For the Risk Averse: Risk Free Investment Options
When it comes to putting your money in any investment vehicle, the fear of losing the money is omnipresent, which makes the investor search for risk free investment options. Anyone who thinks about investing their money, especially in stock market investments, wants to have minimum risk on their plate. In such conditions, the return that one can hope for also reduced, because as the saying goes “with high risk comes high reward”.
An investment where the return is assured is known assurance. The assurance usually comes from a supreme amount of hopefulness in the issuer of the investment, for example, Treasury securities are known as riskless investments because the US government is considered as the best possible issuer.
However, riskless investments have such low levels of returns that they may as well be avoided. Riskless investments usually have a low rate of return and, as a result, it exposed to inflation risk. Risk-free investment options are ideal for individuals who just want to save a part of their earning and sit back and relax without having to worry about its outcome.
Some of the best investment options that can help you park money and relax are:
For the Risk Averse: Risk Free Investment Options
1. Post Office Savings Schemes – the best investment option ?
Any saving scheme offered by the post office gives a better return and high rate of interest when compared to the schemes offered by banks and NBFCs. For individuals who look for secure investments, choosing a saving scheme from the post office based on the requirement would be the right thing to do. Anyone can invest as low as Rs. 10 by the schemes which are hard to throughout other institutions.
Some post office best investment options and interest rate is given against them are as follows:- Saving account – 4%
- 5 Year recurring deposit account – 6.9%
- Time deposit account – up to 7.4%
- Monthly income scheme account – 7.6%
- Senior citizen saving scheme – 8.3%
- 15-year public provident fund – 7.6%
- National saving certificate – 7.6%
- Kisan Vikas Patra – 7.3%
- Sukanya Samriddhi Account – 8.1%
Not many adopt opening a saving scheme from the post office due to the absence of online account management.
2. Public Provident Fund
PPF is one of the best investment options for a long time and preferred by many for its guaranteed returns and tax-free nature. It is a 14-year risk-free scheme and it can also be enlarged later. Anyone can invest a maximum of 12 times a year. It is also recommended to deposit the money before the 6th of every month to get the interest for the whole month. The interest rate usually ranges from 8% to 8.9%.
Premature withdrawal on a PPF account cannot be done until 4 years of completion. However, some emergencies and life-threatening illnesses will be considered for withdrawal.
3. Recurring Deposit
A recurring deposit is a safe investment tool for individuals who can make a regular deposit every month until a specific period to get a guaranteed return. Once the rate fixed does not change throughout the whole tenure, thus making assume a confirmed estimated return. The interest rate generally ranges between 6.9% and 7.9% per annum. Premature withdrawal is not allowed; however, some banks do allow by levying a penalty.
Senior citizen and females usually get better returns on such schemes from banks. Recurring deposit can be considered as the inverse of a bank loan. You first pay the EMIs and then get a lumpsum amount at the end of the tenure with interest.
4. Risk-Free Mutual Funds
Mutual funds such as debt and GILT carry less risk and confidence capital protection for the investor. This type of fund invests in government bonds, commercial papers, debentures, fixed securities, etc. The investment could be for a short, mid or long-term depending on consumer purposes.
However, investing in mutual funds do carry some amount of risk associated in some way or the other, It is very important to know about all the ins and outs of the scheme mentioned in the document before proceeding for any investment.
5. Savings Account
Though having a savings account is an utmost necessity for managing customer’s finance, this is should be the last option used for investment. The rate of interest offered on customer’s savings is up to 4% per annum. It is a secure place to save money and good for people who wants to make withdrawals at any time of the year.
This is probably the most common and most preferred investment option for investment in our country due to least amount of risk that is associated with it.
6. Fixed Deposit
The fixed deposit is a popular instrument for parking surplus amount of money for a certain period and gets a guaranteed return at the date of maturity. It is totally risk-free and assures capital protection. Anyone can hold the money from 1 month to any number of years in the bank. The interest rate begins from 7.4% and it can go up to 8% depending on the number of years held in the account.
Different banks offer different rate of interest on fixed deposits. The rate of interest also depends on various criteria like the amount, which is deposited, the age of the applicant, type of relationship held with the bank etc.
In reality, there is no completely risk-free investment option as every investment carries some risk which is usually in the monetary form. It is through proper analysis that one can manage the risks in a way that better returns are achieved with minimalistic risk. It is better to consult an investment advisor to plan your investments in a systematic manner and also get a risk profile analysis to get an idea about the risk that you should take in the market. AN investment advisor not only helps you in choosing then best investment option as per your capacity and risk profile but also helps you with your investment journey towards your goal..
Author
CapitalVia
Pioneer in Investment Advisor
