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    Here are low risk investment options that may provide high returns

    Here are low risk investment options that may provide high returns

    Here are low risk investment options that may provide high returns
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    By CNBCTV18.com Contributor  IST (Updated)

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    The savings doesn’t have to be necessarily for retirement but it can also be for big purchases like a house, vehicle or vacation abroad. In uncertain times like today, the fear of losing a job keeps hanging over the head, making savings even more important.

    Every month is a vicious cycle of spending the monthly income within the first few days. Every month we think we will start saving from the next month, but it never really happens. There is always something important that needs to be bought immediately. It is only fair to spend the hard-earned money on things we love. The only problem is that we are not planning and putting away enough money. It is a pity since there are enough reasons to secure a future by saving.
    The savings doesn’t have to be necessarily for retirement but it can also be for big purchases like a house, vehicle or vacation abroad. In uncertain times like today, the fear of losing a job keeps hanging over the head, making savings even more important. The best way to go about it is to plan a monthly budget and divide the money into categories. It is not necessarily to save the money in a bank account, you can always go for other low investment options, that will help you save and earn returns.
    With investment, you may feel a certain risk regarding volatile market situations. Along with the rising cost of living, one will prefer putting money in more sustainable avenues that ensure returns with low risk. There are several options that provide higher returns with lower risks, but you need to recognize your goals and invest accordingly.
    Here are some of the options that you can go for:
    High-Interest Savings Account
    The easiest way to save money is with a high-interest savings account. You will be able to earn nominal interest on the deposit in your savings account. All you have to do is open a savings account and deposit money. But you must choose a financial institution that offers competitive interest rates without an extra fee. Make sure it provides good customer service, online account management and easy deposits. Based on your bank of choice, you can earn a respectable return on your savings.
    Municipal Bonds
    The debt instruments issued by urban local bodies are called municipal bonds. They promise to repay a fixed principal amount with interest. The payment can be either at the fixed intervals or at the end of the tenor with the principal. They are one of the safest ways to invest your money as there is a rare chance that the municipality will go bankrupt.
    Annuities
    You can also build a stabilized portfolio with annuities. It is a contract with an insurance company where you make a lump-sum payment or series of payments. In return, you get regular disbursements, either immediately or at some point in the future depending upon the company. One must note that annuities are complicated financial instruments. While fixed annuities provide fixed returns with lower risk. In spite of their complexities, they are largely safe.
    Certificate of Deposit
    A Certificate of Deposit is issued by commercial banks or other financial institutions. You need a minimum deposit of Rs 100,000 for a fixed period of time and receive guaranteed returns in exchange. It ensures a fixed rate of interest for that time regardless of changes in interest rates. It is one of the safest measures as government ensures that you don’t suffer a loss. The additional interest by the financial institutions is determined by the length of the Certificate of Deposit and current interest rates.
    Treasury Bills
    If somebody is looking for a short-term investment, for instance, up to a year, Treasury Bills are the best choice. The Indian government offers three kinds of treasury bills through auctions — 91-day, 182-day, and 364-day. The minimum amount of investment is Rs 25,000 and it increases in multiples of Rs 25,000. They have zero risks and can be easily opted electronically through the Negotiated Dealing System (NDS).
    Fixed Deposits
    One of the safest investment options is a fixed deposit. It provides a decent rate of interest over the period of time as compared to other low-risk investment options. One may even get additional advantages like flexibility, periodic interest payouts, high stability and credibility, this depends upon the financial institution.
    The above-mentioned investment avenues are mostly fixed income and play a different role in the process of wealth creation. While market-linked investments have the potential to offer higher returns, fixed-income investments preserve the accumulated wealth. It is best to make use of both investment options but if you cannot afford to take the risk, go for fixed-income investments.
    The author, Raghuvir Gakhar, is CEO at CashBean (PC Financial Services Pvt Ltd). The views expressed are personal
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