Financial planning includes investing as a key component. It helps people in increasing their money and achieving their financial objectives. Nevertheless, investing involves risk, and not everyone enjoys taking chances. Low-risk investment opportunities in India are an excellent approach for such people to increase their money without taking on too much danger.
If you’re not comfortable with sudden changes in your money, you should stay away from high-risk investments. Therefore, choosing low-risk investing options is a wise choice. There are all low-risk, high-return investments, which makes sense given that risk and return are in healthy amounts.
What are low-risk investment options in India?: The Reality
Investment options that carry little or no risk are considered low-risk. For those who want to protect their money from risk and are risk averse, these investments are perfect. The following are some of India’s top low-risk investing possibilities but are they the best? Let’s find out:
1. Fixed Deposits
One of the most common low-risk investing alternatives in India is fixed deposits (FDs). They are provided by banks and post offices and have fixed interest rates for certain durations. Due to government backing and up to Rs. 5 lakhs in principal insurance, FDs are a secure investment choice. Even while interest rates on FDs vary from bank to bank, they are typically higher than those on savings accounts.
Mutual funds are, however, considered unfavorably by investors when they place importance on certain drawbacks, such as large cost ratios levied by the fund, numerous unreported front-end and back-end load fees, a lack of control over investing decisions, and diluted returns.
2. Public Provident Fund (PPF)
A long-term investment option with guaranteed returns is the Public Provident Fund (PPF). It is an investment strategy supported by the government that provides a set interest rate and tax advantages. The PPF interest rate is presently 7.1% and is updated every three months. The lowest and maximum investment amounts each year are 500 and 1.5 lakh rupees, respectively.
There are pretty huge drawbacks when it comes to PPF such as, There is a lengthy lock-in period of 15 years, an open account cannot be opened by HUFs or NRIs, the maximum payment that can be deposited into a PPF account is ₹1.5 lakh and no liquidity exists.
3. National Savings Certificate (NSC)
The National Savings Certificate (NSC) is a fixed-interest investment program backed by the government. Every three months, the interest rate on NSC is updated, and it is now 6.8%. There is no maximum investment limit and a minimum investment requirement of Rs. 100. Under Section 80C of the Income Tax Act, the investment in NSC is eligible for tax advantages.
However it does not offer a reinvestment option, so you would have to buy a new certificate every time you decide to invest in this scheme and the interest rate offered is fixed and hence may not offer real returns if they fall below inflation.
4. Money Market Funds
Mutual funds known as “money market funds” invest in short-term debt securities such as treasury bills, commercial paper, and certificates of deposit. These funds are perfect for people who want to invest in debt instruments but only want to take on a small level of risk because they offer low-risk returns.
The disadvantage is that returns may be lower than other investments. Investing is all about netting potential returns, your financial institution may limit convenient withdrawals and there may be minimum balance requirements.
5. Municipal Bond
Municipalities can raise money for infrastructure development by issuing municipal bonds, which are debt instruments. These bonds have a set interest rate and are supported by the government. Given that they are issued by governmental bodies and offer a fixed rate of return, municipal bonds are a low-risk investment choice.
Although it is not inflation friendly and the returns are not that great!
6. iCreditSpace: The best low-risk investment option
iCreditSpace is undoubtedly the best and the most convenient investment option available it provides the best-fixed returns investment in India, All you have to do is download the app, add funds to your wallet, and then start investing with the secured and researched backed options available. We diversify your portfolio and take care of risk analysis. No hassle and No-worry. We provide high-return fixed-income investments that benefit you in the long term. So download now and get best safe investments with high returns.
Conclusion
Investing in low-risk investment options is a great way to grow your wealth without taking on too much risk. It is essential to choose an investment option based on your financial goals and risk appetite.