- What Does Safe Investments With High Returns Mean?
- Top Safe Investment Plans In India
- Mutual Funds That Balance Safety & Growth
Over the years, the world of investing has evolved dramatically. While more people today are eager to grow their wealth, many remain wary of taking big risks. This leads us to an important question: Are there safe investment options that offer high returns? In this blog, we’ll explore investment options that strike this balance, ideal for conservative investors looking for steady, long-term growth.
What Does Safe Investments With High Returns Mean?
In every investment option, risk and return are closely linked. Before jumping into what investment options yield how much return, let’s understand the trade-off between risk and return and how to balance them. Knowing these will help you pick the right fund for your needs.
Understanding Risk vs Return
Risk and return often have a trade-off. High-return instruments also carry higher risk. A low-risk investment also grows slowly. How one manages this trade-off also depends on where they are in their investment journey. A young investor who has a longer time horizon may take on more risks. While an older investor who has a shorter investment horizon may not be willing to risk. The key here is to balance and manage your risk.
How To Balance Safety & Returns In India
Striking the right balance between safety and returns boils down to your financial needs. The rule here is to diversify your investments and not park all your savings in one vehicle. The next most important thing is to reassess and rebalance your investments after periodically analysing them.
Top Safe Investment Plans In India
Here are the top low-risk investments that can generate steady returns over time:
1. Fixed Deposit
Fixed Deposit is a fixed-income instrument where you invest a lump sum of money with a Bank or Non-banking Financial Institution and earn a fixed interest on it. Different banks have different interest rates set, however it can range anywhere from 6.5% to 7%. To understand how much return you could expect, let’s take an example.
Say you invested ₹10,00,000 as a fixed deposit at an interest rate of 7% for 5 years. Your returns after the 5 year period would be ₹14,02,552. You can also calculate your returns from FD using this FD calculator.
2. Public Provident Fund
Public Provident Fund or PPF is a scheme that is popularly known for its tax-saving benefits. Under this scheme, investors deposit a fixed amount yearly and earn a fixed interest of 7.1%. This amount deducted can be claimed as a tax benefit under section 80C of the Income Tax Act. The minimum investment starts from ₹500 and goes up to ₹1,50,000. So, for example, if you decide to deposit ₹1,50,000 yearly for 15 years, you get 1,50,000 as tax exemption every year, and your maturity value at the end of 15 years comes to ₹40,68,209. Calculate your returns with this PPF calculator.
3. Senior Citizen Savings Scheme
This is an investment scheme for senior citizens aged 60 or above. You can open an SCSS account at any authorized bank or Post Office by making a lump sum deposit. It offers an interest rate of 8.2% per annum along with quarterly payouts and tax benefits under Section 80C.
4. Sovereign Gold Bonds
Sovereign Gold Bonds provide a unique opportunity to invest in gold without the hassle of physical storage. Issued by the Reserve Bank of India (RBI), these bonds are denominated in grams of gold, offering a safe and easy way to invest in the precious metal. Gold’s price tends to be less volatile compared to other assets, making SGBs a stable investment choice for conservative investors.
5. National Pension Scheme
National Pension Scheme (NPS) is a retirement savings scheme, an initiative by the Government of India. It is open to all Indian citizens. Under this scheme, you contribute regularly during your working years, and the amount is invested in a mix of equity, government bonds, and corporate debt. At retirement, you can withdraw a portion of the accumulated amount and use the rest to receive a monthly pension. NPS also offers additional tax benefits under Section 80C and 80CCD(1B), making it a smart choice for long-term wealth creation. Calculate your NPS returns using INDmoney’s NPS Calculator.
6. Real Estate
Another popular investment option that is considered relatively safe, though it requires significant capital is real estate. This includes investing in residential or commercial properties with the goal of earning rental income or benefiting from long-term capital appreciation. Rental income provides a steady cash flow, especially in well-located areas. However, real estate investments come with low liquidity and require ongoing maintenance.
7. Unit Linked Insurance Plans (ULIPs)
Besides life insurance coverage, a Unit Linked Insurance Plan (ULIP) offers an opportunity to use the possible investment returns. ULIPs aim to provide policyholders with the benefits they can enjoy from investing and an insurance plan in one comprehensive package. The policyholder decides which investment funds to choose based on their financial goals and risk appetite. ULIPs have an investment option because the policyholders can shift between various funds depending on their financial goals and market conditions. They also offer tax relief on the premium paid and the benefits received in some cases.
8. Post Office Savings Scheme
Post Office Savings Scheme are a set of government-backed investment plans that are safe and have high returns. These schemes can be availed at any post office in India. Under this scheme, individuals can choose from multiple options like:
- Time Deposits
- Recurring Deposits
- Monthly Income Scheme (MIS)
- Kisan Vikas Patra
9. Government Issued Bonds
Government bonds are debt instruments issued by the Central or State Governments to raise money from the public, primarily for funding fiscal needs. These are among the safest forms of investment, as they carry the sovereign guarantee, meaning the repayment of both principal and interest is backed by the government itself. Under this scheme, when you invest in a government bond, you’re essentially lending money to the government, and in return, you receive regular interest payouts and the full principal at maturity.
Mutual Funds That Balance Safety & Growth
While the above investment options are excellent choices for risk-averse investors, mutual funds also present an attractive investment avenue. Mutual funds pool money from multiple investors and invest in a diversified mix of equities and debt. While there are various types of mutual funds, some are specifically designed to balance risk with growth, making them a suitable option for conservative investors.
1. Debt Mutual Funds
Debt mutual funds invest in fixed-income instruments such as government bonds, treasury bills, and corporate bonds. These funds are designed to offer steady income with lower risk. Within debt mutual funds, there are several types, with some being safer and more popular options:
- Liquid Funds: These funds invest in short-term debt instruments with a maturity period of up to 91 days. They are ideal for investors looking to park their money for a short period while earning decent returns.
- Short Duration Debt Funds: These funds invest in debt securities with a relatively short maturity period, offering a balance between safety and higher returns.
2. Conservative Hybrid Funds
Conservative hybrid funds invest a larger portion of their portfolio in debt instruments (typically 75–90%), with the remainder in equity or other growth assets. These funds aim to strike a balance between safety and growth. Popular conservative hybrid funds include:
Final Thoughts
When looking for safe investments with high returns in India, it’s important to know what fits your investment needs the most. As we discussed options like fixed deposit, PPF, and Bonds, we can see there are a multitude of investments to choose from. Additionally, debt mutual funds or hybrid mutual funds also provide a blend of safety and growth.
Investing in these schemes, combined with a structured approach like a systematic investment plan (SIP), helps manage risk and ride market fluctuations if investing in a market-linked investment. If you are not sure where to start, assessing your goals and creating a five-year investment plan can go a long way in achieving your goals.