Best Investment Plans with Low but Guaranteed Returns
Achieving financial security is an important goal in every individual’s life. However, most people focus on saving for a rainy day and building a safety net for a stable future. Although such an objective proves to be beneficial, it overlooks the essence of growth and wealth creation. Investing these savings to earn steady returns is important.
While considering investments, the primary avenues in the minds of most people include stock markets and equities. Although the returns in such products are high, these financial instruments entail high risk. Several individuals avoid investing in these instruments as they prefer safer methods to create wealth.
Investing in stable investment instruments with low returns may be for the short-term or long-term. Short-term goals with an investment horizon of two to five years focus on protecting the investment. Any returns on these products are incidental. Long-term objectives usually ranging from 10 to 20 years focus on wealth creation while beating inflationary increase.
Low-risk investment instruments include stable wealth-creating products like bonds and mutual funds. In most cases, such instruments are safeguarded from market fluctuations. Although returns are lower, capital is protected in most of these products. Here are five of the best investment options that offer low but guaranteed returns.
1. Fixed deposits (FDs)
FDs are offered by banks and are time-based instruments. The returns on the FDs are higher than a regular savings account. These investment products mature after a pre-specified duration. Investors are not allowed to liquidate the FDs before their maturity dates. Sometimes FDs may be prematurely liquidated; however, investors would need to forego their returns or may have to incur a penalty. The return on FDs is taxable as per the tax bracket of the investors. Banks provide FDs for as less as 7 days up to 10 years. Interest rates vary from one bank to another based on the duration.
2. Mutual funds (MFs)
Certain mutual funds offer stable and low returns. Investors may also find some MFs providing guaranteed returns. These include monthly plans that offer regular and tax-free dividends. Another option is a systematic withdrawal plan that allows investors to sell a certain number of MF units at periodic intervals.
3. Government bonds
One of the best investment plans with guaranteed returns is government bonds. These securities are backed by the government and provide a fixed rate of interest. Compared to FDs, government bonds are more liquid because some of these instruments are traded on secondary markets.
4. Endowment insurance plans
Endowment plans are offered by insurance companies. These plans combine the benefits of an insurance policy with modified savings scheme. The endowment plans offer a lump sum amount on maturity or on the demise of the insured. Investors may opt for the duration of 10, 15, or 20 years. Some of these plans offer assured payouts against the sum insured at certain critical situations of life. Furthermore, insurance companies may declare an annual bonus, thereby offering low but steady returns.
5. Post office schemes
Individuals may choose from different types of post office schemes. These instruments have different tenures, interest rates, and tax benefits. The risk-free nature and security of such a scheme make it the best investment plan with low but guaranteed returns. Most of these instruments are suitable for long-term investment and do not entail huge returns. Post office schemes include term deposits, Kisan Vikas Patra (KVP), National Savings Certificate (NSC), Monthly Income Scheme (MIS), and Public Provident Fund (PPF).
All investments have certain inherent risks. However, some investments are more stable but provide lower returns. Individuals who do not want to risk their capital investment must opt for these guaranteed low return products. However, investors must understand the different financial products and opt for investing in instruments that suit their personal financial objectives.