5 Risk-free Investment Options You Should Know About

In the ever-fluctuating market, people tend to avoid risks in investments. Preserving the capital is essential for it to give a bigger and better return in the coming future. For those who are retired, it becomes all the more relevant that get the schemes where the risks are next to nil. An ideal investment option in this scenario would be the one with zero or a minimal risk.

There is also a misconception that zero or minimal risk investments yield fewer returns in comparison to the one with higher involvement of risks. Of course, it is not universally true. There are many good investment options that provide higher returns and have lesser risks.

Risk-free investments will keep your future post-retirement financially secured. Based on your own preference, you may select the numerous schemes or options available in the market for investment. For your help, here are the top five risk-free investment options you should at least briefly have a look at before investing anywhere.

1. Savings Account

All the commercial banks offer the services of a maintained savings account to their customers. As far as the investment is concerned, banks usually offer around 4% interest per annum on savings account deposits. The returns rate may discourage some, but the risks involved are nil in this situation. Certainly, it is not the best investment option in terms of return but as far as the security of your capital is concerned it is one of the safest options out there. While opting for a savings account, explore different banks to see which one provides the highest interest for your savings.

2. Fixed Deposits

The most popular option of investment in India is the fixed deposit. It is a highly safer form of investment with better returns than a savings account. In this option, you will be depositing a certain amount for a given time period. After the end of this period, you will get back the entire amount along with the interest earned on the principal. The interest rate on fixed deposits varies from 6% to 8.5%. The period of investment ranges from one month to ten years and most of these fixed deposits allow one the benefit of withdrawing the sum before the maturity period ends. The condition, however, is you may require paying a nominal premature withdrawal fee.

3. Recurring Deposits

Recurring Deposits are quite similar to fixed deposits. While in FD you had to deposit a sum only for once, in recurring deposit scheme you will be able to pay a fixed amount at regular intervals. The returns are also guaranteed in the recurring deposits as they are in the fixed deposits. The interest rate ranges from 5% to 8%. The thing to be noted here is that the interest rates remain the same for the entire deposit tenure. Premature withdrawals are seldom allowed in recurring deposits but that comes against a withdrawal fee.

There are different tools available to assist you in calculating returns. With the help of a recurring deposit calculator, one can calculate the maturity value of the investment based on its growth at a certain interest rate. The recurring deposit calculator will give you fair information about your investment returns. The data reflected on the recurring deposit calculator depends on the investment amount, interest rate and the period of investment.

4. Public Provident Funds

Public Provident Fund or PPF is yet another popular option of investment with no risks, guaranteed returns and tax exemptions. It is a scheme initiated by the government of India for the people to save money for post-retirement purposes. A PPF account can be opened at any bank or postal department. Though the general tenure is 15 years, it can also be extended according to your requirements. The maximum deposit amount in a year is Rs 1.5 lakh with the maximum number of investments permissible being no more than 12 per year. The interest rate is 7%-9% and the amount invested is also tax-free. One can withdraw from PPF only after 5 years if the need arises. A PPF calculator can help you to calculate returns from your PPF investment, similar to a recurring deposit calculator.

5. Mutual Funds

Mutual funds are generally considered safe, especially when opted for the long run. A short-term fluctuation in the market does not affect the scheme for the best benefits in mutual funds can only be reaped if they are put to use in the long run. The mutual fund investment interest rate can go as high as 14%  based on the performance of the market. The returns are not guaranteed mostly in the short run but if you are investing in it for a longer period say 15-20 years, the returns are going to be more than enough.

Compare different mutual fund options and read about it carefully before going for one. Just like tools available to calculate returns from recurring deposits such as a recurring deposit calculator, tools are available to calculate returns from different mutual funds.

These are some of the investment schemes a potential investor should know and learn before finalizing the decision of investment. Go through the details and assess the returns to make the best decision. For instance, if you are opting for recurring deposits, use a recurring deposit calculator to analyze what your return is going to be on the amount you will invest. In this way, you will be able to evaluate different options with the help of tools such as recurring deposit calculator and choose the one which gives you maximum returns.

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