Which are the Safest Investment Options in India

Posted in Investment Tips By Sajhyadri Chattopadhyay -
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Navigating the Indian investment landscape with caution? Discover peace of mind with our guide to the safest investment options tailored for risk-averse investors. Read on to unveil the features, pros, and cons of these time-tested options, ensuring your financial journey is well-planned. Remember, navigating the safest investment options in India is crucial for financial stability. Choose wisely based on your goals and risk tolerance. 

Public Provident Fund

 

  • Definition:

    The Public Provident Fund (PPF) is a government-backed long-term investment option designed to promote savings for Indian citizens. It originated in 1968 and continues to be a go-to choice due to its government backing, tax advantages, and consistent historical interest rate, making it a secure avenue for risk-averse investors. 

  • Features: 

  1. Government-backed ensures security and reliability.
  2. Long-term tenure of 15 years with compounding interest. 
  3. Current interest rate: 7.1%
  • Pros:

  1. Tax-free returns and maturity amount.

  2. Flexible contribution with an annual limit.

  • Cons:

    Long lock-in period of 15 years. 

Fixed Deposits

 

  • Definition:

    Fixed Deposits (FD) are financial instruments offered by banks or financial institutions with a fixed interest rate and maturity date. FDs, rooted in stability, offer a fixed interest rate and various tenures, making them a reliable choice for risk-averse investors aiming for capital protection. 

  • Features:

  1. Fixed interest rate for a specified tenure.
  2. Various tenures and interest payout options
  • Pros:

  1. Capital protection with a guaranteed return.
  2. Suitable for short to medium-term goals.
  • Cons:

    Interest income is taxed as per income slab.

National Pension Scheme

 

  • Definition:

    The National Pension Scheme (NPS) is a voluntary, long-term retirement savings scheme designed to enable systematic savings. Launched in 2004, NPS caters to retirement needs with a diversified portfolio, tax benefits, and potential for higher returns, aligning with the goal of long-term financial security. 

  • Features: 

  1. Long-term retirement-focused investment.
  2. A mix of equity, debt, and government securities.
  3. Equity investment in NPS has delivered 16.94% returns in the past year, as revealed by the latest data from the Pension Fund Regulatory and Development Authority (PFRDA). 
  • Pros:

  1. Tax benefits under Section 80C and 80CCD.
  2. Potential for higher returns.
  • Cons:

    Partial withdrawal restrictions. 

Sovereign Gold Bonds

 

  • Definition:

    Sovereign Gold Bonds (SGB) are government securities denominated in grams of gold, allowing investors to participate in gold's performance without holding physical gold. Introduced in 2015, they combine the allure of gold investment with government backing, lack storage concerns, offer stability and the potential for capital appreciation. 

  • Features:

    Fixed interest of 2.5%, plus potential capital appreciation. 

  • Pros: 

  1. No risk of theft or storage issues.
  2. Indexation benefits on capital gains.
  • Cons:

    Lock-in period of 5 years. 

Senior Citizens Savings Scheme

 

  • Definition:

    The Senior Citizens Savings Scheme (SCSS) is a government-backed savings scheme aimed at providing financial security to individuals aged 60 and above. Introduced in 2004, addresses the financial needs of senior citizens, offering higher interest rates and tax benefits, ensuring a secure investment avenue for retirees. 

  • Features: 

  1. Government-backed with quarterly interest payout.
  2. Current SCSS interest rate: 8.2%.
  • Pros:

  1. Higher interest rates.
  2. Tax benefits under Section 80C. 
  • Cons:

    Restricted to individuals aged 60 and above. 

Liquid Funds

 

  • Definition:

    Liquid Funds are a category of mutual funds that invest in short-term market instruments with high liquidity. Introduced as an alternative to savings accounts, these funds offer higher returns with liquidity, making them suitable for short-term investments and emergency funds. 

  • Features: 

  1. Mutual fund category focused on short-term debt securities.
  2. High liquidity with no lock-in period.
  • Pros: 

  1. Potential for higher returns than traditional savings accounts.
  2. Suitable for emergency funds.
  • Cons:

    Slightly higher risk compared to traditional savings. 

Post Office Monthly Income Scheme

 

  • Definition:

    The Post Office Monthly Income Scheme (POMIS) is a government-backed investment option allowing individuals to invest a lump sum amount and receive a fixed monthly income. POMIS ensures a stable income source, making it an attractive option for risk-averse investors seeking stability.

  • Features: 

  1. Government-backed scheme.
  2. Current POMIS interest rate: 7.40%
  • Pros: 

  1. Regular fixed income.
  2. No market risks.
  • Cons:

    Lower interest rates compared to some other options.

Corporate Fixed Deposits

 

  • Definition:

    Corporate Fixed Deposits are fixed-income instruments issued by non-banking financial companies or corporations. Introduced as an alternative to bank FDs, these attract investors with higher interest rates, albeit with a higher risk profile. 

  • Features: 

  1. Offered by private companies.
  2. Higher interest rates compared to bank FDs.
  • Pros: 

  1. Attractive interest rates.
  2. Option for cumulative or regular payouts.
  • Cons:

    Higher risk compared to bank FDs.

Government Savings Bonds

 

  • Definition:

    Government Savings Bonds are sovereign bonds issued by the Government of India, allowing individuals to invest in a secure government-backed instrument. Backed by the government, these bonds offer capital protection with a fixed interest rate, providing a safe investment choice for risk-averse investors. 

  • Features: 
  1. Fixed interest rate with cumulative and non-cumulative options. 
  2. Current interest rate for National Savings Certificate (NSC): 7.7% (for Q3FY24). 
  • Pros:
  1. Capital protection.
  2. No TDS deduction.
  • Cons:

        Moderate interest rates. 

 

From PPF's security to NPS's long-term focus, each option has its unique advantages—crafting a resilient financial portfolio tailored to your needs. Your best bet for a starting line to win the savings race? Drive your financial wagon to a 100% safe and secure online platform like Bajaj Markets and pick your winner! From FDs to SGBs, select the saving tools that align with your long-term goals and broaden your investment portfolio today! 

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