Get Protection + Monthly Income after Retirement

Top Three Safest Investment Options

Dec 27, 2019 | 3 months ago | Read Time: 3 minutes | By iKnowledge Team
Top Three Safest Investment Options

In everything that we undertake, there are varying degrees of risk. While some endeavours shoulder a high amount of risk, there are some things that carry lower risk compared to others. Investments also carry risk as we know and different types of financial investments have varying degrees of risk associated with them. The risk of losing our capital and our money is what we fear when we invest our money. When we look for investment opportunities, we obviously look for avenues where we have a guaranteed return and our capital is also safe.

Let us look at the three low risk investment options where we can invest our money.

Fixed Deposits

Karvy Private Wealth’s report reveals [1] that when it comes to financial assets, Indians have invested the most in fixed deposits especially those of banks.

What are the safety features of fixed deposits?

FDs offer a guaranteed rate of interest. Interest pay-outs can be monthly, quarterly, annually or we can get the capital plus all the accumulated interest at the end of the tenure of the deposit. The interest rate once fixed does not change during the period of the holding of the instrument by the depositor. If we have invested in a three-year fixed deposit and it promises us an interest rate of 8%, then for three years we are assured of the same rate, even if the interest rate in the economy goes down.

Fixed deposits of both corporates and banks are generally assumed to be safe, unless the bank or the company goes bust. There is always the risk of credit default (inability to repay the money taken). However, if we have invested in the fixed deposits of large, well-known companies with a good track record, that risk is reduced. Similar is the case with banks, especially those owned by the government, where it reduces even further.

Fixed deposits however are good for the short and medium term. What about investing for the long term?

 Public Provident Fund

One of the safest long-term investments options where we can invest is the Public Provident Fund, a savings scheme administered by the government.

What makes this safe is that it has sovereign guarantee and since it is run by the government, we can be assured that we will be getting what has been promised.

The PPF has an initial tenure of 15 years after which we can either get back the money invested plus the interest accumulated over the years or we can extend it for a further period of five years. What makes this scheme more attractive is that it is tax-exempt at all levels –the investments we make in the scheme periodically are eligible for tax deduction from our income. The interest we get is tax exempt and so is the amount we get at maturity. An added level of security is that PPF is one investment that the government or courts or any other entity cannot attach even if we are declared bankrupt and must meet our financial obligations. Now what could be safer than that?

Unlike with fixed deposits, interest rates on the PPF are not fixed for the entire tenure of the scheme. In the last couple of years, the government has started pegging the interest paid on the PPF to the prevailing interest rate in the economy (revised quarterly), but in general it is higher than what the economy rate is, and higher than the inflation rate, so there is a positive real rate of return.

There is a facility of taking a loan from the PPF, and the interest charged is very low (around 2%), certainly lower than what any other financial institution charges. From the 7th year onwards, one can make partial withdrawals, and this is also tax-exempt.

Insurance

Experts rank life insurance as among the safe investment options available to us. Provided we have made regular premium contribution according to the terms of the policy, we do get the sum assured at the time of maturity or on death, according to the prescribed terms.

Since life insurance companies, especially in India, are closely monitored by the regulator on solvency (ability to repay its liabilities) and other financial parameters, so far, they have honoured their commitments. The only time that life insurance companies may not pay up is in case they suspect foul play in the death of the life insured. Life insurance especially plays an important role as a safety net in case of the untimely death of the policy holder, and in providing for the dependents.

We pay for protection and that protection is assured. To know about Aegon Life Insurance products like term insurance and other products, visit our home page.

Citations

[1] http://www.karvywealth.com/india-wealth-report-2016?Site=Karvywealth.com&Campaign=Karvy_Brand_Search&Adgroup=Karvy&Keyword=Karvy&Creativeid=600×291


PRODUCTS

iTerm Plan

Life Insurance Plan with 3 Options to Choose from

  • Life Protect (Life cover till age 100 years)
  • Protect Plus (5% Automatic Increase of life cover)
  • Dual Protect (Protection + Regular Income)
iTerm Plus Plan

Life Insurance Plan with 4 Options to Choose from

  • Life Plan
  • Life Plus Plan
  • Life & Health Plan (10 Critical Illnesses covered)
  • Life & Health Plus Plan (36 Critical Illnesses covered)
iInvest Plan

iInvest Plan with 3 Options to Choose from

  • Increases Your Investment
  • Boost Your Fund Value
  • Withdraw Your Investment
Prev
What Is A Policy Lapse and How Do You Fix It?
Next
Why do the markets track RBI rates? Understanding the impact
Secure Your Liabilities Now. Calculate your Premium!
Gender
Do You Smoke?

Date of Birth

Your Monthly Premium for Aegon Life iTerm Insurance Plan

RELATED ARTICLES