To invest for the long term means purchasing assets and holding onto them for more than five years, taking into account the investor’s risk tolerance. Stocks, bonds, mutual funds, real estate, and retirement accounts are common long-term investment options that offer compounding benefits, minimize short-term volatility, and provide tax advantages. Long-term investments consist of both fixed-income options like fixed deposit accounts, and market-based returns like equity investments.

1. Invest in Post Office Monthly Income Scheme
India Post’s Post Office Monthly Income Scheme (POMIS) is a government-backed investment scheme that provides a steady source of income for individuals who are averse to taking risks. It is one of the popular post office investment schemes available in India.

The scheme currently offers an annual interest rate of 7.4%, which is paid out monthly. The deposit period for this plan is five years, and individuals can invest up to ₹9 lakh, while joint accounts can invest up to ₹15 lakh. One can start investing in this scheme with as little as ₹1,000.

Once the investment matures, the amount can be reinvested for another five years. This investment scheme is an excellent choice for individuals who are looking for a consistent source of regular income. It is a safe and reliable investment option backed by the Indian government.

Key Features of the POMIS scheme:

a) Maturity period- 5 years.

b) Number of holders- Min. 1 and at max 3 individuals can hold post office MIS (Monthly Income Scheme).

c) Nomination- Only the nominee will get all scheme benefits after the investor’s demise. Nominee can be assigned later after opening an account safe as like our bank accounts.

d) Transfer- Anywhere in India – One Post office to any other PO in India.

e) Taxability- Any income from this scheme does not come under TDS or tax deduction. The post office monthly income scheme tax benefit is zero.

Benefits:

The Post Office Monthly Income Scheme (POMIS) is a low-risk investment plan that offers capital protection to investors. It has a minimum lock-in period of 5 years, and the investment can be withdrawn after maturity. The scheme offers monthly interest payouts and is an affordable investment option that can be started with a low capital investment.

POMIS protects investors against high inflation and provides pre-defined monthly interest. The scheme is easily managed through online banking services, including deposits and withdrawals.

This scheme is best suited for risk-averse investors seeking regular monthly income. It is also an ideal option for long-term investment and portfolio diversification. For senior citizens, POMIS is a preferred investment plan due to its guaranteed monthly income and capital protection.

Overall, the Post Office Monthly Income Scheme is an excellent investment option for those seeking low-risk investments with regular income and capital protection.

2. Invest in Government Long Term Bonds/Gold bonds/Securities.
Government Long Term bonds are sovereign or treasury bonds issued by the government to raise funds for various purposes such as infrastructure development or other expenses. These bonds offer a fixed interest rate and have a maturity date ranging from a few months to several years. Upon maturity, the bond’s principal amount is returned to the investor along with the earned interest. It is a reliable and profitable investment option that provides guaranteed returns based on fixed or variable terms.

Investing in government bonds is considered a safe option because the government is a dependable borrower and is unlikely to default on its debt obligations. Compared to fixed deposits in banks, government bonds are a better investment option due to the higher returns they offer. They are a good choice for individuals seeking a secure investment with stable returns.
Types of Govt Bonds-

Fixed Rate Bonds, Sovereign Gold Bonds (SGB), Inflation-Indexed Bonds, PSU Bonds and Zero-Coupon Bonds. These bonds are highly liquid and some of them are being traded in Stock Exchanges too means you can buy and sell them on secondary markets.

3. Invest in Monthly Income Plan Mutual Fund
A monthly income plan (MIP) is a type of investment in mutual funds that focuses on generating cash flows and preserving capital. Instead of reinvesting the profits, you have the option to receive regular income at specified intervals. However, using a Systematic Withdrawal Plan (SWP) could be a better alternative for generating regular income through mutual funds. SWP is the opposite of Systematic Investment Plan (SIP), where you invest in mutual funds in instalments. In an SWP, you withdraw funds from your mutual fund investments and transfer them to your bank account to receive regular payouts. This requires a lump sum investment initially, which is then utilized to generate income through the SWP.

4. Invest in Real Estate
Real estate rental income is a popular and traditional investment option that can provide recurring returns. You can generate rental income from various types of properties, such as corporate offices, shops, agricultural land, shared office spaces, and more. However, investing in such high-budget properties may not be feasible for everyone. This is where Real Estate Investment Trusts (REITs) come in handy.

REITs are companies that own and operate real estate properties to generate income. These corporations manage high-value real estate portfolios and mortgages, lease properties, and collect rent. The collected rent is then distributed among shareholders as income and dividends. REITs offer an opportunity to invest in real estate with lower capital requirements and without the hassles of property management.

Investing in REITs has several advantages, including liquidity, diversification, and professional management. Additionally, REITs can provide regular income and long-term capital appreciation. Before investing in REITs, it is crucial to consider factors such as the type of property, location, management, and fees.

Overall, REITs offer a convenient and accessible way to invest in real estate and earn rental income without having to own and manage properties personally.

5. High dividend paying stocks
To generate a steady income from your investments, dividend-paying stocks can be a good option, but it comes with higher risk. Dividends are a portion of the profits that companies distribute among their shareholders. While dividends can be a source of income, it is important to carefully analyze the company’s financials before investing.

When considering high dividend-paying stocks, it’s important to look at the yield ratio, which shows how much of the company’s earnings are paid to shareholders versus reinvested back into the business. Also, consider the risk potential and your own risk appetite before investing.

Investing in high dividend-paying stocks can help diversify your portfolio and are generally considered safer during market declines. However, it’s crucial to analyze the company’s fundamentals rather than just looking at the dividend yield. Some of the high dividend-paying stocks from the Nifty 50 include GAIL, Hindustan Zinc, Tata Steel, Bajaj Auto, Hero MotoCorp, HCL Technologies, Tech Mahindra and JSW Steel.

6. Systematic Withdrawal Plan
A systematic withdrawal plan (SWP) is a strategy for scheduled withdrawals from a mutual fund account, usually utilized during retirement but not limited to it. It allows investors to withdraw a fixed amount regularly, with options to choose the frequency and amount of withdrawal based on their financial needs.

One can also opt to withdraw only the gains on their investment, keeping the initial capital invested. On the set date, the units in the investor’s portfolio are sold, and the funds are transferred to their account.

There are several reasons why one should consider an SWP. Firstly, it can serve as a reliable secondary source of income, which is crucial in today’s times to combat rising costs of living. Additionally, an SWP can be utilized to create a pension, regardless of whether an individual has a pension plan or not. By investing in a mutual fund scheme based on their risk tolerance around five years before retirement and starting an SWP after retirement, they can create their own pension.

For investors who are risk-averse, Arbitrage Mutual Fund Schemes offer a low-risk option with assured returns. One can opt for the dividend option and invest the dividend in a debt scheme using a SIP. Eventually, they can start an SWP and earn regular income without risking their capital.

7. Corporate Deposits
To put it simply, corporate deposits are fixed-term investments offered by non-banking financial companies and other institutions that provide a higher rate of interest compared to regular bank fixed deposits. Investors can choose from maturities ranging from a few months to a few years. Before investing, it’s important to consider the company’s background, repayment history, and credit rating. Some of the top corporate FDs include Bajaj Finserv, HDFC, ICICI Home Finance, LIC Housing Finance, PNB Housing, Mahindra Finance FD, Shriram Transport Finance FD, and Sundaram Finance Company FD. Tax implications are applicable based on the investor’s tax slab.