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PPF, NPS and health insurance are safe bets for decent interest and very low or null risk
If you're thinking about investing in market, then I'd recommend looking into IPOs for listing gains, or debt or liquid MFs for low risk good gains. However, you need to really research about it before investing.
You should begin by asking:
1. Do you have a loan to be repaid?
2. Do you have Health insurance?
3. Do you have dependents? If yes, then do you have a term life insurance?
4. Have you built a Emergency fund? (12*1 month avg living expense)
5. Have you started a retirement fund? (10-20% of your take home invested in growth avenues like Equity MFs or Equity Shares)
If above 5 are taken care of then go ahead with building “6. General investment fund”, where you can invest 50% in fixed income products like FDs or Debt MF and the rest 50% can be invested in Index MFs.
It depends on your financial goals, your time horizon (when you want the money back) and your risk taking ability.
In general, if you can take moderate to high risks, you can use Mutual Funds. Debt Mutual Funds for shorter durations (upto 5-6 years) and Equity Mutual Funds for longer durations. It would be advisable not to invest entire amount in one lumpsum. First park the money in a Liquid Fund, and then, systematically transfer it to your preferred funds over a 9-12 month period.
FDs are a no-no, as the returns do not even beat inflation.
Other options could be PPF and NPS (if your investment duration is very long 15+ yrs).
Unless you are yourself confident or have a reliable equity advisor, do not venture directly into equity markets.
Start post office ppf it comes under 80c
Contribute to nps it comes under 80d
Take life insurance and health insurance it comes under 80ccd
Contibute to charity it comes under 80g
mutual fund and nps