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12 Best Safe and low-risk investment options in India

When it comes to investment in India, there is no dearth of opportunities to help your money grow. Making judicious investments is an important part of an individual’s financial planning with long term perspective and objectives in mind. It is not that, sometimes short term investment options are also required to serve a specific purpose, but the long term investment really works towards your wealth creation, leaving you with a healthy corpus to fulfill your future dreams and goals. Investments are dependent on your financial objectives and risk appetite. Most Indians are averse to high-risk investment options, but even for them there are excellent low-risk options that will help your money grow in the long run.

Benefits of Investments:

It needs no stressing that the active professional or earning life is not perpetual. It is through best investment plans that you secure your future financially, literally saving for a rainy day. With such a critical issue in mind, you need to devise a blueprint defining your financial goals and aspirations. The key benefits you can reap form judicious investment options are:

  • You unlock your investible funds and prioritize your income and expenses.
  • You can look forward to meeting your financial goals during different life stages.
  • You are able to provide for financial crisis and emergencies.
  • You help your money grow with inflation adjusted
  • You enjoy the benefit of compounding.
  • You can plan for a comfortable and peaceful retired life.
  • You can do tax planning appropriately and save on your tax liabilities.
  • You need to remember that every tax saving is also your return on investment.

12 Investment options in India:

Let us now evaluate 12 of the best, safe and low-risk investment options in India that will help you in the creation of wealth.

  • Bank Fixed Deposits: It is one of the safest investment options in India ensuring easy liquidity. You get a wide choice of tenures beginning from 7 days to 10 years at the maximum. The rate of interest also varies depending on the term of deposit. Further, you have a choice of different variants of fixed deposits. To name a few:
  1. Short Deposits: The tenure of this type of deposit is from 7 days to less than 1 year.
  2. Double Benefit Deposit: This deposit has a tenure of 1 year to 10 years, affording the benefit of compounding, hence the name. It may vary from bank to bank.
  3. Monthly / Quarterly Income Deposit: Such deposits payout interest monthly or quarterly as the name suggests.

Bank fixed deposits are covered by DICGC for Rs.1 lakh. The interest earned up to Rs.40000 is TDS exempt, which is Rs.50000 in the case of Senior Citizens.

  • Sweep Fixed Deposit: This is a 2 in 1 savings account in your bank, when the balance exceeding the threshold limit is converted into a fixed deposit for a term desired by you. The sweep in and out is system controlled, thereby ensuring easy liquidity that is the hallmark of a savings account, yet enjoying the rate of interest applicable to fixed deposits.
  • Recurring Deposits: This scheme is available in banks and post offices where you save a fixed sum every month for a period spanning 6 months to 10 years. The applicable rate of interest is the same as fixed deposits.
  • Public Provident Fund: It is a government sponsored scheme for the tenure of 15 years. It can be opened in all banks and designated post offices. The minimum deposit in a financial year Rs.500 while the maximum is restricted to Rs.1.5 lakhs. The best part is an investment in PPF is fully tax-exempt in Section 80C of the Income Tax Act, 1961. The maturity value also is tax-free.
  • Life Insurance: This is one of the primary investment options in India. You can buy an Endowment or ULIP plan, which will not only cover your life risk but also help you build a corpus over time. The investment as well as the maturity amounts ate tax-exempt in Section 80C and Section 10 (10D) respectively of the IT Act, 1961
  • National Pension Scheme: This is a government sponsored scheme open to all Indian citizens between the ages of 18 and 60 years. There are 2 kinds of accounts – Tier II & Tier I, in which the basic difference is in the withdrawal of funds. Tier I account is locked till retirement at 60 years and the minimum contribution per year is Rs.500. While partial withdrawal is allowed in Tier II account with a minimum contribution of Rs. 1000. NPS investment is tax exempt in Section 80C of IT Act, 1961.
  • Debt Mutual Funds: Investment options in Debt Fund matches low-risk profile as the investment is directed towards fixed income government securities, treasury bills, bonds and money market instruments. You can park your money here both for the short and long terms.
  • National Savings Certificate: It is a government sponsored scheme issued by the Post Offices. It is for a fixed tenure of 5 and 10 years with guaranteed returns. Additionally, you get tax exemption under Section 80C of the IT Act, 1961.
  • Sukanya Samriddhi Account: This is also a government sponsored scheme aimed to build a corpus for the education of the girl child. The investment in this scheme is tax exempt in Section 80C of the IT act 1961. The rate of interest is controlled by the government which is declared every quarter.
  • Senior Citizen Savings Scheme: This is a government sponsored scheme where the senior citizens can park their funds for a maximum of Rs.15 lakhs. The current rate of interest applicable from 1st January 2019 for the first quarter is 8.7%.
  • Fixed Maturity Plans: These are Mutual Fund units invested in various fixed income bonds, banks deposits, certificate of deposits etc. generally for short periods. It attracts capital gains tax and is considered to be low risk and safe.
  • Sovereign Gold Bonds: A government sponsored scheme issued by the RBI, it is sold in units of 1gm and its multiples at the market rate of gold. Additionally, you are paid interest of 2.5% half yearly. The market rate will apply on redemption, which normally appreciates substantially.

Bottom Line:

The investment options that have been discussed cover a wide range of sectors. However, the emphasis has been to ensure that the investment options are safe, low risk, yet that offer the best possible returns, both for the short term and long term. It is aimed at catering to the conservative investor with a wide array of products.