Safe Investment Options
The investment options discussed here are almost safe in nature; do not possess much risk and hence not give very good returns. These investment options are beneficial for those who do not have any risk appetite.
You will get less returns with these investment instruments but your money is almost safe. You need not worry for the rise and fall of the country's economy but you may not be able to beat inflation. With these investment instruments, you have the advantage of not losing the invested amount and your money will always be with you. Some of the popular safe investment options are described below:
Savings Account: If you will put your money in savings account, you will earn very less or no interest on your money. It means your money will not grow much and hence can not beat inflation. But, this is a safe and secure investment till the bank does not go bankrupt, but it does not mean you will lose all your money, some lump-sump amount of money is insured for every account in accordance with the rules laid by government. You can find out how much money is insured by the bank for your account. Main benefit of savings account is liquidity, means you always have access to your money.
You have an option to save income tax on the interest earned from savings account; open a savings account in post office as the interest is tax free for post office savings account. Remember, there is an upper limit for the amount of tax-free interest earned, so check with your post office before opening an account. Also, post offices have lower minimum balance requirement as compared to most banks.
Fixed Deposits (Certificate of Deposit): With FDs, you will get much better interest rate than savings account. You have the option to invest money for different time periods, right from 15 days to number of years. You will get different interest rates depending on the time period of investment and different banks offer different interest rates, so it is better if you first compare interest rates for different banks and invest wisely. This is again a safe investment till the time bank does not go bankrupt. But, with fixed deposits your money may not be insured, different countries have different rules. And many times, only nationalized banks insures your money up to some limit, so you have to find out which bank is insuring your money. CDs also offer liquidity but you can not access your money at any time, you have to break the deposit in order to get your money before maturity and this process may take 2-5 days. In this case, you may not get the proposed interest rate, as there will be some penalty on interest rate. But, still you will be getting better interest rate than savings account. But the interest amount you earn during any financial year is taxable and adds along with your current income.
Some tax-saving fixed-deposits are also available at some places with a lock-in period which may range from 3-5 years or so as per the tax-laws in your country. Here, the amount you invested becomes non-taxable up-to certain limit, but the maturity interest amount will be taxable.
Government Bonds: You can invest in certain bonds which are directly offered through Government. These bonds give you much better returns than Savings Account, but have some lock-in period which varies as per country to country. Some countries issue taxable bonds and some offers tax-saving bonds also. You need to find out at your place about the taxation policies for these bonds. These Government bonds may be considered as the safest way of investment as they are directly issued via Government bodies. Some banks also sell these Government bonds, so you may check the details from the bank website whether they are offering these types of bonds or not.
PPF (Public Provident Fund): This is one of the best investment options with no risk involved. You will get around 8% rate of interest per annum. The only negative point is that it comes with a 15 years lock-in period though you can partially withdraw some amount but can not withdraw your complete amount before 15 years. The money you deposit in PPF account is tax-free up to a certain limit and the best part is interest amount is also tax-free. So, if you want to save tax and looking for a long term investment or retirement planning, this could be one of the good options for you.
Post Office Schemes: There are various investment schemes available in post offices, like NSC (National Savings Certificate), KVP (Kisan Vikas Patra), MIS (Monthly Income Scheme) and various others. All these schemes are completely risk-free, and you do not need to have large sum of money to start investing in post office schemes. Some schemes offer Tax-saving benefits and some gives tax-free returns. So, you need to find out the scheme as per your requirements.
Above are some of the safe and secure investment instruments that you can opt for. Though, the interest rates are not so high, but still you must invest some part of your money into any of these investment instruments. It is your hard-earned money, so better play safe and invest some part in secure funds also.
To get more returns on your invested amount, check out the below links: