Best Low Risk Investments with High Returns

In the modern world there are a lot of options to invest money. And every asset class has its returns and risks. But every individual has his own risk taking ability and some can’t take risk on their investement and they are happy in low returns. In India people generally prefer low risk investments without thinking of the returns. They mainly prefer the investments backed by the government.

So, there are many options where you can invest money with almost zero risk. Let’s discuss those.

Table of Contents :

• Types of Zero/Low risk investments.
  • FD
  • PPF
  • Bonds
  • NPS
  • Debt Funds
• Advantages of low risk investments.
• Disadvantages of low risk investments.
• Conclusion.

Types of Zero/Low risk investments :

1. FD :-

FD (Fixed Deposit) is the option where almost zero risk is involved. But with zero risk this option has some negatives like it has a lock-in of a particular time depending on scheme to scheme. Also it gives only returns of 6–7% which are not able to beat the inflation completely.

It is an option like a savings account but it has just the benefit that it gives more interest as compared to savings accounts for which we have to invest for a fixed time. In this you can also choose schemes which give benefits of tax deductions under Section 80C. But it has one side effect that if you withdraw the money before a fixed time then you will not receive the actual interest rate because some money will get deducted as charges.

2. PPF :-

PPF (Public Provident Fund) is another safe option where you will have almost zero risk. In this also a fixed rate of interest is decided which is now 7.1%. Again it has the exception that it will not make your money grow with that pace that you want. It is better because it is a government backed scheme. In this government invest the money and give fixed returns to its investors.

But it has many positives like you will get deduction of the money you invest in it up to INR 1,50,000 under section 80C in Old tax regime. Also you can withdraw money from this up to some limit without any exit load whenever you require whereas in FD you have to pay some charges if you want to withdraw in between.

3. Bonds :-

In investment one option is bonds where you get fix returns up to 8–10% depending on time to time. If these are government bonds then these have almost zero risk with a good rate of returns as compared to the risk involved in it. This is a type of debt issued by companies to raise capital without dilution of the equity.

But it has disadvantages that you have to hold these bonds till maturity. You can also sell these before maturity but for that you will need a buyer. And if after your buying of bond if the Coupen rate of bond increases then their prices will be lower than your buy price and you have to bear the loss.

4. NPS :-

NPS (National Pension Scheme) is the investment option with almost zero risk because it is a government instrument. This should be used for retirement planning. This instrument has lock-in of the age of up to 60 and after 60 you can withdraw 60% of the corpus and remaining should be used to purchase annuity.

This scheme has the advantage that your money is saved for retirement and also you can take the benefit of tax deductions under section 80C of income tax up to 1,50,000 and additional 50,000 only in Old tax regime. But it has many complications in withdrawing the money, mainly in the first 3 years.

5. Debt Funds :-

Debt funds are also the safe option to invest for the long term with low risk. This is the instrument which provides better returns than the options we discussed above. In this fund the money invested is paid to the companies which require most and a fixed rate of return is given by them like 8–10%.

These are safe because even in the case of bankruptcy of the company they have to pay the debt on the priority basis even by selling the assets. You can use this instrument for investment with low risk for 3–5 years. The interest received on debt will be taxable without the benefit of indexation on investments made after 01 April 2023.

These are the important and most commonly used zero risk investment options. But other than these there are many other options with different types of conditions. These are :-

• Senior Citizen Savings Scheme
• Sukanya Samriddhi Yojana
• Post Office Monthly Saving Scheme
• Treasury Bills

Advantages of Low Risk Investments :

• Guaranteed returns
• Low risk
• More stability and faith
• No need of expertise
• Can start with a small amount
• Good to create long term saving discipline

Disadvantages of Low Risk Investment :

• Mostly have liquidity issues
• Lock-in period in some schemes
• Mostly not able to beat Inflation with big Margin

Conclusion :

So, now if we come to conclude the low risk investments then these are good for low risk investors and aged investors. But if you are in the age of 20–30 then you should keep more portions in Equity Mutual Funds for long term and small portions in these low risk investments to have diversification of risk and investments.

You should use these also if you want to invest for 1, 2 or 3 years You can choose anyone which suits you best as per your goals and requirements. Every scheme has a different journey. Use these with your knowledge and risk appetite and don’t run behind every scheme.

Learn More :

Thank you for reading Buffett Money’s guide on the Low Risk Investments. To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:

• Penny Stock
• High Growth Stocks
• Dividend Yield Stocks
• False Breakout Stocks
• Fundamentally strong stocks
• AI impact on Algo Trading
• 5 Best Stocks
• Averaging Down Strategy
• Methods of Stock Market Prediction

The content shared above is just to educate you. Choose and invest after consulting your financial advisor.

Thank You

Happy Investing