We study hard to get good jobs, we look for a good job to earn big money, we earn money to fulfill our desire of having a dream house, car or luxury. People have their own reasons for rushing behind money. Earning money and spending it has become easy but how to grow remaining leftover money is always challenging.
Usually, whenever we think about saving money, most of us will keep in saving the account. We think, just saving money every month from our salary and keeping in the bank’s savings account is wise. Well, you are wrong! If your money is laying in your bank’s savings account, then it’s worth is decreasing every year. It’s basic and many of you might already know about it.
The people who know about these things are looking for other investment opportunities. They talk to their friends, their investment advisor, their family member or follow some random advice received on the business channels. There are many schemes in the market to eat up your money. These schemes could work as a ladder to create wealth for you in future or drain your existing money faster than you think. When I say investment schemes, I mean Fixed Deposit , Recurring Fixed Deposit, Equity, Mutual Funds, Liquid Funds, Commodity, Forex, Cryptocurrency, PPF, Post Office Saving Scheme and many more.
People who are desperate to make quick money from such schemes are usually the ones who lost their lifetime money sooner. Shocked? Well, I am not saying these schemes are bad. These schemes can make you millionaire, provided you know how to invest properly and follow the best practices.
Investors who want to play safe usually trust on FD i.e. Fixed deposit but its interest rate is not enough to beat the ongoing inflation rate. Check out my previous article which explains, why Fixed deposit investments were never 100% safe investment. You will be amazed to know certain facts there. So, What to do? Should we keep the money in saving account instead? Are there any safest investment options available for us? Actually there is..
But before, let’s understand why the right investment is essential?
India’s inflation rate stands at 6.7% as of May 2019 . If you don’t know about inflation,
Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.
You can search for it on the internet or YouTube to get more information if you want.
Today what we can buy in Rs. 1000 would cost Rs. 1500 after 5 or 10 years. If we don’t work hard to increase our money’s worth, we might find difficult to sustain or have a present life-style in the longer run.
If we keep money in the bank where we get only 4% or less interest, then technically we are losing 6.7 – 4 = 2.7% of our money’s worth every year. All FD in major banks are offering a maximum of 7% interest and if you think you are making at least 0.3% interest here, then you are wrong. You are entitled to pay tax on the earned interest and it could go till 30%.
Don’t worry, we have some other investment schemes which could offer good interest to beat the inflation and create wealth in longer run. These schemes work fine because I have tested them all and have seen good result.
Top 5 Proven Safest Investment Options in India
There are a lot of investment options available in the modern world and I am just listing which I believe is safest among them. The returns may not be as high as some investors claim through the stock market. The following are my top 5 safest investment options in India.
1. PPF (Public Provident Fund):
This is my favorite and top of my list. Interests offered under this scheme is good for long term investment.
Public Provided Fund is a savings-cum-tax-saving instrument in India, introduced by the National Savings Institute of the Ministry of Finance in 1968.
Following are some key points to know about PPF:
- The investment under the PPF account falls under tax redemption 80C.
- Investment is locked for the 15 years however; partial withdrawal option is there from the 7th years of investment. One withdrawal in 2 years and there is a cap of 50% of total investment.
- The maximum contribution towards PPF is Rs. 1,50,000 in a financial year.
- All interest earned under this saving scheme is tax-free. You can complete the maturity amount.
- Minimum of 500 should be invested in each financial year
This is one of my favorites if you looking for a very long term investment. For some people, 15 years is too much but there is no harm me dividing the portfolio and invest small portal in PPF account.
If you only invest Rs. 5,000 every month, your total investment in 15 years stands at Rs. 9,00,000. However, the maturity amount at the rate of interest 8% will be Rs. 17,59,457.
It is not mandatory to withdraw the money after 15 years however you don’t need to invest anything after 15 years. If you extend your PPF for 5 more years, your total withdrawable money will be Rs. 29,65,375. Isn’t it great?
2. RBI Bonds
As I explained earlier in the article about FD that, how it is not worth investing with the current interest rate. In addition to that, it is not 100% secure (however depositor has the insurance of Rs. 1,00,000 if the bank goes bankrupt.)
So, an alternative to FD, I would suggest investing in RBI Bonds issued by Reserve Bank of India. The current interest rate in 2019 is 7.75% and still better than the interest offered in Fixed Deposit.
Following are some points to remember about RBI Bonds:
- It has a locking period of 7 years
- Bonds are issued by RBI and are sovereign rated, there is NO credit risk and are fully safe.
- Best suited for senior citizens as the locking period decreases with the age of the depositor. E.g. For age 60-70 it’s 6 years, from 70-80 it’s 5 years and from 80 onwards it’s 4 years.
- There is no maximum investment limit
- No regular investment needed, a one-time lump sum amount could be invested.
- Investments in these bonds are not eligible for tax benefit under section 80C of the Income Tax Act.
Note: Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond
Now, how to buy these bonds?
One can buy the bonds from the Stock Holding Corporation of India or any of the branches of the nationalized banks and few of the private sector banks such as ICICI Bank, HDFC and Axis Bank.
Do you find this as an interesting investment opportunity? Let me know in the comment section.
3. Commercial Properties/Land
Well, this investment option is always there if you have good money in hand. We all know the prices of land and especially the commercial lands are touching the sky and it’s continue going up. Not only the land worth, but there are also many advantages of owning a commercial residence land or property.
Some of the key benefits of investing in commercial or residential property:
- The investment of return is too high if you have bought it at the right price.
- You can give on lease the land and earn good rent
- You can construct shops and rent it out
- You will always have the option to start a business without worrying about rent.
These benefits are there along with the overall increase in land worth. However, I would not suggest investing heavily in residence units because it has high regular maintenance and the return we get from residence units is not worth it. Moreover, if you have the opportunity to purchase residential units at attractive prices in the location where you can expect growth in expected rent and locality then you can always consider it. Commercial units are proven to give excellent returns over time and I would blindly suggest investing in this if you have money.
Advice: Please check the background and legal things related to the property you are buying. There have been many cases of fraud in property deals. So be careful and research before making any move.
Have you invested in the real state via residence or land? If yes! How was your experience? Please share your experience in the comment section.
4. Investment in GOLD
Indians are always attached to the shiny yellow metal called Gold. They always see value in purchasing GOLD and why not? The gold price is on the rise continuously if you see the long term pattern. Therefore, buying gold as an investment could be a wise choice but I would definitely stay away from physical gold. Physical gold involves making and other charges and when you sell, they don’t consider the exact value.
So, how to invest in GOLD?
I have one answer for this; which is “Sovereign Gold Bonds”
Sovereign Gold Bonds is issued by the Reserve Bank of India on behalf of the Government of India. It is an ideal investment for someone looking to invest in Gold.
Some of the key benefits of Sovereign Gold Bonds:
- You can take a loan against it.
- You don’t need to keep physical gold.
- Fixed 2.5% interest every year on the initially invested amount. This interest will be credited to the investor’s bank account semi-annually.
- The tenor of the Bond will be for a period of 8 years with exit option in 5th, 6th and 7th year, to be exercised on the interest payment dates. In Short, there is a lock-in period of 5 years.
- The minimum investment needed is 1 gram and a maximum of 4KG gold for the individual.
- You hold the exact quantity of Gold and on maturity, you get the money as per the latest gold rate of the last week.
However, there is a risk of gold prices falling down however, there is no impact on the already bought gold units. So, if you are a gold lover, then Sovereign Gold Bonds is a good choice for you.
Have you invested in this scheme? How’s it working for you? Please share your feedback in the comment section.
5. Debt mutual funds
Last but not least, Debt Mutual Funds. Equity mutual funds are linked with the market and there is always a risk involved in your investment if market sentiments are not going positive. It is also a good option for the long term horizon but you should have the courage to see your investment chart going in south direction.
On the other side, Debt funds are best suitable for investors who want to play safe and expect steady returns. Debt mutual funds primarily invest in fixed-interest generating securities like corporate bonds, government securities, treasury bills, commercial paper, and other money market instruments. They are less volatile and, hence, less risky compared to equity funds.
Some of the key benefit of investing in Debt Mutual Funds:
- It is very less risky.
- Offers attractive returns (better than FD)
- It offers higher liquidity. You can withdraw anytime you want
- If offers greater flexibility and you can start with very less amount
Top-performing debt Mutual Funds have given between 8% – 10% returns if you check for the 5 years’ average. This isn’t bad if you compare to other safe investment opportunities.
However, you should always check with your financial advisor regarding the best performing debt fund and analyze yourself before investing money.
I have also listed some of the high return investment opportunities with the Indian Post Office Saving Scheme. Do check it out let me know if it worked for you.
These safest investment options are my list based on my experience in investing. This post shouldn’t be considered as financial advice and it is for your reference purpose. One should investigate and read more about these investment opportunities before taking any further action. Money doesn’t come easily if you already have enough respect and think multiple times before investing anywhere.
I hope you enjoyed reading and found this article interesting. You can always subscribe through email and share an article with friends via social media. Also, let me know your feedback in the comment section, I would be happy to read and act accordingly.