A pay cheque can rise, yet purchasing power can still slip. Retail inflation was 2.75% in January 2026 under the new CPI series. In the same period, Systematic Investment Plan inflows were ₹31,002 crore. SIP accounts also rose to 10.29 crore, pointing to a broader habit of regular saving and investment mindset. Even “safe” savings have a moving target. EPF interest for 2024–25 was approved at 8.25%. But these options may not cover every goal on their own.
This is where smart choices matter. The aim is not to chase the highest return, but to pick options that fit your income, your timeline, and how much risk you can handle. This blog explains some of the best investment options for a salaried person in India. Let us get into the options and how to build a simple plan that you can actually stick with.
Why Salaried Individuals Need an Investment Plan
A regular paycheque can feel secure, yet priorities, costs and obligations shift quickly. A structured approach keeps decisions coherent. Here are the reasons an investment plan matters for salaried people in India every year.
- Priority mapping– Clear targets for goals like retirement, education and a home, allocate monthly sums, so urgent spending does not dominate.
- Inflation resilience– Rising prices erode cash balances, while diversified avenues can counter that drag and preserve purchasing power.
- Shock absorber– A dedicated contingency fund reduces reliance on debt and prevents forced withdrawals of savings/investments during illness or job disruption.
- Cleaner tax choices– Spreading purchases across the year supports tax saving options and avoids last minute picks that misfit objectives.
Best Investment Options for Salaried Individuals
Here are some of the best investment options for a salaried person in India:
Public Provident Fund (PPF)
PPF is a government-backed savings scheme designed for long-term, low-risk investing. You put money in, earn interest set by the government, and build a pot for goals like retirement.
It has a 15-year maturity (from the end of the year you open it), and you can extend it in 5-year blocks if you want to keep building the corpus.
| Feature | Key point |
| Minimum deposit | ₹500 per year |
| Maximum deposit | ₹1,50,000 per year |
| Deposit frequency | Lump sum/instalments |
| Interest | Set quarterly |
| Interest calculation | Monthly on balance before 5th, credited yearly |
| Loan facility | From 3rd to 6th year |
| Partial withdrawal | After 5 years |
| Premature closure | Allowed only for specific reasons |
| Tax benefit | Eligible under Section 80C |
| Tax on maturity | Fully exempt |
Employee Provident Fund (EPF) & Voluntary Provident Fund (VPF)
EPF is a retirement savings plan for salaried employees, where both you and your employer contribute each month and the money earns interest.
VPF is simply an extra, voluntary top up from your side into the same provident fund account, to build a larger retirement corpus.
| Feature | EPF | VPF |
| Who contributes | Employee and employer | Employee only (extra over EPF) |
| Typical contribution | 12% from employee and 12% from employer | Any higher amount you choose (subject to employer payroll rules) |
| Wage ceiling note | Statutory coverage & contributions are commonly referenced up to ₹15,000 wage ceiling | Extra contribution can be above the normal statutory amount if allowed |
| Interest | 8.25% (FY 2024-25) | Same |
| Access and withdrawals | Withdrawals can be tax free after 5 years of continuous service, or if you transfer when changing jobs | Same |
| Tax angle to remember | Interest on employee contributions above ₹2.5 lakh (₹5 lakh where there is no employer contribution) can become taxable | The same threshold applies since it is also employee contribution |
Bank Fixed Deposits & Recurring Deposits
Both are savings options where the bank pays you a set interest rate for a chosen time. An FD-Fixed Deposit is a one time deposit, while an RD-Recurring Deposit is a fixed monthly deposit that builds a lump sum over time.
| Detail | FD | RD |
| How you invest | One lump sum upfront | Fixed amount every month |
| Tenure | Flexible, chosen at the start | Flexible, chosen at the start |
| Payout | Monthly or quarterly interest, or reinvestment till maturity | Usually paid at maturity (lump sum) |
| Early withdrawal | Allowed in most cases, but penalty can apply | Usually allowed, but penalty can apply |
| Missed payments | Not applicable | Missed instalments can attract a penalty, and some banks may close the RD early |
| Loan against deposit | Commonly available (bank-specific terms) | Same |
| Tax | Interest is taxable as per your slab; TDS can apply if annual interest crosses thresholds | Same |
| TDS threshold (banks) | TDS typically applies if interest exceeds ₹50K in a year, and ₹1 lakh for resident senior citizens | Same thresholds |
| Safety net | Covered under deposit insurance up to ₹5 lakh per depositor per bank (principal + interest) | Same cover |
National Savings Certificate (NSC)
NSC is a government-backed savings scheme you can buy through India Post. It runs for 5 years, and interest is compounded annually and paid on maturity.
| Feature | Details |
| Tenure | 5 years (matures after five years from the deposit date) |
| Interest rate | 7.7% per annum for January to March 2026 |
| How interest works | Compounded annually; interest is credited each year and treated as reinvested up to the end of the fourth year, then paid out at maturity |
| Minimum deposit | ₹1,000, then in multiples of ₹100 |
| Maximum deposit | No upper limit |
| Who can open | Single holder or joint account (up to three adults); can also be opened for a minor through a guardian |
| Where to buy | Post office (and some authorised banks) |
| Tax benefit | Investment qualifies u/s 80C; interest is taxable |
| TDS on interest | TDS does not apply on NSC interest |
| Loan or security | Can be pledged as security (for example, with certain banks) |
Tax‑Saving Investment Options (80C)
Section 80C lets you reduce taxable income by claiming deductions on certain investments and expenses. The combined ceiling for 80C, 80CCC and 80CCD(1) is ₹1.5 lakh in a financial year.
This deduction is generally available only if you choose the old tax regime, since most Chapter VI A deductions (including 80C) are not allowed in the new regime.
Some of the options under 80C are PPF, EPF & VPF, Sukanya Samriddhi, Life insurance premium, and Home loan principal repayment.
Equity Linked Savings Scheme (ELSS)
ELSS is a tax-saving mutual fund that invests mainly in shares, so returns move with the stock market. It comes with a 3-year lock-in, so it suits goals where you can stay invested for at least that long.
| Feature | Details |
| Equity exposure | Predominantly in equity and equity-related instruments |
| Lock-in | 3 years, you cannot redeem before this |
| How to invest | Lump sum or SIP |
| 80C tax benefit | Amount invested can count u/s 80C, within the overall ₹1.5 lakh limit. |
| Risk level | High, as market-linked returns are not guaranteed |
| Tax on gains at redemption | STCG is taxed at 20%; LTCG above ₹1.25 lakh is taxed at 12.5% |
Here is the ELSS category average return as of 5 February 2026 (annualised),
| Period | Category average return |
| 3 years | 17.05% |
| 5 years | 14.97% |
| 10 years | 15.12% |
Tax Saver FDs
A Tax Saver FD is a bank fixed deposit with a mandatory 5-year tenure. It is low-risk and predictable, but your money stays locked in for five years and the interest you earn is taxable.
| Feature | Details |
| Lock-in | Money is locked for 5 years; premature closure is generally not allowed (banks may allow exceptions like death of the depositor) |
| Returns | Interest rate is fixed when you book the FD; payout can be cumulative or periodic (varies by bank) |
| 80C benefit | Qualify for a deduction u/s 80C (subject to rules) |
| Tax on interest | Interest is taxable, and TDS may apply if annual interest crosses limits |
| TDS threshold | Banks typically deduct TDS if interest in a year exceeds ₹50,000 (or ₹1,00,000 for senior citizens) |
| Safety net | Deposits are insured up to ₹5,00,000 per depositor per bank (principal+interest), via Deposit Insurance and Credit Guarantee Corporation |
National Pension System (NPS)
NPS is a long-term retirement plan regulated by Pension Fund Regulatory and Development Authority. It is market-linked, so returns can move up or down, and you get a PRAN (Permanent Retirement Account Number) for lifetime tracking and portability.
| Feature | Details |
| Account types | Tier I is the main retirement account with tax benefits; Tier II is optional with flexible withdrawals and usually no tax benefits. |
| Minimum contribution | Tier I: ₹500 per contribution and ₹1,000 per year. Tier II: ₹1,000 to open and ₹250 per contribution. |
| How money is invested | You can choose Active Choice (set your mix) or Auto Choice (age-based mix). Equity exposure under common schemes is typically capped (for example, equity up to 75% in Active Choice). |
| Partial withdrawals | Allowed after 3 years, up to 25% of your own contributions for specific needs. |
| Exit at retirement (non-government) | Up to 80% lump sum and at least 20% annuity for All Citizen and Corporate models. |
| Small corpus flexibility | If your corpus is up to ₹8 lakh, the rules allow 100% lump sum (or systematic withdrawal options), subject to tax rules. |
| Tax on withdrawal | Up to 60% lump sum at retirement is tax-exempt under section 10(12A); annuity purchase is tax-exempt, but annuity income is taxable when received. |
| Tax deductions (80CCD) | Self-contribution can qualify under 80CCD(1) (within the overall ceiling) plus ₹50,000 extra under 80CCD(1B). Employer contribution can qualify under 80CCD(2). |
Market‑Linked Wealth Creation Options
Market-linked wealth creation options include equity mutual funds, index funds and ETFs, direct shares, listed REITs and InvITs, and market-linked retirement products such as NPS. Here, values move daily with market prices, so returns can be uneven year to year.
Mutual Funds & SIPs
Mutual funds pool money from many investors and invest it in shares, bonds, or a mix, based on the fund’s goal. A SIP is a way to invest in a mutual fund by putting in a fixed amount regularly, instead of investing all at once
| Factors | Mutual Funds | SIPs |
| How you invest | Lump sum or through SIP | Fixed amount weekly, monthly, or quarterly |
| Best for | Goals like wealth building, income, or balance (depends on fund type) | Building wealth steadily with a routine |
| Minimum amount | Varies by fund and plan | Often starts low, but varies by fund and platform |
| Returns | Not fixed, depends on market performance | Not fixed, depends on the chosen fund’s performance |
| Flexibility | You can switch funds, add more, or redeem (rules vary) | You can start, pause, increase, or stop a SIP (platform rules vary) |
| Liquidity | Open-ended funds let you redeem any time, exit load may apply in early period | Same as the fund you pick, SIP does not change the redemption rules |
Equity Mutual Funds & Large‑Cap Funds
Equity mutual funds pool money from many investors & invest it mainly in company shares. They aim for long-term growth, but prices can move up & down sharply in the short term.
Large-cap funds are a type of equity mutual fund that focuses on the biggest listed companies. A large-cap fund typically keeps at least 80% in large-cap shares, and “large-cap” is commonly defined as the top 1 to 100 companies by full market value.
| Period | Category average return (as of 6 February 2026) |
| 1 year | 8.42% |
| 5 years | 13.12% |
| 10 years | 13.95% |
Hybrid & Balanced Funds
Hybrid funds invest in a mix of equity and debt, so they try to balance growth potential with steadier income.
“Balanced” funds usually mean hybrid funds where equity and debt both have a meaningful role in the portfolio.
Here is a simple view of the main hybrid and balanced fund types:
| Fund type | Typical mix |
| Conservative hybrid fund | Equity 10% to 25% Debt 75% to 90% |
| Balanced hybrid fund | Equity 40% to 60% Debt 40% to 60% |
| Aggressive hybrid fund | Equity 65% to 80% Debt 20% to 35% |
| Balanced advantage (dynamic asset allocation) | Equity and debt shift dynamically from 0% to 100% |
| Multi asset allocation | At least 3 asset classes with minimum 10% each |
| Equity savings fund | Equity minimum 65%, debt minimum 10% + hedging via derivatives |
| Arbitrage fund | Uses equity market price differences, balance in debt and money market |
Direct Equity & Shares
Direct equity means buying shares of listed companies in your own name through the stock market. Your returns come from share price changes and, in some cases, dividends, but values can swing sharply in the short term.
| Feature | Direct equity in simple terms |
| What you buy | Shares of a company listed on a stock exchange |
| Where shares are held | In a demat account with a SEBI-registered depository participant |
| How you buy and sell | Through a SEBI-registered stock broker using a trading account |
| Minimum amount | Depends on the share price and the number of shares you buy, plus charges |
| What drives returns | Share price movement and dividends (if declared) |
| Key risks | Market falls, company-specific bad news, and poor diversification |
| Costs to expect | Brokerage and statutory charges such as STT and exchange-related charges (varies by transaction) |
| Corporate actions | You may receive dividends, bonus shares, splits, rights issues, and similar updates as a shareholder |
How to Build a Diversified Portfolio
Diversification means spreading your money across different types of investments so one bad patch does not derail the full plan. It is less about finding the perfect product and more about building a mix that can handle different market conditions.
- Build your base first: Keep an emergency buffer in a savings account or liquid option before you take market risk. Next, separate money by goal timelines.
- Choose an asset mix: Start with a simple split across equity, debt, and other diversifiers like gold. Then adjust the mix based on how long you can stay invested and how comfortable you are with ups and downs.
- Diversify inside each bucket: Within equity, spread across styles and market segments, not just one fund or theme.
- Rebalance on a schedule: Check once or twice a year and bring the mix back to your chosen percentages.
Tax Planning Strategies for Salaried Individuals
Tax planning for salaried people is mostly about two things. Choosing the right tax regime and using the deductions and exemptions you are genuinely eligible for.
- Compare the old vs new regime using your expected income and real deductions.
- The old regime usually works better when you can claim multiple deductions and salary exemptions.
- The new regime allows limited items such as employer NPS contribution under Section 80CCD(2), and home-loan interest under Section 24(b) only in specific cases like let-out property, with restrictions on set-off of loss.
- Submit proofs via payroll, then cross-check Form 16 with your records before filing.
FAQ‘s
There is no single “best” option for every salaried person in India, because it depends on goal timeline, risk comfort, and cash flow.
Over long periods, equity-linked investments (such as direct shares or equity mutual funds) have tended to deliver the highest returns, but they also carry the highest ups and downs. There is no guaranteed “highest return” option, since returns depend on market cycles, time period and risk taken.
A SIP is simply a method to invest a fixed amount regularly into a mutual fund, which many salaried people use because it fits monthly income patterns. It does not guarantee returns and the outcome depends on the fund type, costs, and market performance over time.
Tax saving usually starts with choosing between the old and new tax regimes, since the set of deductions you can claim differs. In the old regime, people commonly use eligible 80C investments, health insurance under 80D and employer NPS contribution under 80CCD(2) where available.
There is no fixed percentage that suits everyone, since it depends on your essentials, existing EMIs, emergency buffer and near-term goals.
Fixed deposits are a low-risk, predictable option that many salaried individuals use for short to medium-term goals and for stability in their overall savings. They typically offer lower return potential than market-linked options, and the interest earned is taxable.
Direct equity means picking and tracking individual shares yourself, while mutual funds spread money across many securities through a managed portfolio. Either can be suitable depending on how much time and skill you can devote, and how comfortable you are with ups and downs, since both are market-linked and can fall in value.
