There are plethora of investment options to choose from however it’s important to understand one’s risk profile before taking a decision. Return on an investment can vary depending upon the underlying asset class, more returns generally means more risk. The affinity and joy that making “safe investments” brings to Indians is unmatched. Take, for example, the fact that almost 95% of
Indian families invest heavily in FDs, while only 3% of Indians actively participate in the stock market trade.
This justifies why Indian investors are still risk-averse. Indians usually choose to invest in government-backed instruments because they are seen as safe investments.
Here are the top 6 safe investment classes as seen by Indians-
- Everyone’s beloved- Fixed Deposits
Fixed deposits (FDs) are among the safest forms of investment in India because there are so few instances of banks defaulting on FDs. Bank FDs offer an interest rate that is significantly greater than a standard bank savings account. The rate of interest varies depending on the length of the investment, the amount, the bank, and the resident status (NRI or not). There is a lock-in period for FDs. If you want to pull out of the investment during the lock-in period, the bank will fine you by taking out the interest you earned on it. Interest from FD’s is taxable hence net post tax returns are in range of 4-5% only.
- Public Provident Fund (PPF)
PPF is an investment program backed by the government. Because the government backs it, it is seen as one of the safest investments. Interest rate on PPF is 7.1% however it has a lock-in period of 15 years.
Don’t believe me, but Indian women alone hold 11% of global gold deposits. Dhanteras last year witnessed 15 tonnes of gold being sold, which was estimated to be a value of Rs. 7500 crore. Indians have a strong preference for the yellow metal. Gold jewelry, coins, and bars are all common forms of gold investments. You can also invest in gold by buying sovereign gold bonds and gold exchange-traded funds (ETFs). Returns on gold are not guaranteed and depends upon market performance.
The previous 8% savings bond was replaced with G-Sec GoI Savings Bonds. They were introduced in 2018. Investors receive annual interest at a rate of 7.75%, as the name implies. These bonds have a 7 year term, interest earned on these bonds is taxable as per income tax slab of individual.
- National Savings Certificate (NSC)
For cautious investors, the NSC is a fantastic choice because it offers guaranteed returns. There is no chance of default because the government is backing it. The NSC has a five-year term and pays 6.8% interest annually. Even though the interest is compounded every year, it is only paid to the investor upon maturity. Interest earned becomes taxable in 5
th year as per income tax slab of individual.
- Pre-owned Life Insurance Policies
Yes, you can invest in pre-owned life insurance policies. Average returns offered is in range of 7-12% with an average investment period of 3-10 years. Returns from pre-owned life insurance policies are completely tax free.
How can you invest in a pre-owned policy?
All you need to do is contact us at www.ThePolicyExchange.com and we will ensure a seamless, high return and tax free investment for you.
To know more, contact us now..
