There are numerous options when it comes to investments, be it FDs, mutual funds and PPF, and and each has its own set of benefits and drawbacks. Here’s a look at those that top the list in terms of security and dependability.
Financial planning is important but can be quite confusing as there are numerous investment options available for you to choose from. All these options have their unique characteristics. While some offer the promise of better returns, others offer short-term gains but are riskier in nature. Investment options that are prone to market fluctuations can be a risky for investors with a lower risk appetite. Whether you choose to stay averse from risks or like to take a little risk for better gains, it is important to choose at least a few safe options for your investment portfolio.
There are numerous investments that provide steady returns on investment and are unaffected by market fluctuations. These include options like fixed deposits, provident funds and many more.
Safety of money should be your priority when making a final decision regarding your financial nest egg. There are scores of people who have lost money in risky investment options that are prone to market ups and downs. So here are some safer and more dependable options you could consider as risk-averse investments:
- Fixed Deposits: If you have accumulated savings that you are looking to invest in utmost safety, bank FDs are the perfect option for you. This option involves investing an amount of money in a bank account, locking it in for a chosen tenor and receiving interest payments on the sum invested. There are various schemes offered by banks when it comes to fixed deposits; however, fixed deposits interest rates have seen a slump in recent times. This has made traditional FDs a less attractive investment for individuals.
- Company Fixed Deposits: This option is the similar to fixed deposits, however it gives investors like you better returns. Offered by banks, NBFCs and other standalone institutions, company FDs are linked to companies and thus carry a little more risk. However, when choosing such FDs, checking the ratings of these fixed deposits by trusted agencies like ICRA and CRISIL will ensure that your investment is as stable as possible. Company FDs also offer fixed returns over your chosen tenor and also give you the option of choosing a cumulative or non cumulative option. A cumulative FD gives you your interest returns at the maturity along with your principal investment while a non-cumulative FD gives you interest income at your chosen dates, be it monthly, quarterly or annually. Fixed deposits are free from risk, liquid and a safe form of investment.
- Mutual Funds: For those interested in safe equity, mutual funds are your best bet. Mutual funds are basically a pool of money invested by a group of investors to purchase securities in various companies. The sum invested in mutual funds grows in value over period of time and provides dividend pay-outs over the tenor. Mutual funds are the least risky form of equity; however there are numerous forms of mutual fund investments. It is important for you to carry out a thorough analysis and choose the safest option available. Also, long term holdings of mutual funds over 12 months are also free from capital gains tax.
- Public Provident Fund: The government of India has created a scheme that allows various individuals to deposit money collectively in an account called the public provident fund. The amount invested grows over a variable period of time and delivers a good interest. The interest rate that PPF offers is around 8.10%. It is the perfect investment option for those who seek excellent growth of their investment. This option is also safe from market fluctuations and risks, and the best part is that the returns from this investment option are tax free.
Whether you are looking for safe FDs or stable mutual funds, grow your earnings with Bajaj Finance.