Safe Investment Options in India: Securing Your Financial Future

Top Best and Safe Investment Options in India
 

Here’s a list of popular safe investments available in India.

1. Fixed Deposit (FD):

   Fixed Deposits (FDs) are among the most trusted and safe investment options in India, providing guaranteed returns with minimal risk¹. FDs offer interest rates and are suitable for conservative investors looking to grow their wealth steadily. The key features are¹ as follows:

   • Guaranteed returns with no market risk.

   • 5-year tax-saving FDs qualify for deductions under Section 80C.

   • Usually, it offers slightly higher interest rates for senior citizens.

   • Partial withdrawals and loans against FD balance are possible.

   • Penalties could apply if funds are withdrawn before maturity.
     

2. Recurring Deposit (RD):

   An RD is a great alternative to Fixed Deposits (FDs), where individuals invest a fixed amount at regular intervals¹. Like FDs, RDs offer interest rates, making it a reliable option for those seeking steady returns. RDs are also collateral for secured loans¹, adding an extra benefit to your investment. Salient features of RD are¹ as follows:

   • Regular investments foster savings discipline.

   • It starts with a small sum, making it accessible for all.

   • Offers assured returns unaffected by market fluctuations.

   • It can be used as collateral to make loans available.

3. Public Provident Fund (PPF):

   PPF is one of the safe investment options in India, offering guaranteed returns backed by the government¹. The key features of PPF are² as follows:

   • Available at most Indian banks and post offices; no age limit to open an account.

   • Minimum investment amount of ₹500 annually, with a maximum of ₹1.5 lakh per year.

   • Currently, the interest rate is 7.1% per annum, subject to quarterly revisions.

   • The fund matures after 15 years; partial withdrawals are allowed after 5 years.

   • Investments and interest earned are tax-free.

4. Post Office Monthly Income Scheme (POMIS):

   POMIS is a reliable option for those seeking regular, low-risk returns. It is id for individuals looking for a steady income stream. It offers monthly payouts while being backed by the government. Salient features of POMIS are covered below⁴:

   • Available for single, joint (up to 3 adults), account on behalf of minors (10 years or above ).

   • Minimum amount of ₹1,500 to open; maximum ₹4.5 lakh for single accounts and ₹9 lakhs for joint accounts and for minor account, 3 lakhs.

   • Interest rate of 5.50% per annum for 1-3 years and 7.6% for 5 years.

   • Account matures in 5 years with penalties for early closure.

   • Interest earned is taxable.

5. National Savings Certificate (NSC):

   NSCs are government-backed savings instruments that offer guaranteed returns over a fixed tenure of 5 years. A popular choice for tax-conscious investors, NSC provides a secure, risk-free investment option with the added benefit of tax savings under Section 80C of Income Tax Act, 1961². The interest earned is compounded annually and is payable only at maturity. Some key features of NSC are as follows²:

   • Available for investment through post offices only.

   • Minimum ₹1,000 and in multiples of ₹100 as an investment with no upper limit.

   • 7.7% interest rate from 1^st April 2024, compounded annually.

   • The maturity period is 5 years.

   • Eligible for deductions under Section 80C up to ₹1.5 lakh²

6. Sukanya Samriddhi Yojana (SSY):

   SSY is a government-backed savings scheme designed to promote the welfare and education of the girl child below the age of 10 years². Offering guaranteed returns, it stands out as one of the top choices among safe investments for parents planning their daughter’s future, be it for education or marriage. The scheme provides tax benefits and zero-risk returns, ensuring financial security for your child. Given below are the key features² of the SSY scheme:

   • Open at post offices and bank.

   • Investment amount of minimum ₹250, maximum ₹1.5 lakh per year.

   • The interest rate is 8.2% per annum (with effect from 01-01-2024), revised quarterly.

   • The policy matures when the girl turns 21 or upon marriage after 18 years (no closure can be done before 1 month or after 3 months from the date of marriage).

   • Exempt under Section 80C of Income Tax Act, 1961.
      

Life insurance savings plans
 

If you want the dual benefit of savings and insurance protection, you can also choose life insurance savings plans like endowment plans and money-back policies⁵. These policies are traditional plans that do not involve putting your money in market-linked funds. This makes your money safe from market volatility. Some of the features of endowment and money-back plans are as follows⁵ –

• Come with a flexible choice of tenure.

• Under money-back plans, you can get regular and predefined payouts, which provide liquidity during the policy tenure.

• A death benefit is paid if the life insured dies during the policy tenure. This benefit can provide financial assistance to the family and help them fulfil their financial goals.

• Participating plans offer bonus additions during the policy tenure, if declared, that help enhance the policy benefits.

• Optional riders are also offered that enhance the scope of the policy and add protection.
   

Enjoy stable returns with safe investment options
 

You can explore these safe investment options in India and choose those that align with your financial goals and investment preferences. You can also invest in more than one avenue to enjoy enhanced benefits. Life insurance plans can be a good addition to your portfolio because of their financial security.

Moreover, when you choose safe and savings-oriented life insurance plans like endowment and money-back plans, you can create a corpus for your financial goals without the risk of market volatility. So, create a diversified portfolio and enjoy stable returns with these options.
 

FAQs
 

1. What is the maximum deduction available under Section 80C

   The maximum deduction limit under Section 80C is ₹1.5 lakhs in a financial year3.

2. Can I invest in more than two safe investment options?

   Yes, you can invest in two or more safe investment options depending on your disposable income, investment preference, tax planning, and financial goals.

3. What is the meaning of premature withdrawal

   Premature withdrawal means withdrawing your investment before the stipulated maturity date. For instance, if you invest in a 2-year FD and withdraw the investment after 1 year, it will be an example of premature withdrawal.

Sources

1. https://cleartax.in/s/top-6-safe-investments-india

2. https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx

3. https://cleartax.in/s/80c-80-deductions

4. https://www.myscheme.gov.in/schemes/pomis

5. https://www.livemint.com/Money/zlZ2KmQ54mov3C5Wbv3sgI/The-differences-between-moneyback-and-endowment-policies.html