Best Investment Options for Fixed Returns

Nutan Gupta

23 Jan 2017

The financial needs and priorities of every individual are different. Also, the risk taking ability of every individual differs. Some individuals might have a higher risk appetite, while some may not be willing to take any risk at all. For individuals who have a low risk appetite, fixed return products suit them the best.

Here are some of the smart investment options for fixed returns:

Investment Options for Fixed returns

Fixed Deposits

Fixed deposits are offered by banks at attractive interest rates. FDs are offered to investors for a period as low as 7 days up to 20 years. Fixed deposits offer higher returns than a savings bank account. At present, FDs are giving a return of 6-6.75%. The returns vary from one bank to another.

Bonds

Bonds are loans which an individual makes to the government and large organisations. The government and companies issue bonds in order to raise money. The principal amount along with the interest is given back to the investor at a future date as per the agreement between the two parties. A lot of people are under the wrong impression that one cannot sell bonds until maturity. However, one can buy and sell bonds in the open market. At present, bonds are giving an interest rate of 7-7.5%.

Public Provident Fund

Public Provident Fund (PPF) is a type of investment which is provided by the Government of India. PPF comes with a lock-in period of 15 years. The rate of return provided on PPF changes as per government policies. At present, PPF is providing a return of 8.1%. Amount invested in PPF is also eligible for a tax deduction under section 80C of the Income Tax Act.

National Savings Certificate

NSC are bonds issued by the government for small savings and one can purchase these bonds from post offices. The interest rate on NSC is decided by the government every year. It is linked to the yield of 10-year government bonds. The current interest rate is 8%. The lock-in period for NSC is 5 years.

Have Referral Code?

  • Responses
  • Patidar Samaj

    - 2 hrs ago

    This article claims RJio was given a "Backdoor Entry" into the 4G Based Voice Routing. The peculiar aspect is without the Voice License, Rjio would have been a mere ISP. With the license, it is now a holistic communications service provider, with ability to exponentially scale the bouquet of products. The events indicate it was meticulously planned way before the auctions because the auctions were clear on the agenda: 4G for internet only.

Load More
mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


Banner

Best Investment Options for Fixed Returns

Nutan Gupta

23 Jan 2017

The financial needs and priorities of every individual are different. Also, the risk taking ability of every individual differs. Some individuals might have a higher risk appetite, while some may not be willing to take any risk at all. For individuals who have a low risk appetite, fixed return products suit them the best.

Here are some of the smart investment options for fixed returns:

Investment Options for Fixed returns

Fixed Deposits

Fixed deposits are offered by banks at attractive interest rates. FDs are offered to investors for a period as low as 7 days up to 20 years. Fixed deposits offer higher returns than a savings bank account. At present, FDs are giving a return of 6-6.75%. The returns vary from one bank to another.

Bonds

Bonds are loans which an individual makes to the government and large organisations. The government and companies issue bonds in order to raise money. The principal amount along with the interest is given back to the investor at a future date as per the agreement between the two parties. A lot of people are under the wrong impression that one cannot sell bonds until maturity. However, one can buy and sell bonds in the open market. At present, bonds are giving an interest rate of 7-7.5%.

Public Provident Fund

Public Provident Fund (PPF) is a type of investment which is provided by the Government of India. PPF comes with a lock-in period of 15 years. The rate of return provided on PPF changes as per government policies. At present, PPF is providing a return of 8.1%. Amount invested in PPF is also eligible for a tax deduction under section 80C of the Income Tax Act.

National Savings Certificate

NSC are bonds issued by the government for small savings and one can purchase these bonds from post offices. The interest rate on NSC is decided by the government every year. It is linked to the yield of 10-year government bonds. The current interest rate is 8%. The lock-in period for NSC is 5 years.

Have Referral Code?