Top Safest Investments with Highest Interest Rates in India 2024

Safest Investments in India

Updated on 24 Oct, 2023

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“The first rule is not to lose. The second rule is not to forget the first rule.” Warren Buffett.

None of us likes to lose our money and therefore are always looking for safe investment options that give high returns. Everyone desires to generate high returns quickly, and we often expect to earn high returns with less risk. Though this is everyone’s dream, but unfortunately can never come true.

Risk and returns are highly correlated. The higher the risk, the higher will be the returns and vice versa. Therefore, while choosing investment options, you should always consider your risk profile. Understanding your risk profile will help you select investment options that match it. In other words, if you are a high-risk taker, low-risk investments may not earn you satisfying returns that you may expect. While, for a low-risk seeker, highly volatile investments will result in a restless life. They will always panic with the market movements. Therefore, identifying your risk tolerance levels is often the first step towards curating a good financial plan.

Following are the safest investment options in India:

Top Safest Investments with Highest Interest Rates in India 2024

Scheme Name	Tenure	Interest Rate
Fixed Deposit	1- 5 Years
Public Provident Fund (PPF)	15 Years
Post Office Monthly Income Scheme (POMIS)	5 Years
Senior Citizen Savings Scheme (SCSS)	5 Years
Sukanya Samriddhi Yojana (SSY)	Till the girl child reaches 21 years
National Savings Certificate (NSC)	5 Years
Pradhan Mantri Vaya Vandana Yojana (PMVVY)	10 Years	8-8.30% p.a.
Atal Pension Yojana (APY)	20 Years
Long Term Government Bonds	5 – 40 Years	Returns depend on the type of scheme

While looking for safe investment options that offer high returns, you should always ensure they have good creditworthiness or are backed by government institutions. Often government-backed schemes are considered risk free.

Safe investments translate to capital protection and fixed or guaranteed returns. However, not all schemes offer high returns. Inflation should often be the benchmark while investing in low-risk investments. You should identify schemes that offer inflation-beating returns. Inflation can reduce the value of your returns along with the money. Therefore, not all safe investments generate inflation-beating returns.

Choosing from the various investment options can be dicey. However, the thumb rule is to match your risk profile and investment goal with the product’s investment objective and risk category.

What Should You Choose?

The above mentioned safe investment schemes are fixed income schemes. These schemes help you generate guaranteed income, unlike market-linked instruments (equities). The fixed income schemes help in wealth preservation. The choice among the schemes largely depends on the following parameters:

Goal

Always invest towards a goal. Goal-based investing will help you stay determined and motivate you to continue your investments. For example, if your goal is to create a retirement fund, you can choose either a PPF scheme or an SCSS scheme. If you wish to save for your girl child’s future, SSY can be the most suitable option. These schemes guarantee income, and therefore you need not worry about losing money. Investing through these schemes will help you achieve your goals hassle-free.

Investment Horizon

Your investment horizon plays an important role in determining the scheme to invest in. For example, if you have a long term investment horizon, PPF or government bonds, or SSY can be a suitable option. In case your investment horizon is around five years, you can choose between FD, SCSS, NSC or POMIS, depending on your investment objective.

Investment Amount

The amount you wish to invest in a scheme will also determine which scheme will best fit into your portfolio. Keep in mind the minimum investment amount required for a scheme, and choose the one that fits into your budget as well as your investment goal.

Tax

Taxation plays an important role while determining the actual returns from an investment. For example, investments and returns from PPF and SSY are completely tax-free in the investor’s hands. Therefore, carefully consider the tax implications on the investments and returns while choosing a scheme.

To sum up, know your investment goal, investment horizon, assess your risk profile and choose a scheme that aligns with your needs. All safe investments do not offer high returns. For generating higher returns, you should invest in market-linked investments. Ideally, you should aim to have a good mix of investments (market-linked and fixed income) in your portfolio to generate significant returns. The best of both worlds will help you achieve good returns.

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