Introduction
Investment is a good option to witness your money grow over a period of time. For the same, you need to choose one of the best investment plans in India from the many plans available to choose. The numerous plans can confuse you. So, it is better to explore online, do a proper research, consult experts prior to taking decisions of buying a plan.
Investors in India generally look for the Risk-Free Investment Plans when it comes to choosing a suitable plan. Capital protection and handsome return is the key requirement of every investor. It is good to look for safe option with zero or minimal risks. These plans are best-suited plans for individuals concerned about the safety of their hard-earned money.
Here we will also talk about a few risk-free investments. The below detailed options are suitable for the retired people and risk-averse people who avoid taking any kind of risk. There are many advantages of parking your money in the instruments or options that has no impact of market fluctuation.
The List of Safe Investments Options with decent return
| • Public Provident Fund (PPF) |
| • Post Office Monthly Income Scheme (POMIS) |
| • Atal Pension Yojana (APY) |
| • Long Term Government Bonds |
| • Fixed Deposits (FD) |
| • National Savings Certificate (NSC) |
| • Pradhan Mantri Vaya Vandana Yojana (PMVVY) |
| • Senior Citizen Savings Scheme (SCSS) |
| • Sukanya Samriddhi Yojana (SSY) |
More About the risk-free investments in India
1. Fixed Deposits (FD)
There are a good percentage of the Indians who have invested a good amount of money in the Fixed Deposit Scheme of banks and NBFCs which yields meagre returns. You can choose to open your FD with a bank either in a private bank or a nationalised bank or with a non-banking financial company (NBFC). The market condition in India is far better in comparison to the financial markets in many countries. Investors are able to earn comparatively better return on their investments.
Bank Fixed Deposit – Quick Facts
| • The right type of investment option for investors looking for low-risk investment. |
| • Provides guaranteed returns. |
| • Flexibility to do partial withdrawal. |
| • There is a facility for loans. |
| • Bank Fixed Deposit provides higher returns to senior citizens. |
Fixed deposits in the country have become one of the highly preferred instruments for the average person. People prefer to park their surplus money in the risk-free investment plan for short term in India because of several reasons. The highly considerable feature is the liquidity. A FD holder can withdraw money in the time of emergencies without hassle. It is thus, chosen as the right option for emergency fund.
The financial institutions facilitating FDs guarantees accumulated return on maturity along with the principal amount. The rate of interest and return is predictable. It is considered a risk-free investment option but remember that capital protection is limited to 5 lakhs through an insurance. The capital protection limit earlier was one lakh only. You can choose to go for a fixed deposit for a tenure ranging between one month to ten years or even more time. The rate of interest payable varies depending on the tenure, amount, bank type, and fixed deposit type. The interest rates offered by a bank currently range between 3.50% – 9.25% on FDs for senior citizens FDs based on the amount deposited and the chosen tenure.
In case of a regular bank fixed deposit the minimum investment amount is Rs 5,000. Under the Income Tax Act, 1961, the interest earned on a bank fixed deposit is taxable.
A few of the common banks FDs are:
• Cumulative fixed deposits
• Standard fixed deposits with a fixed tenure
• Senior citizen fixed deposits
• Non-cumulative fixed deposits
• Tax-saving fixed deposits
Fixed deposits facilitate premature withdrawal subject to certain charges. Banks also provide you loans and credit cards against your fixed deposits. Experts advice you to compare the fixed deposits of different banks to choose the best suited FD for your investment need.
2. Public Provident Fund (PPF)
PPF in India is another popular saving instrument. It is known to offer the benefit of tax exemptions and guaranteed returns. PPF is the government of India facilitated and managed scheme for the individuals who wish to save for their retirement. You can open your Public Provident Fund (PPF) account in a bank or a post-office. PPF have a tenure of 15 years and can be extended for more time if required. Twelve is the number of investments allowed in a year and the maximum amount allowed in a fiscal year is Rs. 1.5 lakh. You can opt for short term investment plan to meet your short-term financial goals.
PPF – Quick Facts
| • Investment type – long-term |
| • Lock-in-period – 15 years |
| • Minimum investment – INR 500 |
| • Maximum investment – INR 1.5 lakh |
The Public Provident Fund (PPF) is a non-market linked scheme.
You can avail the benefit of tax under Section 80C of the Income Tax Act. The rate of interest offered range between 7% to 8.9%. As far as liquidity is concerned, PPF permits Premature withdrawals after 5 years of opening the PPF account for your particular need. Public Provident Fund (PPF) is an excellent choice for investors looking for a secure investment option.
3. Savings Account offered by Banks
Saving account facility is offered by all commercial banks in the country for the citizens who wish to deposit money in his/her account for easy withdrawal. The money in your saving account can be used for multipurpose. You can use your money in saving to pay for shopping, payments of utility bills, credit card dues, loans, and more. The returns you can expect is 4% annually. It is considered safe and good option for short term deposit. For frequent withdrawal saving account is an ideal choice.
Tips – You can choose to open a saving account in a bank considering the offered interest, minimum balance, and other factors.
4. Post Office Savings Schemes
The postal department in India provides numerous savings schemes option to encourage people develop the habit of investment. It can help your money grow. It provides the returns relatively higher as compared to banks and NBFCs. The process to open a post office saving scheme is easy. You can explore online or visit the post website to learn in detail about the popular post office savings schemes.
More About Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Yojana (SSY) – Quick Facts
| • The rate of interest is fixed by the government. |
| • 7.60% is the interest rate for the fiscal year 2021-22. |
| • It is a tax saving scheme specifically for a girl child. |
| • The girl child should not be above 10 years old. |
| • A single account per girl child is allowed. |
| • A family can secure two girl children under Sukanya Samriddhi Yojana (SSY) scheme. |
People do not prefer to go for the post office savings schemes because of the unavailability of online option for investments in the varied schemes and tracking. To commence your investment journey with a post office scheme, you need to visit the nearest post office in your area.
Tips – You can expect the availability of postal schemes online soon with digitisation taking place in every department.
5. Recurring Deposits (RD)
A recurring deposit is an excellent choice for investors interested in depositing a fixed amount of money at a fixed interval every month. It is similar to a bank FD. The key difference between both is that a FD requires you to deposit the amount in a single time while a recurring deposit requires you to invest the chosen amount generally every month. The monthly amount is deducted automatically from your saving account.
A Recurring deposit unlike a bank fixed deposit provides you guaranteed returns in the form of fixed rate of interest that do not change for the entire duration. The rate of interest ranges from 5.9% to 8.0% depending on the chosen bank for your RD. Premature withdrawals is generally not allowed in case of a recurring deposit. A few banks do allow early withdrawal subject to a penalty charge.
What are the short-term investment plans?
About the Short-term Investment Plans with High Returns in India
Investors today are more concerned about the time period.
We have listed below the top short-term investment plans with high returns in India:
Know About the Long-term Investment Plans with High Returns
When it comes to investment, people in India prefer the investment options that are safe and provide high returns.
Long-term Investment Plans Advantages
• Benefit of compounding
• Help you secure your family financially
• Safe investment option
• Yields high returns
• Help build corpus for self or family
Long-term Investment Plans – Key Objective
• Plan higher education of children
• Fund marriage expenses of children
• Buying a property
• Building corpus for pension or a retirement
• Other long-term financial goals