Most of these avenues not only provide steady returns, you can also avail tax benefits on your investments.
Every investment carries a certain degree of risk. The higher the risk, the higher potential returns. On the flip side, the higher the risk, the chances of losses are also higher. However, there are some investment products which do not carry any risk or has minimal risk attached to them. Therefore, if you are a risk-averse investor and do not want to take any kind of market risk, there are a host of investment avenues falling into the category where one can get decent returns without taking much risk.
The good part is that you will not only get returns, most of these avenues also provide you tax benefit under section 80C of income tax act.
Here are 6 investment avenues where one can invest with minimum risk:
Fixed Deposit (FD)
The safest way to park your money is to keep it in bank FDs. Although the returns are low when compared to other risky investment instruments, one can at least get a guarantee of returns for any number of years. You can easily earn interest rate ranging from 6-8% either on the monthly, quarterly or yearly basis as per your convenience with a maturity period ranging from 7 days to 10 years. If you invest Rs 5000 a month in a 5-year bank FD; then the return at 7% would amount to Rs 3.6 Lakh.
You can claim tax deduction under section 80C of the income tax act on your investment made under a 5-year term FD. Any FD bought for less than the period of 5 years will not be eligible for tax deduction.
National Savings Certificate (NSC)
National Savings Certificates comes with a term of 5-year lock-in and the interest earned is compounded annually. These can be bought from the post office. You can deposit a minimum amount of Rs 500 and there is no maximum limit for making your deposit.
You can claim tax deduction under section 80C of the income tax act on your investment. Moreover, the interest earned is also eligible for deduction under the income tax act except for the last year.
As per the prevailing interest rate which stands at 7.8%, if you invest Rs 50,000 lump sum for a period of 5 years, then the total return on your investment will be around Rs 73,750. These returns are guaranteed, however, are subjected to get change as per the government rules on a quarterly basis.
Public Provident Fund (PPF)
If you are planning for retirement and want guaranteed returns, investing in PPF can be one of the best options for you. You can invest either in lump-sum or in 12 installments during the financial year. Maximum limit to investing in PPF stands at Rs 1.5 lakh in a financial year. This amount can be claimed under the 80C deduction for the purpose of tax savings. PPF has a lock-in of 15 years which can be further extended for batches of 5 years. Currently, one gets an interest of 7.8% on their investment.
For example, if you will invest Rs 5000 a month continuously for 15 years in PPF account then at the prevailing rate as mentioned thereon, it will help you generate a corpus of Rs 17 lakh on maturity.
Sukanya Samriddhi Yojana Account Scheme (SSYAS)
A government initiative to promote welfare for child girl. Any natural or legal guardian can open an account and had to make a deposit for 14 years with the maturity period of 21 years. However, there can be a facility of withdrawing 50% of investments after 18 years of age. You can also claim the amount to get income tax benefit under section 80C of income tax act. You can deposit a minimum amount of Rs 1000 in a year having a maximum cap limit up to Rs 1.5 lakh. Currently, the interest rates of SSYAS stands at 8.3%.
Senior Citizen Savings Scheme (SCSS)
Any senior citizens investor of 60 years or above can open an account subject to certain term and condition especially keeping the fact in mind that investment should not exceed more than Rs 15 lakh at any point in time. Currently, the interest rate stands at 8.3% p.a. payable quarterly. You can also claim a deduction of the deposit under section 80C of income tax act, however, the interest earned is fully taxable. The maturity period of your investment is 5 years.
Government of India Bonds (GOIB)
These bonds are issued by Government of India. The bonds are issued at 8% interest rate paid half yearly and these are one of the safest instrument where an investor can make their investment. The interest rate can also get cumulated and paid at the time of maturity as per the investor’s choice.These bonds are issued with a maturity of 6 years. The bonds are available at specified distributors through whom you can apply to make your investments.