Overview – 10 safe investment options in India
Many of us keep investing in various investment options and think they might be safe investment options. Few of our friends has similar opinion, hence I thought I should list down the options for safe investments in India so that several investors like you also get benefitted.
What are safe investments?
Safe investments are those where the investment amount + to some extent interest / returns are protected.
10 safe investment options in India
- Bank fixed deposits: With several regulations from Reserve Bank of India, Indian banks operate with lot of controls. Bank fixed deposits are safe investment options. Banks are offering 8% to 9.25% returns per annum. However investment up to Rs 1 lakh is covered under Insurance. If you have an option, you can invest your money in various banks up to Rs 1 lakh. Please note, do not get confused with multiple branches with multiple banks. If you are investing in same bank, but in different branch, your Rs.1 lakh limit apply for all your bank fixed deposits across branches.
- Bank tax saver deposits: These bank tax saver deposits provide good returns from 8% to 9.5% per annum and tax exemptions. Investment up to Rs 1 lakh coverage under insurance discussed above applies to this also.
- Savings bank account: Amount kept in savings bank provides 4% to 5% per annum. Generally people invest amount which they may need for regular monthly expenses or any emergency funds. Investment up to Rs 1 lakh coverage under insurance discussed above applies to this also.
- Debt mutual funds: Several investors feel that investments in mutual funds are safe. All the investments in mutual funds are risky as it depends on equity stock markets. However mutual funds would be safe in debt mutual funds, where, thought capital is always protected, the returns would also be more or less with bank fixed deposits ranging between 8% to 10% per annum.
- Balanced mutual funds: Balanced mutual funds invest 60% to 80% of investments in debt related instruments and only 10% to 40% in equity related investments. Hence the downside of investment is limited. However balanced mutual funds have provided 1% to 14% returns over the last 3 years under various market conditions.
- Public provident fund (PPF): You might be aware that PPF account can be opened at post office or from State Bank of India. The rate offered currently is around 8.5% per annum. The account needs to be maintained for 15 years with annual minimum contribution of Rs 500. This is one of the good safe investments as they are secured by Govt. of India.
- Post Office – MIS scheme: Investment in MIS scheme is also safe investment option as they are secured by Govt. of India. The rate of interest is around 8.5% per annum and the tenure is 5 years.
- National saving certificates: NSC’s issued by post office for 5 years and 10 years are also good safe investments as they are secured by Govt. of India. The returns are around 8.5% per annum.
- Secured Non-Convertible-Debentures(NCD): There are several corporates who are issuing NCD’s & company deposits month on month. The safety of these investments would depend on the performance of the corporate. However in case you are looking for NCD’s, go for Secured-NCD where the interest rate ranges between 11% to 13% per annum. Secured NCD investors would be given preference for repayment of capital in case there is any unforeseen thing happening and company is getting winding up. Here the advice is not to invest in such corporate, but in case you are tempting for higher interest, this would be one way to avoid the risk.
- Tax free bonds: Tax free bonds are issued year on year which provides tax benefit as well the returns range between 8% to 8.5% per annum and they are safe investments as they are generally backed up with govt. security.
Conclusion: Various options of safe investments provide safety for capital along with good returns on the investment. However note that the returns would be limited when you are investing in such safe investments.
Readers, what is your view about safe investment options? Do you think there are any other best investment options which are safe? Please give your comments
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Suresh
Myinvestmentideas.com
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Thank you for listing such nice ways to operate lazy money. However I still prefer some part of amount must to be committed to risk means by good offers.
If somebody want to invest large amount of money for long term but do not want to earn interest where should he invest. Thank you.
Hi suresh
I am planning to get Birla sun life Vison life insurance.my son age is just 1 .please suggest me is this plan is good or not or suggest me which plan is best for my kid
Regards
D.kumar
Kumar, Let me analyse this completed and get back next week. I have seen that you posted on suggest a topic. Good it would be on my radar.
Hi Suresh,
I am 32 years old guy working in a private sector organization and I ahave net take home salary of 35 thousan only. These days I am very keen to buy a flat with help of home lone form any nationlized bank. Can you please advise me what are the requirments from bank to have a housing lone and according to my net salary what amount of lone a bank can provide me for how long as well as what will be the maximum lone tenure ?
Regards,
Suman
Suman if you are at 32, banks can give loan for 25 years to 30 years. The requirements would change from bank to bank. You can check with SBI as they do comprehensive documentation for house loans.
Dear Suresh,
I got a housing loan in SBI 4 years back of Rs 20 Lakhs at interest rate of 12.45%(two months back it was changed to 9.7%) and has a due upto 19,45,000 remaining.Now on selling one property we got required some to clear this loan.My question is
1) Is it better to go for FD for 20 lakhs (and paying loan monthly with the interest money debited from FD) or pay directly the sum and clear loan.
2) If so FD, then what is the best possible way to invest above sum.
—-> How to invest in various banks in different multiples in order to get rid out maximum from taxes.
—-> The best banks to get highest interest.(or interest chart URL,where i can look after often)
I am studying 3rd year B-tech and my mother is a house wife( she has PAN card).Please help me out to choose best route to get more interests.
Thank you.
Srinath, If you have surplus amount, you can pre-pay your housing loan. There is no point in paying 9.7% interest and get a FD rate of 9%+. Please consider any fore-closure charges before taking the decision.
Hi Suresh,
How the bank FD would be calculated if i put some 20000/- for 5 years tenure at 9% interest?
And would it be beneficial if i take the monthly interest and reinvest that interest in an RD?
Kindly suggest.
Supriya, Last week there was a reader who asked the similar quetion that he want to invest FD for 7 days and open a fresh FD after 7 days as the rate of interest was 6.5% comparing to annual rate of %. It would work out to almost same or less than what banks are offering per annum. You should take re-investment plan for 5 years. The interest would be computed on principal for 1st year and second year interest would be on principal+1st year interest.