Best Investment Plan for 5 Years in India 2025

Investment Plans for 5 Years: Options to Explore in 2025

Returns under every investment plan are influenced by many factors, and tenure is one of them. Here are investment plans for a 5-year tenure that you can explore in 2025:

Mutual Funds

Mutual funds are investment instruments that pool money from various investors to invest in a diverse portfolio of assets, including stocks, bonds, and other securities. These are considered a reliable option for investors seeking to expand their profit margins while ensuring stability and minimising risk.

Why Choose Mutual Funds?

• Fund Management: As a novice investor, analysing the market can be overwhelming. Mutual funds are managed by professional fund managers who are responsible for investing your money in high-performing assets.
• Portfolio Diversification: Mutual funds are investments made in a diversified portfolio of multiple assets, allowing you to benefit from diversification and reduce portfolio risk.

Pro Tip: If you are a conservative investor, consider hybrid funds for growing wealth with lower risk. Alternatively, explore large-cap funds for wealth growth with lower risk.

Equity Linked Savings Scheme

This is a type of mutual fund in which a significant portion of your investment is allocated to equity or equity-related assets. ELSS has gained wide popularity for offering capital appreciation and tax benefits.

Why choose ELSS?

• Tax Benefits: Investments under ELSS are eligible for tax deductions under section 80C of the Income Tax Act. Additionally, maturity benefits of up to ₹1 lakh do not constitute capital gains.
• Lock-In Period: ELSS has a three-year lock-in period, making it ideal for short-term investment goals.
• Impressive Returns: ELSS have recorded an average return of 10-12%.

Did You Know that ELSS have marked an inflow of ₹570 crores in 2025?

National Savings Certificate

The National Savings Certificate (NSC) is a government-backed investment instrument, also known as a fixed-income investment scheme. This scheme was introduced by the government primarily for small and mid-income investors seeking safe and steady investment options.

Why Choose NSC?

• Tax Benefits: Investments made under NSC are eligible for tax deductions up to ₹1.5 lakhs under section 80C of the Income Tax Act.
• Lock-In Period: NSC has a lock-in period of 5 years, post which partial withdrawals are allowed.
• Interest Rate: The government pays an annual interest rate of 7.7% on the invested amount.

Did You Know that the interest earned under NSC for the first four years is reinvested, thus making even the interest rate eligible for tax deductions?

Unit-Linked Insurance Plan

Unit-Linked Insurance Plan or ULIP is primarily an insurance plan that also offers market-linked returns, thus allowing you to enjoy dual benefits through a single investment. ULIPs are known for making diversification easier for investors by allowing investments in different types of assets.

Why Choose ULIPs?

• Tax Benefits: You can enjoy tax deductions under section 80C of the Income Tax Act for premiums paid under ULIPs. According to the Union Budget 2025, for premium amounts below ₹2.5 lakhs annually, there are no tax liabilities on the returns. Additionally, the maturity benefits under ULIPs fall under long-term capital gains and are therefore liable for a tax rate of only 10%.
• Lock-In Period: The lock-in period is 5 years.
• Diversification: A ULIP allows you to choose the type of asset you want to invest a portion of your premiums in. Additionally, you can typically switch assets to leverage market conditions.

Liquid Funds

Liquid funds are a type of mutual fund that focuses on high-quality assets. Investments in liquid funds are considered an ideal option for investors looking towards short-term goals and high liquidity.

Why Choose Liquid Funds?

• Liquidity: The maturity period under liquid funds is 91 days, thus allowing you to meet short-term financial goals or reinvest easily.
• Tax Liabilities: The tax implications of holding liquid funds depend on the holding period.
• Dividends: You can benefit from dividends received through liquid funds, and these are taxed as per your tax slab rates.
• Diversification: Liquid funds enable investment in multiple instruments, including commercial papers, treasury bills, and certificates of deposit.

Fixed Maturity Plans

Fixed maturity plans are a type of mutual fund. However, unlike open-ended funds, fixed maturity funds are closed-end debt instruments that are available during a specific period (opening and closing dates as decided by fund houses). The investments made under fixed maturity plans mature along with the scheme and are considered a reliable option for investors looking for stable yet high-return options.

Why Choose Fixed Maturity Plans?

• Impressive Returns: You can benefit from both market-linked returns and dividends.
• Tax Implications: You can claim tax benefits for investments made towards Fixed Maturity Plans if you hold them for at least three years. Following 2014, the government introduced indexation benefits for long-term capital gains.

Over to You

Expanding returns from every investment decision is something we all wish to achieve. The ideal way to make investment decisions is to focus on options that align with personal investment goals and risk tolerance. Given the market scenario so far in 2025, mutual funds, ULIPs, and liquid funds are options worth exploring, especially for 5-year investment goals.

To stay updated on market trends, explore investment options, compare different plans, and more, you can visit Jio Insurance Broking for a seamless and reliable experience.