From March 2020 people have been experiencing things that were unimaginable. The lockdown gave us the time to have a break from our fast-paced life and think about life from another perspective as well. Also, this lockdown has taught us the importance of multiple sources of income and investments. Therefore, people are searching for the best investment options that can keep their money safe.
During the lockdown, a record number of DEMAT accounts were opened. People have started inclining more towards the safest investment options in India and making money from different sources of income. We also could not help ourselves to do the same and studied various investment options indeed to create passive income.
Without further ado, let’s take a look at the top 5 safer investment options –
1. Public Provident Fund (PPF)
The Public provident fund scheme is an old-school investment option people opt for. It attracts investors due to its high and stable returns. One can open a PPF account with many banks.
The lock-in period of a PPF account is 15 years making it a non-liquid investment. You can choose it if you want to invest in the long term. You can invest a minimum of INR 500 to a maximum of INR 1, 50,000 annually in a PPF account. It is also not linked to the market and is mandated by the government making it an investment with stable returns. Also, it can acts as a tax saver investment option as money invested in the PPF account is exempted from tax under section 80C.
The current interest rate for a PPF account is 7.1%. Also, the total interest accrued on a PPF account is exempted from any tax calculations. One can withdraw only 50% of the total balance in one transaction each financial year also this can be done only after 5 yrs of opening the PPF account.
2. Mutual Funds
A mutual fund is an investment tool where many investors pool money to invest. An Asset Management Company (AMC) then manages the collected amount. The benefit you enjoy here is that you don’t need to figure out which stocks to buy or you don’t have to observe the finances of various companies. The AMC charges a nominal fee for managing the fund from the customers. One thing that you have to do is to think about which mutual fund to invest in.
The funds are invested in a diversified manner which makes it a safe investment. The money is invested in different companies belonging to different sectors. Mutual funds can be considered a liquid investment if you have invested in funds that allow you to withdraw money anytime. These funds are subjected to market risk however they still can be called safe in long term. It is one of the most popular investment options in India these days.
3. Investment in large-cap companies
This is investing in the share of large-cap companies. In India, the large-cap companies are those which come in the top 100 companies in India in terms of their market capitalization. Their market capitalization value is more than INR 20,000 Crores. The stocks of these companies are the least risky.
If invested in the long term, these stocks can provide you good stable returns. Invest in these companies if you have a low-risk appetite and a lump sum amount to invest. These shares are generally liquid and safe as they belong to well-established reputed firms.
Examples: Reliance industries, Tata consultancy services, Maruti Suzuki, Companies in SENSEX & NIFTY 50, etc. You can also check the list of large-cap companies. Click here for the list
4. Real Estate
Real Estate is the investment that has proven to be best in long term provided you do your homework properly before buying. It gives you both monthly income as well as capital appreciation.
Your income will depend upon the following factors:
- Type of real estate
- Location
- Scope of development in that area.
This investment can do wonders for your finances as it provides you with a stable monthly cash flow. One can use this cash flow for further investment. Many have witnessed that real estate investment always goes up in long run. The only disadvantage of this investment is that it is highly illiquid. It may take a few months to get a good deal for your property. It is also one of the most popular as well as the oldest investment options in India.
You can also read our article on things to consider before buying a commercial property. Click here
5. Government Securities, Bonds, and Fixed deposits (FDs)
Government Securities and Bonds are the investment options the government releases for a limited period. The interest rate that one gets is good. These are the safest investment options. If you are not able to buy these bonds during the time government is issuing them, you can still buy them or invest in them through the share market.
RBI issued a Floating Rate Savings Bond at an interest rate of 7.15% on 20th July 2020. The interest rate will be reset/revised every six months. The tenure of this bond is 7 yrs.
One more investment option is FD. This is a very popular investment people have been investing. The return is constant and the investment has a certain lock-in period. One can withdraw the FD amount in between the lock-in period but there are certain charges applicable for it.
Now that you know the best investment options in India to keep your money safe, then it is time to choose one and start investing and you can start with any one of the best investment options above.
If you like the article then feel free to share the article among your peers and also let them know about the safer investment options in India and do share your thoughts and takeaways from this article in the comment section below.
