Best Safe Investment Options In India
Last Updated: Nov -13-2019
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Safety simply means zero risks or zero accidents. Similarly, safe investment means an investment which does not involve any risks. When it comes to managing money, people look for investment options that offer high returns but have low risks involved. The reality is that there is no such investment which has low risks and high returns. It is always high risk, high returns or low risk, low returns. It depends on the risk-taking capacity of the individual that can help him choose the best investment option for himself or herself.
Investment products can be categorized into two classes.
Financial Assets – Includes market-linked products like stocks, mutual funds, and fixed income products like Public Provident Fund and Bank Fixed Deposits.
Non-Financial Assets – Includes investment in Gold and Real estate.
Most often old-aged retired personnel opt for safe investments as in their age they do not want to face any risks related to their money. There are some young individuals who also opt for safe investments as they have low risk-taking capacity. It is a good habit to always match your risk-taking capacity with the available investment options so that you have no surprises waiting for you.
In this blog, we will look at some of the top safe investment options available in India.
1. KTDFC Fixed Deposits
There are one of the safest deposits. Backed by the Government of Kerala, you can gain an interest as much as 8.75% for senior citizens and 8.5% for others for a duration of maximum 3 years. The company does not work with Brokers hence most of the work has to be done by the customers themselves. Although it is a safe bet; however, it is recommended not to invest for longer duration.
2. Mahindra Finance FDS
This FD offers an interest rate of 9% per annum. This is applicable only if the FD is above the tenure of 33 and 40 months. Tenure lower than that will fetch you low interest rates. This is a good and safe option for long-term investment. One thing to note is that one must consider online investment only, else the interest rate drops to 8.80% if not invested online.
3. Monthly Income Scheme
The monthly income scheme offered by the post office is one safe investment option which is fully taxable. In addition, the investment does not attract TDS, which makes the returns low. At present, the interest rate offered is 7.8%. Since this scheme is powered by the Government of India, the interest rates change every quarter.
4. Public Provident Fund (PPF)
This is one of the most preferred investment choices of salaried individuals. There are several reasons behind this. Firstly, the interest income is not taxable and secondly, individuals can avail tax benefits under Sec 80C of the Income Tax Act. The current interest rate is 8 percent. It is a great option for long-term investment and a great way to save for your retirement. The only negative about PPF is that it has a lock-in period and one is not allowed to withdraw funds. 50% of the accumulated amount can be removed from the account in case of emergencies only after the completion of minimum 5 years.
5. Senior Citizens Savings Scheme
This scheme can be opened at the post office or at banks like ICICI, SBI, etc. Currently the interest rate is 8.7% and is a safe investment option exclusively for senior citizens only. The interest rates are continuously monitored by the Government of India. One negative about the scheme is that there are no tax benefits. A TDS is applicable on the deposits made under this scheme.
6. Sukanya Samriddhi Account
This scheme has a social purpose underneath – To encourage the education of girl child. It offers tax benefits under Sec 80C of the Income Tax Act. The scheme has a long holding tenure and currently offers an interest rate of 8.5% per annum. This account can be easily opened at the post office or any of the commercial banks. However, one must understand the locking period and other details of the account before making an investment.
7. Tax Saving Fixed Deposits
As the name suggests, this fixed deposit offers tax benefits under Sec 80C of the Income Tax Act. You can deduct the invested amount from your taxable amount, which will lower your tax liability. However, if your income exceeds Rs 10,000 in a financial year, then a TDS would be applicable. The interest rates vary from 6% to 7.5%. SBI offers a 5-year tax saving fixed deposit rate of 6.75%. DCB offers the highest interest rates of 7.2% on this.
8. Fixed Maturity Plans (FMPs)
This type of investment has a low tenure, generally less than a year. The amount is safely invested in AAA rated instruments. These are not tax free and investor needs to pay the taxes applicable. However, it is one of the safest investment options with low tenure.
9. Post Office Recurring Deposits
The post office RDs are a safe investment options for investors who are willing to invest for a long tenure. They are taxable but also relatively safe. We suggest that if you wish to reap the benefits out of this scheme, then invest at least for a period of 5 years. Currently the RD fetches an interest of 7.3% per annum for a 5-year tenure.
10. Schemes of Debt Mutual Funds
This is a safe investment scheme for investors looking for long-term investments. The debt mutual funds generally invest your money into safe government bonds, debentures, commercial papers, etc. which are very safe. However, one must be careful about some element of risk involved in the scheme. Opt for the GILT funds that invests your money in safe sovereign government owner securities.
11. Sovereign Gold Bonds (SGBs)
Needless to say, this involves investment in gold which is considered to be one of the safest investment options. These securities are denominated in units of gold (grams) and issued by the RBI on behalf of the Government of India. One can also easily invest through online medium availing a discount of Rs 50. Once the bonds are matured, the investor can redeem them in cash. If the market price of gold increases at the time of bonds’ maturity, or if the investor applies for premature redemption, then the investor will be eligible for periodic interest payment at the rate of 2.5% per annum payable semi-annually. In addition, the investor need not worry about the purity of gold and making charges. Retail investors are allowed to invest a maximum of 4kgs of gold in a financial year, while trusts and similar entities can invest upto 20kgs.
12. FDs of TN Power Finance
This is another safe investment option which offers an interest rate of 8.25% for a tenure of 36, 48, and 50 months. Senior citizens get an interest rate of 8.75% which is a good bet. However, all the investments here are taxable.
In addition to the above-mentioned investment options, smaller banks also tend to offer safe investment options. Small finance banks like Jana Small Finance Bank offers an interest rate of 9% for three years, which is not at all bad. Real estate is another such safe investment option which comes under the category of non-financial assets. Although it is a non-liquefiable investment, it offers a satisfaction of its own. One can receive returns in the form of capital appreciation and rentals.
One must be careful in all possible ways before making any financial investment. One must also remember that every investment involves some kind of risk. Some may offer big risks, while other safer options may include minor risks. So, be ready to face whatever comes your way if you wish to get good returns from your financial investments.
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