There are several investment avenues in the market that offer decent returns. While some of these have equity exposure, others have fixed returns and are considered safer.
With a plethora of these options, let’s look at some of the risk-free investment options:
Fixed deposits (FDs), also known as term deposits, are one of the best options for people looking for an assured income as they are risk-free. In FDs, a lump sum amount is locked-in for a specific period. Investors can choose tenure usually in the range of 7 days to 10 years. FDs are offered by commercial banks, small finance banks as well as non-banking financial companies (NBFCs).
Unlike stocks and mutual funds, these give safe returns as they are unaffected by market volatility. However, falling FD rates especially with commercial banks have become a point of concern for investors now.
In such a scenario, investors can consider investing in corporate FDs. Nevertheless, the returns from corporate FDs very much depend on the profits posted by the companies.
Public Provident Fund (PPF)
The Public Provident Fund is a post office savings scheme in India. PPF is an ideal option for investors because it offers multiple benefits such as low-risk appetite, tax benefits, and a steady interest on the money deposited.
Recurring Deposit (RD)
Under RDs, individuals invest a fixed sum regularly. Like FDs, RDs too offer a higher rate of interest than a regular savings bank account. One can furnish the RD investment as a collateral to avail secured loans, according to ClearTax.
National Pension Scheme (NPS)
National Pension System or NPS, a government-run investment scheme, gives the subscriber the option to set the preferred allocation to different asset classes. The subscriber can either apply for an NPS account by visiting a Point of Presence (PoP) or do it online through the e-NPS website.
NPS offers two kinds of accounts — Tier 1 and Tier 2 — for instruments including government bonds, equity market, and corporate debt.
While the Tier 1 NPS account is strictly a pension account, the Tier 2 account — known as investment account — is a voluntary saving account associated with the PRAN.