10 Best Safe Investment Options With High Return In India

10 Best Safe Investment Options With High Return In India

Many individuals seek investment options that offer both safety and decent returns. With rising costs and future financial goals, finding a safe investment option that balances low risk and strong returns is key.

What is an Investment Option in India?

An investment option in India refers to any financial product or plan where you can allocate money with the expectation of getting returns over time. These options vary based on risk levels, time frames, and the type of returns they offer. While some investors seek high-risk opportunities, others prioritise security. Finding the best saving option that meets your financial goals requires understanding how each investment product works.

10 Best Investment Options in India in 2024

Here are ten safe investment plan that offer both security and high returns.

Fixed Deposit (FD)

Fixed Deposits (FDs) are considered one of India's most reliable and low-risk investment options. FDs have historically provided around 6-7% returns, depending on the bank and tenure. The key benefit of an FD is that your capital remains secure, and you receive guaranteed returns over the agreed period.

Life Insurance

Life insurance, particularly savings-oriented plans, is a safe investment option that offers a combination of insurance coverage and returns. In addition to protecting your family, many life insurance plan provide returns on premiums paid over the years. For instance, many insurance providers like SBI Life Insurance offer plans allowing you to build wealth while offering life cover, ensuring your loved ones are financially secure. The returns are steady, and the peace of mind from having insurance makes it a reliable investment choice.

Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a government-backed investment savings plan that is highly popular among conservative investors. Its long-term returns are typically 7-8%, making it one of the most dependable choices. The investment is locked in for 15 years, but partial withdrawals are allowed after five years.

National Pension Scheme (NPS)

The National Pension Scheme (NPS) is a retirement-focused, government-backed investment plan. It allows contributions to be invested in equity, corporate bonds, and government securities. The historical returns are approximately 8-10% annually. At retirement, 40% of the corpus must be used to purchase an annuity.

Gold

Gold has always been considered a safe investment option, especially during times of economic uncertainty. Over the long term, gold has given returns of 7-9% per annum. It is a hedge against inflation and can be held physically or invested in Gold ETFs.

Savings Bonds

Savings bonds, particularly those offered by the Reserve Bank of India (RBI), are secure investment options. The RBI Savings Bond provides fixed returns, usually between 7-8% over a tenure of 7 years. These bonds are low-risk, government-backed, and offer a stable return.

Recurring Deposits

Recurring Deposits (RDs) are a popular investment savings plan, especially for those looking to save small amounts regularly. RDs offer guaranteed returns, typically between 6-7%, over a flexible tenure, making them a stable option for risk-averse investors.

National Savings Certificate

The National Savings Certificate (NSC) is another government-backed safe investment plan. It offers fixed returns, currently around 6.8% per annum, with a five-year lock-in period. The principal and interest are both secure, making it a low-risk investment option.

Post Office Monthly Income Schemes (POMIS)

The Post Office Monthly Income Scheme (POMIS) is designed to offer regular income for those looking for a stable investment. It has an interest rate of around 6.6% annually, with the returns paid out monthly. This makes it a good option for retirees or those seeking regular income.

Senior Citizen Savings Scheme (SCSS)

The Senior Citizen Savings Scheme (SCSS) can be a great safe investment option for those over 60. SCSS provides a guaranteed return of 8% per annum, making it one of the best saving investment plans for retirees. The interest is paid quarterly, offering a regular income stream. It also has a five-year lock-in period.

How To Choose Safe Investment Options?

When deciding on a safe investment option, you should consider several factors to make the best choice based on your financial goals and risk tolerance.

Assess Your Risk Tolerance

Understanding your risk tolerance is crucial when selecting low-risk investment options. If you are risk-averse, consider options like FDs, PPFs, or SCSS, which offer stable returns with little risk. If you have a higher risk tolerance, you may opt for NPS or Gold, which have slightly higher risks but can yield better returns.

Define Your Financial Goals

It’s important to define your financial goals clearly. Whether you are saving for retirement, your child’s education, or purchasing a home, your goals will dictate your safe investment plans. For long-term goals like retirement, NPS and pension plans are ideal choices, while recurring deposits or savings bonds may be better suited for short-term goals.

Consider Liquidity Needs

Liquidity refers to how easily you can access your money in an emergency. If you need access to your funds sooner, low-risk investment options like FDs or recurring deposits are better, as they offer shorter tenures. On the other hand, options like PPF or SCSS have longer lock-in periods and may not be suitable for those needing immediate liquidity.

Diversify

Diversification helps in spreading your risk across different asset classes. For instance, you could allocate some of your money into safe investment options like bonds and fixed deposits while keeping some funds in gold or mutual funds. This way, you can balance risk while aiming for better returns in your investment savings plans.

Look at the Returns

While safety is important, it’s also essential to consider returns when choosing the best saving investment plan. For example, savings bonds offer guaranteed returns but may not always keep up with inflation. Always weigh the potential return against the risk involved in your chosen investment option.

Check for Tax Implications

Different investment options have varied tax implications. While some, like the PPF and life insurance proceeds, offer tax-free returns, others may be taxed according to your income slab. Consider the tax aspect when deciding on your investment savings plans to ensure your net returns align with your financial goals.

Inflation Factor

Inflation can erode the purchasing power of your returns over time. When choosing a safe investment option, ensure that it offers returns that outpace inflation. Gold and NPS, for instance, offer good protection against inflation, while FDs and savings bonds may provide lower real returns.

Reputation and Stability of Institutions

Always invest with reputed and stable financial institutions. Government-backed schemes and established companies like SBI Life Insurance assure that your investments are safe, providing peace of mind and long-term stability.

Review and Rebalance

Regularly review and rebalance your portfolio to align with your changing financial needs and market conditions. Whether it’s moving funds from a low-risk investment to something with higher returns or adjusting based on new goals, staying active with your investments will help you meet objectives.

Frequently Asked Questions

Conclusion

Investing wisely requires balancing safety and returns. Whether you choose low-risk options like FDs and insurance plans or higher-return choices like gold or NPS, the key is finding what suits your financial goals.