The Indian investment market offers a plethora of investment avenues. However the asset class that an investor chooses has to primarily do with the risk appetite of the investor. Every investor looks for a certain element of safety before investing — a kind of assurance that even in the case of unfortunate market events s/he at least gets back the capital invested. This article talks about some risk free investment options which can give you decent returns.
- Investment in fixed deposits-
Fixed Deposits provide you a fixed rate of return on your investments for a fixed period of time. You can get Fixed Deposits open in any bank where you have the Savings account. Every bank provides different rate of interest on FDs (these days most of the banks are providing interest rate of 9 % – 9.25%). But, it is the safest option because you are hundred percent sure of the return (which includes both principal and interest) on maturity.
- Investment in National Saving Certificate-
National Saving Certificate (NSC) is subsidized and supported by government of India as is a secure investment technique. There is no utmost limit in this investment option. NSC is specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses. National Saving Certificate falls under Section 80C of IT Act and the profit accrued by the investor stands valid for tax deduction up to 1, 00,000.
- Investment in Public Provident Fund-
Like NSC, Public Provident Fund (PPF) is also supported by the Indian government. An investment of minimum 500 and maximum of 1, 00,000 is required to be deposited in a fiscal year. PPF is an ideal investment option for investors with a very long term horizon.
- Investment in Debt Mutual Funds-
These are the funds where money is invested solely in government securities and corporate bonds. Debt mutual funds do not have a lock in period , you can take out your money whenever you want without paying any penalty .With the interest rates expected to go down , it’s better to go in for options with longer maturity .
- Investment in Liquid funds-
Liquid funds are a safe option for investors from the point of view of volatility and risk of losing capital. Liquid funds are best if you have a very short time horizon. These funds are money market funds which invest your money in short term money market instruments like certificate of deposit, commercial paper and treasury bills all of which have maturities of less than a year.
- Investment in Savings account–
Investing in savings account is the safest option as it is less risky and has high liquidity too. The minimum amount required for this investment differs from one bank to another.
To sum up, before you take a decision on these investments, have clarity regarding the terms and conditions of the instrument. Diversifying your portfolio helps in offsetting the inherent risk of any single option.