Best Low Risk Investment Options With Higher Returns
Best Low-Risk Investment Options With Higher Returns
The general tendency of any investor is to receive the optimum return within a short span without the risk of losing the principal investment amount. But unfortunately, such a combination of low-risk with a sky-high return is legally non-existent. In the investment world, return and risk go hand in hand.
There are a multitude of investment opportunities currently in circulation in the market. Some of those options possess a high inflation-adjusted return tendency but involve significant risk. On the other hand, certain investment options generate low return but there is minimal risk of loss involved. These sort of investments are suitable in the long run for fulfilling long-term financial goals.
Top 8 low-risk investment options with significant return benefits
- Savings Accounts
Well, although not technically considered to be an investment, yet a savings account offers a significantly modest return to the holder. Maintaining a savings account runs no loss of losing the principal amount. Most of the savings accounts possess government insurance up to a certain percentage. This means that the account holder will receive relevant compensation even if the organisation fails.
- Bank Fixed Deposits
Under the investment scenario, this is considered to be the safest and the most popular long-term investment option. Although there are different rules for different banks, yet the basic policy is always the same. It is also wise to invest in public sector financial institutions to ensure guaranteed security. The general interest rates on fixed deposits currently range between 6.5% and 7% (for senior citizens) and the deposit term varies from 7 days to up to 10 years.
- National Savings Certificate
These are the savings bonds provided by the government of India. These have been a part of the Indian Postal Service. It is very simple to start with having a minimum investment of INR 100. The certificates are available in several denominations ranging from INR 100 to INR 10,000. The interest rate is 8% p.a. If you are considering tax planning, then it involves a tax redemption up to an optimum limit of INR 1.5 lakh under section 80C of the Income Tax Act. This is one of the safest investment options with minimal risk investment and considerable returns.
- Public Provident Fund
This is one of the most popular long-term investment options offering both tax returns as well as savings. A minimum yearly deposit of just INR 500 is enough to continue with a PPF account. The maximum limit for this plan is INR 1.5 lakh. But there is a lock-in period during which withdrawal is not possible. The entire amount can only be withdrawn only after maturity.
- Mutual Fund
Mutual fund investment is ideal for individuals with a knack for securities and equities like debt bonds with a maintaining balance between return and risk. Mutual fund investment is ideal for long-term investment planning and enhanced capital in the long run. The mutual fund returns are entirely dependent on market performance. Although mutual funds have considerably higher risk exposure, the return percentage is much higher when compared to any other investment option.
Debt Mutual Fund
This investment option is also suitable in the long run with lucrative return benefits. Under this scheme, the money gets invested in corporate bonds, government securities, commercial papers, treasury bills and other types of debt-oriented money market securities.
Liquid Mutual Fund
Investment in liquid mutual funds is a good option for low risk investors, especially for overnight or short term parking of funds. The risk as well as the return is quite low.
- National Pension System
Considered to be the safest and the most secure method of investment in the long run, NPS is an ideal post-retirement investment option. Any individual between 18 and 60 years of age group can join the plan. Although there is a minimum investment value of INR 60,000 there is no existence or restriction regarding the upper limit. The return from the investment is entirely dependent on the percentage of debt and equity. It is also eligible for tax benefit up to INR 1.5 lakh under section 80C along with INR 50,000 under section 80 CCD. This investment option is safe, producing a considerable higher percentage of returns.
- Gold Investment
Gold investment is quite a popular source of investment options in India. It is ideal for short-term investment. In times of unforeseen uncertain emergencies, this sort of investment might prove to be of help while remaining stable in the face of inflation. The gold value remains unaffected by the market trends which has provoked the tendency to invest in gold.
The various types of gold investment possible are physical gold in terms of jewellery, bullion, coins, bars, etc. and digital gold such as Gold ETFs (electronically traded funds), Gold Mutual Funds and Sovereign Gold Bonds (SGBs)
There are a multitude of insurance options currently available in the market, offering several types of returns and benefits including death benefits. The investor can easily choose the insurance plan as per the requirement to fulfil long-term and short-term financial goals accordingly. There is not only an assured positive return from this type of investment but it also offers secured financial coverage to the individual and the family, depending on the type of plan chosen. On the other hand, insurance also allows you to save tax under various Sections such as 80C, 80D and 10 (10D) of the Income Tax Act. Thus, insurance offers high returns because of tax exemption.
From the above discussion, it is evident that there are several types of low-risk investment options for wealth creation that are easily available in the market. Careful consideration and expert market findings are essential before proceeding to settle for any particular investment option. The return factor is directly dependent on the risk appetite of the investor in maximum cases. Therefore, gaining a good return with minimal risk involvement is a challenge. But, these investment options are quite safe to proceed with possessing minimal risk of loss.