Low-risk, high-return investment plans are very popular among all types of investors. These plans are perfect for investors who wish to grow their money without taking a lot of risk.
Yes, these plans produce less returns than high-risk investment options. However, these investment options can be ideal for you if you’re saving for short-term goals. In this post, we will learn about different high-return, low-risk investment plans and try to understand their importance.
Why Investors Prefer a High-Return, Low-Risk Investment Plan?
These plans enjoy huge popularity among the general public due to the benefits that they provide like:
1. Capital Protection
A high-return, low-risk investment plan allows investors to keep their money safe from the ups and downs of the market. This makes these plans ideal for people who seek to grow their money but have a low-risk appetite.
2. Stable Income
Low-risk investment plans such as government bonds and FDs provide stable and consistent returns. Thus, you can use them to cover your regular expenses and short-term goals.
3. Peace of Mind
This type of investment plan gives you peace of mind. If you invest in them, you do not have to constantly track the volatility of the market and make adjustments to your investments. These plans help you achieve your goals without worrying about losing money.
4. Diversification
If your portfolio includes only high-risk investments, you can balance it by including a low-risk investment plan. By doing this, you cannot only reduce your overall risk but also build a stable income source for yourself.
5. Perfect for Beginners
Low-risk, high returns investment plans are very simple and easy to understand. You don’t have to be an investment guru to start investing in these types of plans.
Some of the Most Popular Low-Risk, High-Return Investment Options in India
1. Fixed Deposits or FDs
It is one of the most popular investment options in the market. The interest rate and investment tenure are fixed at the time of the investment. However, the returns can be moderate because they are not linked to the market. Plus, you can also get tax benefits if you invest in tax-saving FD.
2. Public Provident Fund (PPF)
This scheme is backed by the government of India and is a very attractive investment option. It provides stable returns with low risk. Basically, it is a long-term investment plan in which your money is locked for a period of 15 years. However, the returns you get from it are tax-free under Section 80C of the Income Tax Act 1961 (T&C apply).
3. National Pension System (NPS)
It is another investment plan that is backed by the government of India. Basically, it is a retirement saving plan that offers great tax benefits and returns. Earlier, the scheme was only open to government employees, but later, the government opened NPS for all.
It requires regular contributions till retirement by the investors, and you can claim deductions for it under Section 80C and Section 80CCD with additional benefits under Section 80CCD(1B) of the Income Tax Act. When you retire, you can withdraw a certain percentage of your invested amount, and you have to use the rest to buy an annuity.
4. Corporate Bonds
These are debt securities that are issued by companies to raise money for different purposes. Companies issue bonds for expansion, purchasing new equipment, etc. When you buy these bonds, you are giving a loan to the company, who, in return, will give your money back on a set date with fixed interest. In the past, corporate bonds have given very decent returns to investors. However, it is important to note that these returns depend on several factors.
What Things Should Investors Keep In Mind When Investing in a Low-Risk Investment Plan?
Before investing in any type of plan, there are certain things you must consider like:
- Set clear goals and choose an investment plan that can help you achieve them.
- Keep in mind that even low-risk options involve some risk. For example, FDs are safer than bonds.
- Don’t make investment decisions based on someone’s advice. Do your own research and then invest.
- Regularly review your investments and make adjustments if necessary.
- Remember, the low-risk investment options produce low to moderate returns.
Conclusion
Putting money into low-risk investment plans is a great way to build wealth without burning a hole in your pocket. These investment options may not produce high returns like other investment products. However, they can provide you with decent returns, tax benefits and peace of mind.
Before investing in any plan, do adequate research to ensure it aligns with your goals. You can use an investment calculator offered by companies like Axis Max Life Insurance to plan your investments better.
Wait no more. The sooner you start, the more time your investments have to grow.
