Before investing, you must keep things in your mind and then do research. Must ask a few below questions to yourself while researching and investing:-
What will be the condition of the economy in the next 3 to 5 years? Will the economy revive in the next 3 years?
What are the government’s finance policies towards business, trading, import and export strategies, etc.?
Keep track of external factors like worldwide instability and cash stream.
Execution of OROP (One Rank One Pension) and seventh Pay Commission.
Shortlist midcap stocks and stocks which can turn out to be large-cap stocks.
Note down their answers on one sheet and keep it saved with you. A good and veteran stock market broker in India can also help investors to put their money in the best sectors and companies to gain a high ROI.
How Long-term Investment is Beneficial?
Avails Compound Interest – Compounding means interest over interest. It doubles investor money in less time. Therefore, in long-term investments, the investor gets a very high return.
Tax Benefits on Capital Gains – This is also a big benefit of making a long-time investment plan in that you pay less tax. If an investment of less than a year is known as a short-time investment and carried a top marginal tax rate. The tax rate on short-time investment lies between 10% to 39% whereas, on long-time investment, the tax rate could be 0%, 15%, or 20% depending on your income.
No Stress Level – Once you have made a good choice of investment for a long time and know that you will get high returns will make you relaxed and stress-free. Making investments in good companies for a long-time makes the stocks less volatile and hence less stressful.
How to Select the Sectors to Invest Savings?
Always invest your money in growing sectors therefore, search for those sectors that have been performing the best and carry good growth potential in the coming years.
The Top Sectors for Long Term Investment in India
1> Information Technology (IT)
Since Google and the internet evolved, the growth in information technology has taken place drastically. Most businesses have been dependent on software and applications since technology evolved. It has also been used more since the JIO emerged. Even people from rural areas also started to do online shopping, using social networking sites and software applications due to which growth in information technology has been taking place tremendously, which indicates good growth potential in information technology in the upcoming years and therefore, investing in information technology for the long term will be good.
2> FMCG (Fast-moving consumer goods)
FMCG is an evergreen sector because the need for basic things like bathroom materials, basic home essentials, kitchen essentials, etc. can never be stopped. FMCG products have been the need of all time; therefore, it has been a safe sector to invest in for a long time with the FMCGs industry.
3> Healthcare & Pharma (Pharmaceuticals)
India has been the largest exporter of medicines and drugs in the world, and the pandemic increased the demand for medicines and vaccines tremendously. The pharma sector for the last many years was under a bear market which turned into a bull market due to COVID-19. The government also runs many health campaigns to keep the people aware of health, like mass check-ups, vaccinations, awareness of personal hygiene, blood pressure, and diabetes health programs. Apart from this, the need for medicines now and then is required by the people and because of the pandemic, the need for medicine increased more, which shows growth in the pharmaceutical industry are also more; therefore, investing in the pharmaceutical sector will be a good choice of investment.
As India is a developing country, therefore, a lot of construction development keeps going in the public and private sectors. The government keeps developing new airports, railway stations, metro projects, redevelopment of housing societies, new offices and buildings for the people, therefore, the need for demand and growth of infrastructure companies will be there in coming next 10 years and hence investing in an infrastructure company for the long -term will be highly beneficial.
5> Housing finance companies
As previously mentioned that India is a developing country which implies that a lot of infrastructure development will take place; companies will require financial or capital help for which they need to contact housing finance companies. Also, remember that the NPA (A non-performing asset is a loan for which the principal or interest installment stayed late for a time of 90 days) is around 13% for banks and just around 1% for housing finance companies, which demonstrates that the housing finance companies have a better administration. Housing finance companies have good potential growth and better management; therefore, investing in housing finance companies is a good choice.
The need for automobiles, whether it is two-wheelers or four-wheelers, has been increasing constantly for the last ten years. Implementing OROP (One Rank One Pension) and the 7th Pay Commission will increase urban consumption. As per the reports, it is foretelling that there will be 100 million electric vehicles by 2030. Automobile Industries are also coming up with the latest EVs, batteries, new vehicle designs, etc. due to which the automobiles sector is on hype, and the potential of shares to go up is visible.
Also Read: Top 7 Electric Vehicle (EV) Stocks in India
7> Energy and Power Industry
Energy utilities industries are the best sectors to invest in because it is a never-ending demand sector all over the world. To run their home appliances, vehicles, trains, and planes, people require fuels, electricity, solar energy, coal, oil, gas – LPG, and CNG in their day-to-day life. Nations also require fuel in abundance to arm an army and their weapons; hence it is the safest and best sector to invest in long-term.
8> Textile Industry
If we don’t consider fashion and trends but still the need for clothes is the basic need of everyone. If we exclude the fashion industry, then the overall textile sectors that include the production and processing of raw materials like cotton, linen, silk, etc. offer good investment options.
To invest in any of the above top sectors, investors first require a Demat account. Always choose the reputed stock market brokers that can help you to open a free Demat account and guide you to put your hard-earned cash in the right place.
SMC Global Securities Ltd is one of the leading financial service provider companies since 1990, offering its products and services all over India. Their major products and services include Broking (Equity, Commodity, and Currency), Distribution of IPOs, Mutual Funds, Fixed Deposits, Life Insurance, General Insurance, Financing, Depository Services, Wealth Management, Research, Real Estate Advisory, etc. To know more about SMC Global, you may check their website and social platforms.