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To grow your funds and beat inflation, it is crucial to opt for a balanced investment strategy. A key part of this strategy is diversification of your portfolio, which you can achieve by investing in certain high return investments that carry lower risk.
In the Indian financial landscape, a range of government-backed schemes, bank offerings, and debt-based instruments provide opportunities for stable returns. Choosing the right options can help preserve capital while earning reasonable profits over time.
Low risk high return investments refer to financial products that offer reasonable gains with minimal exposure to market volatility. These are especially suitable for conservative investors, retirees, and individuals aiming for capital protection along with steady income.
Key characteristics of these low risk investments include:
No association with high-risk financial instruments
Returns that are generally more stable than aggressive market-linked options
Alignment with short-term or medium-term financial goals
Compounding interest over time in some schemes
Tax deductions under applicable sections of the Income Tax Act, 1961
Such investment avenues include a mix of public savings schemes, fixed-income products, and regulated instruments that balance safety with modest but consistent growth.
Risk and return are two important aspects of an investment option. Generally, most investments that are low risk tend to offer low returns. On the contrary, investment options that are high-risk tend to offer higher returns.
As an investor, it is natural for you to want to invest your hard-earned money in low risk high return investments. But then, investors need to be aware of such options in India. Fortunately, there are many.
Here’s an overview of 12 types of high return investments that you may consider.
A mutual fund is an investment instrument that pools money from multiple investors and invests it in a singular asset or a basket of assets. As the name itself signifies, a debt mutual fund invests the pooled money in debt instruments.
These include government securities, money market instruments, and corporate bonds and debentures. The debt instruments that these mutual funds invest in are fixed-income options – the returns tend to be more stable than what other investments offer.
Although there are a few risks involved relating to interest rate risk and credit risk, they come with relatively low risk. Also, you can reduce the risk further by opting for debt mutual funds that invest in instruments that carry high credit and safety ratings. These features make them suitable for those looking for low risk investments with predictable performance.
The National Pension System (NPS) is a low risk high return investment plan. Established by the Government of India through the Ministry of Finance, it is a long-term retirement-focused savings plan.
In this investment plan, you’re required to make contributions till you attain the age of 60. Once you attain the retirement age, you get to withdraw 60% of your accumulated corpus as a lump sum amount.
The remaining 40% of the corpus is converted into annuity benefits, and you receive regular monthly income for life. The Government of India backs up this plan, and it comes with low risk. Meanwhile, the returns are market-linked and can be anywhere from 8% to 10% or more, making it a suitable option for investors looking for high return investments with long-term potential.
Backed by the Government of India, PPF is a low risk high return investment option that is simple and hassle-free. According to this plan, you’re required to contribute a minimum of ₹500 in a financial year. There’s also a maximum contribution limit of ₹1.5 Lakhs per financial year.
Although the plan comes with a lock-in period of 15 years, you can opt to partially withdraw the corpus. You can do so after the expiry of 5 financial years from the year of account opening. Since the government backs the plan, PPFs are extremely safe.
The current PPF interest rate is 7.1% per annum as per the Ministry of Finance. The interest rate for the plan is fixed by the Government of India and revised every quarter. This makes it a reliable choice among low risk investments with long-term tax-saving benefits.
Fixed deposits have traditionally been one of the most popular low risk investments in India. FDs offer a lot of flexibility in terms of the tenure of the investment and the interest payout frequency. Also, fixed deposits aren’t just offered by banking institutions alone.
In fact, many Non-Banking Financial Corporations (NBFCs) offer this facility as well, often at rates of interest that are more attractive than what many traditional banks provide.
With the recent hike in the repo rates by the Reserve Bank of India, most banks and NBFCs have raised the interest rates on fixed deposits across the board. Also, the risk associated with fixed deposits is very low compared to equity and other market-linked investments.
Fixed deposits offer enhanced safety with insurance coverage of up to ₹5 Lakhs, provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC). In the case of NBFC FDs, you can choose to invest in plans that carry a high credit rating.
As the name signifies, the SCSS is a government-backed low risk investment option for individuals above 60 years of age. You can open an SCSS account at a post office or at a bank. The scheme has a fixed tenure of 5 years, which you can extend for three years.
You can invest a maximum of ₹30 Lakhs as a one-time lump sum investment. You also get to prematurely withdraw the investment before the expiry of the tenure in case it’s necessary.
Currently, the SCSS interest rate is set at 8.2% per annum. Quarterly payment of accumulated interest happens here. You also get to enjoy tax benefits to the tune of ₹1.5 Lakhs under Section 80C of the Income Tax Act, 1961. For senior citizens looking for low risk high return investments, this is one of the most suitable options.
Launched in 2017, the PMVVY is also a long-term investment option with zero investment risk for senior citizens. The returns are also attractive and higher than most other traditional investment options.
The Life Insurance Corporation of India (LIC) operates this investment avenue, and the Government of India backs it up. Similar to SCSS, you can invest a maximum of up to ₹15 Lakhs at an interest rate of 7.40% per annum.
The interest is credited monthly, making it the perfect option for retired individuals as a regular source of income. For those in post-retirement years, PMVVY is a reliable low risk investment with fixed monthly returns.
Real estate investments are often considered to be cumbersome in nature. However, investing in a good property can give you high returns in the long run despite the many rules and regulations involved.
Thanks to the ever-increasing popularity and demand for real estate, the investment risk is fairly low. Depending on the location, you also get to enjoy decent levels of liquidity. However, before investing in real estate, it is advisable to thoroughly analyse the property in question.
While not always accessible due to high ticket sizes, for some investors with longer horizons, it may represent a form of low risk high return investment when chosen carefully.
Gold is another very popular investment option in India. The value of gold tends to be quite stable, which helps reduce the investment risk. Meanwhile, the scarce nature and high demand for this precious metal ensure that its value continues to appreciate in the long run.
Another major advantage of this high return investment is that there are many ways to invest in gold. For instance, you could invest in gold jewellery, gold coins or bars, digital gold, or even Sovereign Gold Bonds (SGBs).
Gold continues to be a dependable low risk investment in volatile markets, often used as a hedge against inflation and currency fluctuations.
Annuities are typically offered by life insurance providers. There are two types of annuity plans that you can invest in, immediate annuity and deferred annuity.
In the case of an immediate annuity, you purchase the plan by paying a lump sum amount. In return, you receive a monthly pension for life starting from the immediately succeeding month.
In the case of a deferred annuity, you purchase the plan through a lump sum payment or via regular premium payments. However, you don't receive the pension immediately. Instead, you receive it only after a specified period has elapsed.
Life insurance providers offer annuities and provide above-average returns along with a life cover. This makes them an attractive choice for retirement-focused investors seeking low risk investments that offer lifetime income.
Municipal bonds are debt instruments issued by urban local municipal bodies. Municipalities issue bonds to investors to raise funds for development work. These bonds are heavily regulated by the Securities and Exchange Board of India (SEBI) and are often considered to be low risk investments.
SEBI mandates credit ratings and disclosures for municipal bonds. The tenure for municipal bonds is usually around 3 years, with the interest rates being near the prevailing market rates. With these bonds, you can choose to receive the interest on your investment periodically or on maturity with the principal amount.
This makes them one of the most viable low risk high return investments currently available for investors looking to diversify beyond traditional fixed-income tools.
Issued by banking institutions, Certificates of Deposit (CDs) are short-term money market instruments. The tenure of CDs starts as low as 7 days and can go up to a year. These instruments are issued in dematerialised (demat) form. You need to have an active demat account to invest in them.
Usually, a Certificate of Deposit is issued at a discount and redeemed at face value, the difference being the return on investment. CDs are heavily regulated by the Reserve Bank of India (RBI) and so, carry very low risk.
The minimum deposit amount is ₹5 Lakhs, and you can invest in as many CDs as you wish in multiples of ₹5 Lakhs. For investors looking for short-term, low risk investments with assured returns, CDs serve as a solid option.
Treasury Bills, also known as T-Bills, are low risk high return investments issued by the Government of India. This effectively means that these money market instruments carry zero investment risk. Currently, T-Bills are issued in India in three different tenures:
91-day bills
182-day bills
364-day bills
These money market instruments are zero-coupon securities, which means that they are issued at a discount and then redeemed at face value. The difference between the issue price and the maturity value is the return that you earn.
The Government of India provides these investment options through post offices. This scheme offers fixed-income options with low risk, along with tax benefits under Section 80C. It can be opened at any nearby post office branch and has a fixed maturity period of five years.
As the return rate is higher and the scheme is backed by sovereign guarantee, investors can start with a minimum of ₹1,000. For secured loans, banks and NBFCs accept this scheme certificate as collateral, and it also allows the addition of a nominee to a joint account.
The SSY scheme is primarily designed for the girl child and can be opened at any nearby post office or bank branch. It is available for girls under the age of 10, with a minimum deposit of ₹250. The government sets the interest rates on a quarterly basis.
The scheme has a maturity period linked to 21 years from the date of account opening and qualifies for tax deductions under Section 80C. Offering higher interest rates and a maximum contribution limit of up to ₹1.5 Lakhs, the plan includes compound interest added annually.
Instead of regular savings accounts, these accounts offer a bank account with a low risk investment profile and comparatively higher interest rates. These are suitable for short-term financial goals and provide better returns than traditional savings accounts.
You can earn higher interest through digital or small finance banks, which operate with lower overheads and pass on the benefit to customers. Some institutions offer up to 7% p.a., making these accounts an accessible low invest high return option with full liquidity.
Interest earned is generally taxable, but the safety and ease of access make them popular for emergency funds or short-term cash parking.
ULIPs involve investing the premium in debt or money market instruments, government securities, or bonds. This option comes with low risk factors and is suitable for investors who aim to preserve their capital while earning stable returns.
ULIPs also offer life insurance coverage, making them dual-benefit instruments. Since these are long-term plans, policyholders can benefit from the compounding effect and tax advantages under Section 80C and 10(10D) of the Income Tax Act.
For individuals seeking low risk high return investments with both insurance and market-linked exposure, debt-oriented ULIPs present a structured option.
These bonds are directly backed by the Government of India, making them one of the safest low risk investments available. As the name suggests, their return is linked to inflation, if inflation rises, the bond’s interest rate increases accordingly. Conversely, if inflation falls, the returns may adjust downward.
These bonds are suitable for investors with a low risk appetite and long-term horizon, especially those seeking sovereign-backed high return investments in volatile markets.
Public and private companies issue these debt securities or bonds to raise funds for expansion or capital expenditures. You lend money to the company, which in turn promises to repay the principal on maturity, along with interest.
The risk level varies depending on the issuer’s credit rating but generally ranges from low to moderate. Bonds from reputed corporates with high credit ratings offer low risk investments with returns that can exceed bank deposits.
For investors who can assess creditworthiness or rely on credit rating agencies, corporate bonds can offer high return investments with manageable risk profiles.
Preferred stocks are a hybrid instrument that blends features of debt and equity. Investors receive fixed dividends (usually higher than common stock dividends) but do not hold voting rights.
This option provides stable income and is less volatile than common equity, especially when issued by established financial or industrial corporations. For those prioritising income over capital appreciation, preferred stocks serve as reliable low risk investments with equity-linked potential.
These are listed on exchanges, offering moderate liquidity and diversification for conservative equity investors seeking low risk high return investments with dividend stability.
Money market funds include short-term debt instruments like commercial papers, certificates of deposit, and treasury bills. These are generally low risk investments and are designed to preserve capital while generating moderate yields.
They are not insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) but are typically well-managed by mutual fund houses. These funds are ideal for investors looking for higher liquidity, moderate income, and capital preservation.
If you are seeking a slightly better return than traditional savings accounts with low exposure, money market funds qualify as viable low risk high return investments.
Bond funds are mutual funds or ETFs that hold diversified portfolios of bonds. These could include government securities, corporate bonds, and municipal bonds. While the returns may vary based on market rates, they generally offer fixed income and low risk.
They provide better diversification than buying individual bonds and are actively managed to maintain yield consistency. Bond funds also offer higher liquidity as you can redeem them on any working day.
This makes them suitable for investors who want a hands-off approach to high return investments through professionally managed debt exposure.
Unlike the Employees’ Provident Fund (EPF), where contribution is mandatory, VPF is optional. Employees can contribute beyond the standard 12% of their basic salary, up to 100% of basic plus dearness allowance.
The maturity period is the same as EPF, and interest is tax-free if the withdrawal happens after 5 continuous years. Contributions are eligible for tax deductions under Section 80C.
Being government-backed and tax-efficient, VPF is a reliable low risk investment suitable for salaried individuals seeking low risk high return investments through long-term savings.
An SDP is similar to a recurring deposit scheme. It allows you to invest small amounts regularly, starting from as low as ₹50 or ₹100 per month. Tenures typically range from 6 months to 10 years, offering flexibility to investors.
Interest rates are pre-determined and fixed at the time of booking each deposit. Senior citizens may receive an additional interest benefit, and some institutions offer instant loans against the deposit amount (up to 95%).
For investors looking for disciplined savings and stable returns, SDPs represent a low invest high return strategy backed by the security of fixed-income products.
To ensure that you lower the risks and also receive additional returns, you can follow these strategies:
There are risks associated with market conditions, such as inflation, interest rates, liquidity, and business environment. It is necessary that you identify all the risks before investing and take precautions while assessing their severity.
Investing in a single scheme or investment plan can increase overall risk. Consider diversifying your investment portfolio across different industries, companies, and asset classes. This approach ensures that if you incur a loss in one plan, other plans may help offset it.
Allocation of assets into cash, stocks, and bonds helps you ensure that your financial goals remain on track. It provides a balanced investment plan, particularly important when choosing low risk investments.
Reshaping your investment plan periodically allows you to recheck decisions and rebalance assets. This is key to maintaining optimal exposure in low risk high return investments without drifting into riskier products over time.
Some crucial factors that can influence decisions regarding both low risk and high return investments include:
Risk tolerance or appetite plays a major role in deciding the right investment. In some cases, aiming for higher returns may involve moderate risk. Analysing your comfort with volatility is crucial when selecting low risk investments.
Based on your risk appetite and tolerance, you should evaluate potential returns after investing in a particular scheme. Some low risk high return investments like VPF or SCSS offer fixed interest, while others like debt funds may vary slightly.
To access your funds quickly for short-term needs, consider investments with high liquidity such as high-yield savings accounts or money market funds. These options strike a balance between return and flexibility.
Portfolio diversification is another important factor. Even within low risk investments, spreading funds across government schemes, bank deposits, and mutual funds helps reduce exposure to isolated risks.
Tax deductions are available under Section 80C for several low risk high return investments, such as PPF, VPF, SCSS, NSC, and ULIPs. Evaluating post-tax returns is as important as headline interest rates.
Always choose reputable providers or platforms to ensure your investment remains stable and secure. This adds another layer of protection to your capital.
Assessing and rebalancing your portfolio regularly helps make smarter investment decisions. It allows you to remove underperforming assets and allocate more to high-potential, low risk investments.
Low risk high return investments offer several advantages, including compounded interest, predictable earnings, and potential tax benefits. Whether it’s government-backed schemes, corporate debt instruments, or regulated mutual funds, these options provide financial growth with minimal volatility.
Many of these instruments are ideal for both conservative and long-term investors, including senior citizens and salaried employees. Some schemes, like gold and real estate, are universally accessible, while others like VPF are designed specifically for the salaried class.
When selecting the right mix, ensure your portfolio is well-diversified. Combining multiple low risk investments aligned to your goals, liquidity needs, and tax planning can help you make informed financial decisions, and achieve sustainable, stable returns over time.
Low risk investments help safeguard your capital from major financial losses. They offer stability and are especially useful for risk-averse individuals and senior citizens.
These investments typically provide fixed or steady interest through instruments backed by governments, banks, or large corporations. They are designed to deliver reliable income over time.
Some risks include inflation eroding purchasing power or liquidity restrictions due to lock-in periods. However, these are far less volatile than equity or market-linked instruments.
Returns vary by instrument. Government schemes like SCSS or VPF offer around 8%, while low invest high return options like savings bonds or CDs may offer 6% -- 7.5%.
Yes, particularly those that offer compounding benefits such as PPF or ULIPs. However, a blended portfolio may yield better long-term results.
The likelihood is minimal, especially in government-backed or regulated schemes. However, credit risk or premature withdrawal penalties may slightly reduce returns.
Some plans like FDs or ULIPs have lock-in periods. Others like savings accounts or money market funds offer flexible access. It depends on the instrument’s terms.
Many low risk high return investments offer tax deductions under Section 80C. Interest income may be taxable depending on the product and holding period.
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