5 Best Low-Risk Investment Options in India

If you’re looking to invest your money more conservatively, a low-risk investment may be a good option for you. So, what are low-risk investments? A low-risk investment is basically one that has a lower chance of losing money. 

Of course, when comparing two investments with equal or lower investment potential, you will see that any investment involves an element of risk. But the idea behind this type of investing is to diversify your portfolio by investing in areas that offer much higher returns but have a lower chance of losing value.


Why Consider Low-risk Investments?

The reason why people consider low-risk investments is because they are less risky than high-risk investments. This is because if you make the wrong choice, it will be very difficult to recover from it.

For example, if you invest in stocks, there is a chance that the stock prices can fall. This can happen due to many factors, such as a change in the company’s performance or an economic crisis.

5 Best Risk-free Investments to Safely Park Your Funds 

1. High-Yield Savings Account

There are many different types of saving accounts. However, the first thing to understand about high-yield savings accounts is that they are not the same as regular savings accounts. There are two key differences:

High-yield savings accounts pay higher interest rates than regular savings accounts, making them a better option for investors looking to maximize their return on investment.

High-yield savings accounts offer longer-term maturities and higher withdrawal limits than regular savings accounts. This means you can invest more money in them and have more freedom when it comes time to take it out of the account.

2. Fixed Deposits

Fixed deposits are one of the most popular investment options in India. Fixed deposits are basically an agreement between a bank and its customer wherein the latter invests his money with the bank, usually for a period of 1-10 years. The bank will pay interest on these fixed deposits regularly, after maturity.

The interest rates offered by banks differ according to their financial condition and the type of loan they are offering at that time. For example, government banks offer lower interest rates than private sector banks or foreign banks.

3. Recurring Deposits (RD)

Recurring deposits are an excellent option for those who are looking for a safe investment. These tend to be fixed deposits that have a set maturity date and interest rate. You can pay them in regular installments, saving you money over time.

The best part about these is that you don’t have to worry about keeping up with the balance. As long as you make the payments on time, your interest will continue to accrue.

They are also quite safe, as they are FDs with FD rates of return. This means that if there is a market crash or other unforeseen event, your money will still be there when it comes due!

4. Public Provident Fund (PPF) 

PPF is one of the most popular saving options in India. PPF can be opened at a post office or bank, and it offers guaranteed returns with tax exemptions. The PPF is a government-sponsored retirement plan that can be opened for 15 years, and it can be extended further if required. The maximum number of investments permitted in a year is twelve, and the maximum amount that can be deposited in a financial year is Rs. 1.5 lakhs. 

The amount invested in PPF is tax-exempted under Section 80C of the ITA. The interest rate offered ranges from 7% to 8.9%. Premature withdrawals from the PPF account are permitted after five years of opening the account for specific requirements.

5. Post Office Investments

Many people don’t prefer going for Post-Office investments due to a lack of online presence, but if you want to grow your money, they are one of the safest options out there. Some of the popular post-office saving schemes include:

  • National savings certificate – 7.6%
  • Kisan Vikas Patra – 7.3% 
  • Senior citizen saving scheme – 8.3% 
  • Savings account – 4%
  • Sukanya Samriddhi Scheme – 8.1%
  • 15-year public provident fund – 7.9%
  • 5-year recurring deposit – 6.9%
  • Monthly income scheme – 7.6% 

As you can see, with a small investment, you can make a big profit just by taking some simple steps. You may not be able to get the best investment results without taking some risks. In fact, there is no monetary benefit if you are not taking some risks. But, Low-risk investments certainly do work wonders!

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Author Bio:

Naina Rajgopalan has a thing for numbers and a deep fascination to learn about all things finance. She’s been money-wise from a young age and has always shared her knowledge and tips with those around her. Being a part of the content team at Freo, a neobank that offers flexible and customised financial products, along with benefits such as insurance on balance, safe & secure banking, and so on, Naina stays updated with the latest of what happens in the banking and fintech industries. She has taken upon herself to share her knowledge with readers across all walks of life to help them manage their finances and budgets better, so they can make better decisions while spending, borrowing, investing and saving.

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