In India, only 3.7% of the population invests in equities compared to 12.7% of the population in China. While investing does hold some risk, there are many low-risk investments available to investors in India.
Why Investing is Important
Before we look at the different investment options in India, let us understand the importance of investing. Many believe savings alone can help them be prepared for retirement. But a Standard Chartered report shows most savers are set to miss their retirement goals by 50%. This is because the rate of inflation is constantly increasing. So you need to find a passive source of income, which can help you earn money without working.
Also, investing can help you meet your financial goals. Additionally, some investments in India qualify for tax deductions.
What is the Safest Way to Invest?
Here are some low-risk investments that are considered safe to invest in:
- Fixed Deposit: A fixed deposit is considered one of the safest investments in India. It is like a savings account but gives you a higher rate of interest on your money. But it comes with a lock-in period, meaning you cannot withdraw money for a set period. If you do so, the bank will deduct charges.
- Provident Public Funds – This long term investment scheme aims to help people save for retirement. It provides a 7.1% interest rate on your savings. You can begin investing with just Rs. 500/year. It has a lock-in period of 15 years. Since the government backs the scheme, it is considered safe. You can also claim tax deductions for PPF investments.
- National Pension System – This is a government scheme to help people set up retirement funds and receive monthly pensions after retirement. It allows people to invest in many investment options like equities, bonds, and FD simultaneously. Since it involves equity investments, it has a higher risk factor. But as it affects other assets as well, some returns are guaranteed. It usually provides higher returns than FDs or PPFs.
- Government bonds – This allow you to loan money to the government for a short or long-term period. Their interest rates can vary from time to time, but you get a fixed interest rate once you invest. Investing in these bonds is considered safe and risk-free as you don’t risk losing out on your principal amount invested.
How Can I Get High Returns on Investments in India?
To ensure high returns on investments, you need to invest in high-risk investments.
1. Equity Market: Investing in stocks can help you grow your wealth faster as stocks usually provide the highest return on investments. The risk involved with investing in the stock market is high, though, especially if you want to invest for a short time. The market conditions can change, and you may end up losing your money.
2. Mutual Funds: Mutual funds allow you to invest in several investment vehicles like equity, bonds, liquid funds, much like the National Pension Scheme. But in NPS, you cannot support more than 50% of your investment amount in equities. Whereas in a mutual fund, you can choose to invest more in equities to ensure higher returns. This is often safer than investing directly in the stock market as you can balance high and low-risk investments.
3. Exchange Traded Funds: Like mutual funds, ETFs allow you to diversify investments. However, they are not actively managed like mutual funds and track a market index. Therefore, you generally have to pay a lower fee for investing.
What is the Easiest Way to Invest?
The easiest and safest way you can begin investing is by employing the services of a professional investment advisor. Nowadays, several online portals offer such services.
WealthDesk is one such platform that provides Portfolios called WealthBaskets that are curated by SEBI registered professionals by selecting a mix of equities and ETFs that will help you meet your financial goals. Your portfolio is closely monitored and can help you invest without worrying too much about the safety of your investment.ย
Conclusion
Investing can seem scary, but smart investing can help you build a better future for yourself. Several safe investment options in India can help you steadily grow your money. Therefore, you should assess your future requirements and begin investing as soon as possible. Remember that if you invest, you could lose some money, but you are losing out on a lot of money if you donโt.
FAQs
Investing comes with its own set of risks. The biggest risk with investing is that you will lose out on your principal amount. This risk is usually associated with high-risk investments like investing in the stock market.
It is better to start investing early as it will give you a long time to build your retirement fund and grow your savings. When you start investing early you can also afford to take higher risks as you have a long time to grow your investments. High-risk investments usually give you higher returns and help you save more money.
There are several low-risk and high-risk investments in India. The best investment option for you is the one that can help you meet your financial goals and, at the same time, satisfy your risk appetite. If you want to earn money fast and are not afraid of taking risks, you should consider high-risk investments. But if you are looking to grow money for retirement steadily and cannot afford to lose money, you should choose a low-risk investment.ย
