11 Safe Investments With High Returns to Consider in 2022

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TABLE OF CONTENTS

Introduction

The recent couple of years has indeed been a financial roller coaster. With incredible highs that led to record-breaking years for startup and IPO launches, the market has also shown deep downturns wiping out thousands of crores of investor wealth. In these volatile times, it is essential to relook at your financial portfolio and consider investment tools that are low on risk while providing healthy returns. You will be pleased to know that several such low-risk/steady-returns products are available to invest in. Let us take a deep dive into some popular investment options and consider their features, benefits and other relevant attributes.

Investment Types

  • Fixed Deposits (FD)

    Definition

    Fixed Deposits are a well known and popular investment tool used by a large number of Indian investors. Mostly provided by banks and NBFCs, you can put your surplus cash for a fixed period and get steady returns on them.

    Features and Benefits

    FDs are a preferred mode of saving for a lot of traditional investors as the returns are fixed and guaranteed1 by the bank/NBFC. You can choose your investment tenor and payout frequency, making FDs a fairly flexible instrument. By opting for a monthly or quarterly payout, the returns from FDs can be used as a steady income to manage regular living expenses. Most companies offer an additional interest rate for senior citizens, making it a convenient and beneficial form of retirement planning.

    Return Rate

    The rate of return depends entirely on the bank/NBFC, with the usual range being around 3% to 7.5%. Higher tenors, typically, offer the highest return rates. Senior citizens usually get 0.25 - 0.35% higher, depending on the company's policy.

    Eligibility

    While specific eligibility criteria may differ, usually, an FD can be invested in by any Indian citizen above the age of 18 with the requisite documentation, like a PAN card, Aadhar Card and other proofs of identity and address. NRIs can invest in FDs, but usually, there are specific types of FDs for them.

    Risk Level

    FDs are known for being a low-risk tool as the rates are fixed at the time of investment. However, there is always the risk of the company being in a position of debt and unable to pay the amount back. This is why you must always carefully consider the company profile and interest rates and choose the one with the right balance of both. Checking its CRISIL rating is an advisable step.

    How to invest

    Investing in FDs is relatively simple and can be conveniently done online. You just need to:

    • Login to the chosen company's portal
    • Provide your KYC details
    • Enter the amount to invest
    • Select tenor and payout frequency, and
    • Make the payment using net banking or UPI
  • Public Provident Fund (PPF)

    Definition

    Public Provident Fund is a long-term investment tool that helps you build wealth steadily with low-risk exposure. It is backed by the Government of India and is predominantly used as a retirement planning tool.

    Features and Benefits

    While the PPF provides steady rates to offset the overall inflation, another benefit they offer is in terms of tax savings. The interest earned is not taxable, and the amount deposited each month is tax-deductible up to Rs. 1.5 Lakh per annum. It also allows partial withdrawals, and you can even take a loan against your PPF of 25% of your fund amount payable back within three years. The minimum tenure of PPF is 15 years and at least Rs. 500 need to be deposited each year to keep the account active.

    Return Rate

    The interest rate of a PPF account is presently 7.1%. This is regulated and announced directly by the Government and is fixed unless mentioned otherwise.

    Eligibility

    Every Indian citizen above the age of 18 with the requisite documentation, like PAN card, Aadhar Card and other proofs of identity and address, can open a PPF account. One person can only own one PPF account.

    Risk Level

    Being Government-backed, the risks associated with PPF are some of the lowest among all investment tools.

    How to invest

    To invest in PPF you need to open a PPF account. For this you need to:

    • Visit a Post Office or one of the several nationalised banks
    • Fill in the application form
    • Add a passport size photograph
    • Submit all the necessary KYC document proofs
    • Deposit the amount to get the account activated
  • ABSLI Fixed Maturity Plan

    Definition

    The ABSLI Fixed Maturity Plan is a non-participating endowment plan that offers guaranteed returns as a lump sum on maturity. A savings plan that provides life insurance cover and savings benefits to safeguard your family members from financial crisis in case of an unfortunate event, while helping you accumulate lumpsum benefits to achieve all your dreams. A one-time payment plan to help grow your investment to meet your goals.It gives a fixed return and is not affected by the market changes.

    Features and benefits

    • Guaranteed Maturity Benefit at maturity irrespective of market conditions.
    • Financial Security for your loved ones with comprehensive risk cover in case of death of life insured.
    • Single premium payment
    • Possibilities of getting enhanced maturity benefit with increase in premiums
    • Multiple life cover options available
    • Easy to liquidate the amount

    Return rate

    The return rate is relatively better and is around 6% - 6.5% which is guaranteed. As it is fixed for the policy term, the market fluctuations do not affect the return rate.

    Eligibility

    Anyone who is eligible for mutual fund investment, i.e., individuals above the age of 18 years, can apply for the ABSLI Fixed Maturity plan.

    Minimum age: 8 years (if life insured is a minor, the policy will vest in favour of Life Insured after attainment of majority of the Life Insured. For policies issued on minor life, the date of commencement of risk shall be the date of commencement of the policy)

    Maximum age: 60 years

    Risk level

    The risk attached to a fixed maturity tenure is quite low because it is not linked to the market. It is an endowment plan which offers guaranteed returns on maturity of the policy.

    How to invest in ABSLI Fixed Maturity Plan?

    • Visit the website of ABSLI
    • Select the ABSLI Fixed Maturity Plan
    • Ensure you read all the details of the plan carefully
    • Choose the tenure and amount you want to invest
    • Fill out the application form and submit it along with the required documents
    • Make the payment, and you will receive the policy document post confirmation

    You can also get in touch with ABSLI advisors and enquire about the ABSLI Fixed Maturity Plan and will guide you through the process.

  • Unit Linked Insurance Plan (ULIP)

    Definition

    As the name suggests, ULIP is an insurance plan that has a dual purpose. Apart from providing life cover, these plans invest in the market to generate higher returns.

    Features and Benefits

    When you pay the premium for a ULIP, you're paying for two products. A portion of your premium goes towards your life cover, while the other portion is invested in equity, debt or hybrid funds. The benefits include choosing the amount of life cover and the flexibility to invest in various types of funds. Moreover, there is a tax benefit2 under Sec 80C of up to Rs. 1.5 Lakh per annum paid as premium.

    Return Rate

    There is no fixed return rate in ULIP. While the life cover is fixed, the returns depend on the performance of the funds you choose to invest in. Typically, equity funds provide higher returns than debt funds.

    Eligibility

    Indian citizens above the age of 18 with the requisite documentation, like PAN card, Aadhar Card and other proofs of identity and address, can buy a ULIP.

    Risk Level

    While equity funds offer more return, they can be more risk-prone too. ULIP returns are market-linked, hence, directly impacted by market volatility. Moreover, ULIPs come with a 5-year lock-in period which means your money is blocked for that duration. Therefore, you need to carefully compare ULIPs before choosing one.

    How to invest

    Since there are several ULIPs available in the market, you need to be very careful where you invest. Here are some helpful tips for buying ULIP online:

    • Compare different ULIP policies based on historical returns, features etc
    • Identify the best ULIP for you and visit the insurance provider's website
    • Follow the online investment process by completing the relevant formalities
    • Deposit the amount to activate your plan
  • Post Office Monthly Income Scheme (POMIS)

    Definition

    POMIS is an investment scheme offered exclusively by the Indian Postal Service. It is a monthly fixed-income scheme with adequate but guaranteed1 returns with very low risks.

    Features and Benefits

    POMIS comes with a 5-year maturity term. However, the amount can be withdrawn anytime after a year but with a premature withdrawal charge of 1-2%. Money can be reinvested at the end of the 5 years. While there is no TDS, the returns are taxable. It is easily transferable to any other post office free of cost, and one person can own multiple POMIS accounts.

    Return Rate

    The Ministry of Finance fixes the rate of return and currently stands at a flat 6.6% per annum.

    Eligibility

    Indian citizens above the age of 18 with the requisite documentation, like PAN card, Aadhar Card and other proofs of identity and address can open a POMIS account. Accounts can be opened on behalf of minors aged 10 and above. NRIs cannot open an account.

    Risk Level

    POMIS is a Government-guaranteed instrument. Hence, it has very low risk associated with it.

    How to invest

    Common to many Government schemes, opening a POMIS account needs to be done offline.

    • Visit the nearest Post Office.
    • Fill in the application form and provide KYC documents
    • Submit the form along with a passport-sized photograph
    • Make a deposit in your account
  • Senior Citizen Savings Scheme (SCSS)

    Definition

    The Senior Citizen Savings Scheme is an investment tool specifically for Indian citizens above the age of 60. They are well suited to meet medium-term goals while having a low-risk factor.

    Features and Benefits

    SCSS has a maturity period of 5 years with the option to extend for three more years. Only deposit can be made in this account, and it cannot exceed Rs. 15 Lakh. While premature withdrawal is allowed, there is a penalty of 1.5% associated with it. The deposit amount of up to Rs. 1.5 Lakh per annum is tax-deductible.

    Return Rate

    The return rate of SCSS is declared by the Government and stands at 7.4% per annum.

    Eligibility

    Indian citizens above the age of 60 or those between the ages of 55-60 but have retired on superannuation can open an SCSS account. NRIs and HUFs are excluded from this scheme.

    Risk Level

    SCSS is another Government scheme, hence quite low in risk.

    How to invest

    • Visit the nearest Post Office or nationalised bank branch
    • Fill in the application form and provide KYC documents
    • Submit the form along with a passport-sized photograph
    • Make a deposit in your account
  • Sukanya Samriddhi Yojana Scheme (SSY)

    Definition

    Sukanya Samriddhi Yojana Scheme is targeted toward the education of young girls in India so they can have a secure future. Backed by the Government, this scheme is part of the larger ‘Beti Bachao, Beti Padhao' campaign aimed toward the upliftment of girl children from low-income families.

    Features and Benefits

    SSY allows parents to open an account for 2 daughters with a 21-year tenor for each from the account opening date or until the girl gets married. The range of deposits each year is Rs. 500 - Rs. 1.5 Lakh, and should be done for a period of 15 years. The annual deposit is exempted from tax under Sec 80C, and so are the returns.

    Return Rate

    The prevalent return rate of SSY is 7.6% per annum.

    Eligibility

    Parents can open this account for their girl child under 10 yrs of age. It is available only for Indian residents and 2 girls per family. Requisite documents include the birth certificate of the girl child.

    Risk Level

    Low risk due to Government backing and support.

    How to invest

    • Visit the nearest Post Office or nationalised bank branch
    • Fill in the application form and provide KYC documents
    • Submit the form along with a passport-sized photograph
    • Make a deposit in your account
  • National Pension System (NPS)

    Definition

    The Government has introduced NPS to encourage proper retirement planning by all individuals irrespective of whether they work in the public or private sector or are self-employed. It is like to a social security pension scheme that is regulated by the Pension Fund Regulatory and Development Authority (PFRDA)

    Features and Benefits

    NPS has 2 types of accounts. Tier I is a primary account that offers tax breaks and includes restrictions on withdrawals and other T&C. Tier II is more liquid and has no deposit/withdrawal restrictions, and offers negligible tax benefits2. NPS is known as an EEE (Exempt-Exempt-Exempt) scheme wherein the deposit, the returns paid out, and the maturity value is all tax exempted.

    Return Rate

    Going by past performance, NPS has been providing 8.2 - 12.5% returns. Based on the type of NPS account, asset class and investment mode chosen, the returns can differ. Another factor affecting your return rate is the fund manager chosen.

    Eligibility

    Any citizen of India between the ages of 18-65 years (and NRIs) can open an NPS account.

    Risk Level

    As an instrument, NPS comes under the Government's purview, making it a low-risk tool from a process and payout perspective. However, the returns risk level depends on the type of asset class chosen. For example, if you have opted for 70% equity exposure, then market volatility will be a big risk here.

    How to invest

    NPS accounts can be opened online as well as offline. The online method is the most convenient and can be done by visiting the eNPS website, where a step-by-step guide is provided.

    For the offline method, you will need to visit a Point of Presence Service Providers (POP-SP), which are some of the leading private and nationalised banks.

  • National Savings Certificate (NSC)

    Definition

    NSC is a fixed savings scheme that the Indian Postal Service provides due to its vast network and wide presence. It is targeted at the larger population to encourage regular small-medium savings.

    Features and Benefits

    NSC are purchased through a one-time payment with a minimum of Rs. 1000 and thereon in multiples of Rs. 100. There is no maximum limit and the lock-in period is 5 years. The NSC purchase amount qualifies for tax exemption under Sec 80C, up to Rs. 1.5 Lakh per annum.

    Return Rate

    The current rate of return for NSC is 6.8% per annum, payable at maturity.

    Eligibility

    It can be purchased by any adult Indian citizen and by minors above the age of 10. It can only be bought jointly by up to 3 adult individuals.

    Risk Level

    The risk level is low, with a guaranteed1 fixed maturity amount at the end of 5 years.

    How to invest

    • Visit the nearest Post Office
    • Fill in the application form and provide KYC documents
    • Submit the form along with your passport-sized photograph
    • Make a deposit in your account
    • Once printed, you can collect the NSC certificate from the post office
  • Pradhan Mantri Vaya Vandana Yojana (PMVVY)

    Definition

    PMVVY is a subsidised pension scheme offered by the Government for senior citizens. It is administered solely by LIC. This 10-year scheme can be purchased up to 31st March, 2023.

    Features and Benefits

    Under this scheme, you can choose your frequency of pension payment and your mode of deposit. It offers maturity as well as death benefits. You can avail of a loan of up to 75% of the policy purchase price and enjoy tax benefits2 under Sec 80C for the premium paid.

    Return Rate

    PMVVY provides an assured pension at a fixed rate of 7.4% payable monthly, equivalent to 7.66% per annum.

    Eligibility

    PMVVY is only available to Indian senior citizens above the age of 60 with no maximum age limit.

    Risk Level

    Being a government assured scheme, it comes with low risk.

    How to invest

    PMVVY is solely available through LIC. Hence, to invest in this plan, you need to visit the nearest LIC office or visit their website and follow the registration guidelines.

  • Atal Pension Yojana (APY)

    Definition

    Atal Pension Yojana is a pension fund scheme from the Government of India that offers guaranteed1 pensions to senior citizens depending on their contributions to the fund.

    Features and Benefits

    Under this scheme, senior citizens can get a pension ranging from Rs. 1000 - 5000 per month. The Government also contributes an amount which is the lower amount of 50% of the subscriber's contribution or Rs. 1000 per annum.

    Return Rate

    Since the APY is a fixed income scheme with flat pension amounts, there is no interest rate applicable here.

    Eligibility

    All citizens of India aged between 18 - 40 years can subscribe to APY.

    Risk Level

    Since the Government guarantees the pension, there is negligible risk in this scheme.

    How to invest

    APY can be subscribed to through nationalised and some private banks. You can visit the branch to use the offline channel or use your net banking account to conveniently apply through the internet.

  • Endowment Plans

    Definition

    Endowment plans are similar to life insurance. They pay a lump sum amount on death or on the maturity of the plan's term. There are various kinds of endowment plans available with varying features and benefits.

    Features and Benefits

    Much like a ULIP, endowment plans can provide life cover while also being a useful investment tool. They offer great flexibility in terms of policy term, maturity age, sum assured, premium paying term, illness benefits, add-ons/riders etc. They also provide tax benefits2 under Sec 80C. To know more about the various types of endowment plans, click here.

    Return Rate

    The returns can vary as per the type of endowment plan chosen and the market exposure it provides. There are also endowment plans available with assured returns at a fixed rate. This rate can be different across different providers.

    Eligibility

    The eligibility varies across different types of plans. Most providers offer plans for an age group of 5 - 60 years. Other variables include the policy term, which can be 10, 15, 20, or 25 years. People who invest early and for a longer period stand to gain the most by investing in an endowment plan.

    Risk Level

    The endowment plans come with a very low-risk factor. They offer fixed, assured returns with minimal impact on market volatility.

    How to invest

    Endowment plans are easily available online through several insurance providers. Before investing in one, you should:

    • Browse and compare the features and benefits of different endowment plans
    • Narrow down your selection and do a cost-benefit analysis
    • Visit the provider's website and complete your KYC
    • Select the parameters and other options for your plan
    • Deposit the amount to activate your plan

Benefits Of Choosing A Safe Investment Option

By carefully choosing the right investment option, you can achieve many goals. Safe investment options allow you to secure your financial future and plan for a comfortable retirement. ULIPs and endowment plans go one step further and help you build wealth to meet your medium-long term financial goals. Some can also help you save on taxes adding to your corpus.

How To Choose Safe Investment Options?

As you can see, there are several safe investment options for you to choose from. Picking the right one can be a bit confusing. Before you make a choice, you should compare the different options based on:

  • Goals and objectives
  • Risk appetite
  • Liquidity requirements
  • Investment horizon

Carefully read the terms and conditions of each to ensure there are no surprises later on.

How To Improve Return Rates Of Investments In India?

To improve your ROI, you need to understand the key factors that influence it. These are:

  • Asset Allocation: To get better returns you need to reassess your portfolio and bring in exposure to diverse asset classes. Typically, equities are an excellent way to get better returns. Real estate, cash, commodities, and currency too can be helpful in this regard.
  • Risk Exposure: These asset classes may expose you to a higher risk. Therefore, it is crucial to understand your risk profile and how willing you are to take risks in place of possibly higher gains.
  • Taxation Implications: Taxation can make a dent in your net earnings. Always understand the tax implications before investing in any instrument. These can be taxation on contributions, earned interests, and final maturity amount.
  • Fees and Charges: Note the kind of administrative fees or other hidden charges that may be involved in the product you are investing in, as these will also reduce your final returns.

Keeping the above factors in mind, ULIP and Endowment Plans emerge as a great choice to increase your rate of return while maintaining low risk, getting tax benefits2, and other forms of insurance cover.

FAQs on Safe Investment Options In India

  • Which investment option is better than FD?

    ‘Better’ may mean different things to different people. FDs can provide fixed returns for shorter periods of time, but they are not the preferred tool for long-term wealth creation. For that, you can consider ULIPs and endowment plans. Moreover, these will also provide the added benefit of a life cover to protect your family’s financial future.

  • Is ULIP investment safe?

    Yes, ULIP investments are considered safe. To ensure safety and good returns, you should carefully compare the different plans and check out the insurer’s credibility and reputation as well.

  • Are endowment plans safe?

    Endowment savings plans are quite popular due to their low risk and multiple advantages. They are a safe way to plan for your future while also protecting the interest of your family in your unfortunate absence.

  • How to buy NSC online?

    As of now, you cannot buy NSC online. You need to physically visit the post office to fill out the application form and submit the documents. You can also download the form from their website and print and fill it out before visiting the post office.

  • Is NSC interest taxable?

    Yes, the interest on NSC maturity is taxable as per your existing tax slab, under the heading “Income from other sources”. In the first 4 years, though, since the interest is reinvested, it can be deducted under the provision of Sec 80C of the Income Tax Act.

  • What is annuity in NPS?

    The Pension Fund Regulatory and Development Authority (PFRDA) regulates the NPS scheme. Under this, after maturity, subscribers can withdraw 60% of their entire fund amount. The remaining 40%, though, is paid out as a monthly pension. For this, the subscriber needs to buy an annuity plan from any one of the insurance providers empanelled with the PFRDA. However, if you choose to withdraw before maturity (the age of 60), then you will need to put 80% in annuity instead of 40%.

  • Where can I invest my money safely in India?

    Money can safely be invested in many government and private schemes, as mentioned in this article. However, for long-term financial goals, you should also consider returns along with the safety of investment.

  • Is SIP a safe investment option?

    SIP is a way to contribute to your chosen mutual fund regularly. By regularly investing smaller amounts, SIPs are able to offset the risks and challenges associated with timing your market investments and are able to generate a healthy corpus over a longer period of time.

  • What are safe government investment plan options?

    Some of the safe government investment plan options include Public Provident Fund, Senior Citizen Savings Scheme, NSC, Sukanya Samriddhi Yojana Scheme, National Savings Certificate, Atal Pension Yojana, and Pradhan Mantri Vaya Vandana Yojana, to name a few.

Disclaimer:

1 Provided all due premiums are paid
2 Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.
ABSLI Fixed Maturity Plan is a Non- Linked Non- Participating Individual Savings Life Insurance Plan (UIN: 109N135V01)
ADV/7/22-23/691

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