There are many ways to invest money. Some of them offer safe investment options, but the returns from them are low. Before making any investment, one should study whether it is safe.
Generally, the highest preference is given by consumers to investing in instruments guaranteed by the government. The higher the risk, the higher the return when investing. This article provides ways to invest money safely.
1] Bank Fixed Deposit (FD)
A bank FD is considered to be the safest form of investment in India. The amount invested in a bank fixed deposit is returned with interest over a specified period. A slightly higher rate of interest is paid on bank term deposits for senior citizens. Income tax is exempted if you have taken a 5-year income tax saving bank FD. This exemption is included under Section 80C of the Income Tax Act, 1961. Investors can save tax on income up to Rs 1,50,000 by investing in this scheme.
The term for investment in bank FD is fixed. That means if you withdraw the amount before this fixed lock-in period, you have to pay some form of penalty on the interest earned. The interest rate varies depending on the investment period, amount, residential status, and bank. Like banks, other companies also provide FD facilities.
Bank FD deposits are considered safe. By depositing in it, you get guaranteed returns after a certain period. A safe investment can be made without taking any risk. After withdrawing a part of the amount, the loan is available for the remaining amount.
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2] Public Provident Fund (PPF-Public Provident Fund)
The Public Provident Fund
The scheme is a popular investment scheme approved by the government. This plan is considered safe. One has to invest in this scheme for a lock-in period of 15 years. Like bank FDs, public provident funds pay interest at a fixed rate. Since Public Provident Funds are not linked to the stock market, you get guaranteed returns after 15 years.
A plan like the Public Provident Fund is a good plan for long-term investment as it has a lock-in period of 15 years. After the maturity of this plan, you can withdraw all the money at once or increase the investment in blocks of five more years.
The interest earned on this scheme and the entire amount received on maturity are tax free.
This is a scheme that forces you to invest in a disciplined manner, without risk, with the benefit of compound interest, and you should definitely invest in it.
3] National Pension Scheme (NPS)
The National Pension Scheme is run by the government. There are many types under this plan, and you can choose one according to your needs. All these schemes have different interest rates. The National Pension Scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA). The scheme can invest money in options like liquid funds, fixed deposits, and corporate bonds.
The National Pension Scheme is open for investment to employees working in all sectors. In this plan, the customer has the right to choose an auto or active method of managing the portfolio. As per the provisions of the Income Tax Act, 1961, this scheme can save up to Rs 2 lakh.
4] Investment in gold
Investing in gold has been around for a long time. Gold is traditionally invested in the form of bullion, jewelry, and coins. Apart from buying gold, investing in gold is done by investing in gold ETFs and sovereign gold bonds.
Investing in gold does not depreciate much. So you get the benefit of capital protection. As gold prices and the stock market are inversely related, even if the stock market goes down, it does not affect the price of gold. Investing in gold provides protection against inflation.
5] Savings Bonds
Savings bonds are issued by the government on behalf of the Reserve Bank of India. You have to invest in these bonds for 7 years. Interest earned thereon is taxable. In this, investors currently get annual interest at the rate of 7.75 percent. These rates are announced by the government from time to time.
You can start with an investment of Rs 1,000. Investments in savings bonds are safe. which protects your capital.
6] Recurring Deposits (RD-Recurring Deposits)
A recurring deposit is a good investment option. You get higher interest on RD deposits than on regular savings accounts. You can show the RD deposit as indirect proof to get the loan. RD deposits are used to invest in institutions in rural areas. An RD deposit is considered a safe deposit.
Investments in RD Deposits are not affected by the stock market. Investing in RD deposits for a long period of time creates a habit of saving money. You don’t need a huge amount to invest, you can start with a small amount.