,000 in auctions. See post office savings schemes, NSC and KVP and treasury bills.

What is the difference between a bank FD and a company FD?

A bank FD is insured by DICGC up to ₹5 lakh per depositor per bank. A company or NBFC deposit has no such cover.

A bank FD of ₹1 crore or less can be broken early. You get the lower rate for the shorter period, minus any penalty the bank told you about when you opened it.

An NBFC is a non-banking finance company. RBI lets an NBFC take public deposits only if it holds at least a BBB- credit rating for them, renewed every year. The deposits run 12 to 60 months, at no more than 12.5% a year. A credit rating is a rating agency's opinion on whether a debt will be repaid in full and on time. A tax-saving FD is a 5-year bank deposit of ₹100 to ₹1.5 lakh a year that counts towards section 123 (the old Section 80C) under the old regime. You can't withdraw it before five years, except by a nominee after the holder's death. Koshex offers fixed deposits, bank and corporate, from ₹10,000, and tax-saving fixed deposits. See fixed deposits, how safe each kind is and FD taxation.

What do mutual funds offer?

A mutual fund is a pool of money from many people, invested by a professional manager under SEBI rules. Equity funds mainly hold shares, debt funds hold loans to governments, banks and companies, and hybrid funds mix the two.

Every fund shows SEBI's riskometer, a label on six levels from Low to Very High. The price of one unit is the NAV. Redemption, selling units back to the fund, pays out within 3 working days, or 5 for funds with at least 80% overseas. A SIP puts in a fixed amount at regular intervals. You can start a SIP or one-time investment from ₹100 in the Koshex app. Koshex, an app run by an AMFI-registered mutual fund distributor, offers regular plans and helps you choose a fund that suits your goal and timeline.

Tax depends on the type. Equity-oriented funds, those with at least 65% in Indian listed shares, pay 20% on units sold within 12 months. Their long-term gains above ₹1,25,000 a year pay 12.5%. A fund with more than 65% in debt and money market instruments is a Specified Mutual Fund. Its units bought on or after 1 April 2023 are taxed at your slab rate, whatever the holding period.

See the equity, debt, hybrid, gold and silver pages and tax on redemption.

How do NPS and PPF work for long-term money?

Both are built for decades: PPF runs 15 years, and NPS normally until exit at 15 years or age 60. NPS returns are market-linked, in shares, corporate bonds and government securities. No return is fixed.

For a non-government subscriber, at normal exit, at least 20% goes into an annuity, which pays a regular income, and up to 80% can come out as a lump sum. A premature exit needs at least 80% in an annuity, or full withdrawal if the corpus is ₹5 lakh or less.

Your own contributions count under section 123 (the old Section 80C) within ₹1.5 lakh. Up to ₹50,000 more counts under section 124(3), which replaced 80CCD(1B). Both apply under the old regime only. The full list of deductions is in tax deductions.

See PPF, ELSS and NPS for tax saving, opening an NPS account, opening a PPF account and the PPF calculator.

Where do gold, bonds, shares and property fit?

These are bought and sold at market prices, so their value moves.

Digital gold is not regulated by SEBI. In November 2025 SEBI said such products are "neither notified as securities nor regulated as commodity derivatives" and that its investor-protection mechanisms do not apply to them. Gold ETFs and gold mutual funds are SEBI-regulated. Koshex offers digital gold from ₹100, which you can sell at any time, with physical delivery available. See digital gold.

A corporate bond and a debenture are the same thing in Indian law. See bonds, corporate bonds and NCDs and bond taxation.

To buy shares you need a demat account, which holds securities in electronic form, and a trading account with a SEBI-registered stock broker. The long-term share rate needs STT, the securities transaction tax, paid on purchase and sale, with some exceptions. See what to know before trading.

Land and buildings are long-term after 24 months. A REIT, a real estate investment trust, has listed units you can buy one at a time. See REITs in India and real estate versus equity.

How do you choose between them?

It comes down to when you need the money, whether you may need it early, how large a fall you could sit through without selling, and which tax regime you are in.

Take ₹3,00,000 you may need within two years, with no return assumed:

• PPF, ELSS, a tax-saving FD, NSC and KVP: locked longer than two years.
• Post office 5-year time deposit: not before four years. MIS: closable after a year, with 2% of the deposit cut up to year 3, or ₹6,000 on ₹3,00,000.
• NPS: no minimum lock-in, but a premature exit needs at least 80% in an annuity.
• Bank FD of up to ₹1 crore: breakable early at the lower rate for the period run.
• NBFC FD: nothing in the first three months except on death or emergencies; no interest before six months.
• Open-ended mutual fund: proceeds within 3 working days at that day's NAV. A 30% fall would leave ₹3,00,000 at ₹2,10,000 for a while.

The Koshex app runs a risk-profile questionnaire, free. You can use Koshex's net-worth tracking to review your portfolio, and it can include investments you hold outside Koshex.

Read on: how to start investing, short-term investing and risk tolerance.