Finding a balance between risk and return is important to create the best investment plan and become a successful investor. Going too aggressive on your investments for higher returns and faster growth of corpus can be detrimental to your portfolio’s performance.
Maintaining a balance is especially important when it comes to investments because you can’t afford to “put all your eggs in one basket.” Over reliance on one or a few asset classes, whether they are low-, moderate- or high-risk is not advisable in the long-term. If you’ve been investing in only high-risk and moderate-risk investment products, it’s time to add some low-risk and safe investment options to your portfolio.
Here are 5 low-risk investment instruments that you should consider adding to your portfolio this year. Fixed deposits are one of the safest options available today due to increasing volatility in stocks and mutual funds. Also, due to rising FD interest rates, fixed deposits have become more lucrative than ever before. For instance, fixed deposits available on Finserv MARKETS offer returns up to 8.95% to investors and have high FAAA Crisil rating.
Whole life insurance plan
When it comes to safety and assurance nothing can beat a whole life insurance plan. When you invest in a term insurance plan, your family is only insured for a fixed term which may end even before you retire. However, with a whole life insurance plan your family is protected until you reach the age of 99-100 years. In the event you are not there, your nominee will get death benefit. If you are lucky enough to survive the policy term, you will be eligible for a substantial maturity benefit. With a whole life insurance plan you also get tax benefits under section 80D and section 10D(D) of the Income Tax Act.
Public Provident Fund (PPF)
Public Provident Fund is among the most popular and safe investment options that provide assured returns. Opening a PPF account is easy nowadays and can be done in a few minutes online without filling long and tedious application forms. As of April 1, 2019, rate of return available on PPF was 8%. It has a high lock-in period of 15 years but there is flexibility in investment. You should add PPF to your portfolio because it is low-risk, provides guaranteed returns and helps you save taxes. In fact, PPF falls under the Exempt-Exempt-Exempt (EEE) category, which means deposits are tax deductible while interest earned and withdrawal amount are tax-free.
Even with all the new investment instruments at their disposal, Indians still love fixed deposits and not without good reason. When the market is unpredictable and volatile, not even the best investment plan can match the popularity of fixed deposits. Today, fixed deposits are increasing in popularity because financial institutions have increased FD interest rates and it offers safety, guaranteed returns and ease of liquidity.
Most banks in the country are offering FD interest rates in the range of 6.5-7.5% while finance companies are offering as high as 9%. Fixed deposits rates available on Finserv MARKETS are one of the highest in the country ranging from 8.0-8.95%. Also, when you buy FDs at Finserv MARKETS you can have peace of mind because these fixed deposits have a CRISIL rating of FAAA, the highest rating for any FD.
You should certainly include fixed deposits in your low-risk portfolio because it is high on the safe investment option scale. However, always invest in FD with stable ICRA MAAA and high CRISIL FAAA ratings.
With property prices coming down throughout the country and the government’s push for Housing for All by 2022, this is the right time to invest in low-cost, ready-to-move homes. Real estate has been the safest form of investments that guarantees very good returns in the 10-15 year span. Real estate investment is certainly low-risk if you have performed proper due diligence and it should be part of your best investment plan for the future.
Gold as an asset class attracts attention when uncertainty is ruling the markets. Though gold provides low return compared to other investments, it is very low risk since the value of gold cannot come down after a certain point. Parking your money in gold ensures that your principal amount is seldom lost.
To address problems related to storage and safety of physical gold, companies have come with gold ETFs and digital gold. Now you can invest in gold without taking possession of the gold and worrying about storage. The best part is you can purchase gold online in easy instalments without spending a huge sum of money. At Finserv MARKETS, you can buy gold online for as low as INR100 which is 100% secured and insured. You can also sell online and redeem gold in physical gold coins with free doorstep delivery at Finserv MARKETS.
As mentioned earlier, your portfolio must maintain a balance of low-, moderate- and high-risk investment options to perform well. Do not be lopsided on your approach and go too aggressive or too conservative – both approaches will not serve your investment objective. Maintaining balance in your portfolio will serve you well in the long run.
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