Top 7 Low Risk Investment Options Which Offers Higher Returns
- DetailsWritten by PolicyBazaar -
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Updated date : 16 January 2020
Low Risk Investment Options
When it comes to making investment, most of the people want to make investments with an objective to gain maximum returns in a short span of time with little or no risk involved. The investment objective of an individual can differ from person to person. Many people want to make investment with an aim of financial security while others want to accomplish their investment goal. With wide range of investment options available in the market, here we have discussed some smart investment options that can maximize the returns with minimum risk involved.
These are the simplest and most popular forms of investment because bank fixed deposits are considered to be the safest and best options for long term investment. Of course the rules vary with different banks, but the fixed deposits are safe options that provide a significant amount of money on maturity. It is also advisable to opt for public sector banks to ensure that your money is in safe hands.
The investments in fixed deposits can be made either by visiting the branch office of the bank or by online. Bank fixed deposits offers an attractive interest rate of 6.5% for regular account holder up to 7% for senior citizens for the term period of 1 year. The term period of fixed deposits ranges from minimum 7 days to maximum 10 years. The investors can choose to invest in FDs as per their investment horizon.
National Savings Certificate
These are essentially Savings bonds provided by the Indian Government which also provide tax benefit under section 80C of Income tax act, 1961. The National savings certificates are part of the Indian Postal service. You can purchase these certificates from any post office in India. One can start making investment in NSC with a minimum amount of Rs.100.
The various denominations that the certificate can be bought for are Rs.10,000, Rs.5,000, Rs.1000, Rs.500 and Rs.100. NSC offers two maturity period i.e. 5 years and 10 years to choose from. With an interest rate of 8% per annum, NSC is one of the best investment plan, which offers low risk and high returns. Moreover, one can also avail the benefit of tax exemption up to the maximum limit of Rs 1.5 Lakh under section 80C of IT Act.
Public Provident Fund PPF
The Public Provident Fund is a well-known long term investment option which offers savings and tax return both. It was introduced by the ministry of finance in the year 1968. With the help of this savings option it became possible to mobilize small savings by offering an investment which provided reasonable returns. You need to make a minimum yearly deposit of Rs. 500 in order to open and maintain a PPF account. The maximum limit for this plan is Rs. 1.5 lakh. However, there is a lock in period to the PPF account and you can withdraw the money in whole only after the maturity period is over.
Let’s take a look at the PPF interest rate from year 2012-2019
PPF Interest Rate
|Financial Year||Interest Rate|
*The above mentioned PPF interest rates are for last 7 years
*The interest earned on public provident fund is tax free; this makes it one of the best investment plans in India which offers guaranteed return over a long term period.
Mutual Fund Investment
Those individuals who want to invest in equities and securities related to it like debt, bond with balance between the returns and risk generally chooses to invest in mutual fund. Investing in mutual fund offers long term capital appreciation and return as compared to the any other investment plans available in the market. The returns offered by mutual fund totally depend on the market performance of the fund. Even though mutual fund has a high risk exposure, it offers much higher returns as compared to the other investment options available in the market. Mutual fund offers two main investment options i.e.
Equity Mutual Fund
These are market-linked securities, in which the investment is made majorly in equity and equity related securities with an objective to create maximum return on investment over a long term period. In equity funds the risk involved is more, however the returns are also high as compared to the other mutual fund investment options. These funds are best suitable for individuals who have a high risk appetite and who want to gain high return on investment over a period of time.
List of Top Performing Equity Mutual Fund
|3rd year||5th year|
|ICICI Prudential Blue-chip Fund||13.36%||12.08%|
|Mirae Asset Large Cap Fund||17.43%||17.99%|
|SBI Magnum Multicap Fund||12.32%||16.07%|
|Axis Blue-chip Fund||14.47%||12.48%|
|SBI Blue-chip Fund||9.9%||13.59%|
Debt Mutual Fund
Debt mutual funds are considered as lucrative option of investment for investors who wants to have a steady return on investment over a long term period. In debt funds the money is majorly invested in debt oriented securities such as government securities, treasury bills, corporate bond, commercial papers and other money market instruments. The main objective of investment in debt funds is to generate capital growth and earn interest income.
List of Top Performing Debt Mutual Fund
|3rd year||5th year|
|Aditya Birla Sun Life Savings Fund||7.89%||8.43%|
|Reliance Low Duration Fund||7.49%||7.95%|
|DSP Credit Risk Fund||4.4%||6.7%|
|UTI-ST Income Fund||7.16%||8.03%|
|HDFC Short Term Debt Fund||7.47%||8.22%|
National pension scheme
This is the best retirement plan which is meant for long term investment. The Pension Fund Regulatory and Development Authority of India (PFRDA) regulate this scheme and all individuals between the age of 18 and 60 years can join it.
Key features of NPS
- Minimum amount of investment is Rs. 60,000 and there is no upper limit.
- The returns depend on the percentage of investment in equity and debt.
- Tax benefit is up to Rs. 50,000 under the section 80CCD (IB) along with the Rs. 1.5 lakh under section 80C of Income Tax Act.
Benefits of NPS for investors
- The returns are high compared to other traditional options because some portion of the money is invested in equity.
- You can choose the option of investment, fund manager and annuity plans as per your own requirement and suitability.
- NPS offers multiple tax benefit to the individuals.
- The NPS account number remains same even if there is change in employment.
In India investment in gold is considered to be the most prudent option when it comes to short term investment. The investment can come in handy in times of uncertainty and you also get protection and stability when there is crises in the banking sector, inflation or social unrest. Another benefit of investing in gold is that the trends in the financial market do not affect the value of gold. There has been a constant increase in the demand for gold which has resulted in a 23.5% return on investment in the past few years.
Earlier life insurance was available mainly in the form of term plans which only offered a death benefit. However, nowadays insurance companies offer a wide variety of insurance products which offer investment benefits along with the death benefits. In fact insurance products offer both long term as well as short term investment plans. It is up to you to choose the type of investment option that you wish for. The best part is that you will not only get a good return on investment, but also protect yourself and your family from uncertainty in case of ill health, accidents and even death.
Wrapping it Up!
An individual can gain good return on investment if the money is invested in the right way and in right place. By choosing a safe investment option, the person can secure themselves from market violation and can successfully achieve the financial objectives in life.
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