What are safe investments?
Safe investments are one in which the element of risk is almost zero. Safe investments are good for those who are retired and would not like to take risk. There are many individuals who also do not have the ability to take risk, which is why they opt for some of the best safe investments in India.
KTDFC Fixed Deposits
These deposits are safe as they are backed by the government of Kerala. You can earn an interest of as much as 8.50 per cent for duration of 1, 2 and 3 years.
Senior citizens are entitled to an interest rate of 8.75 per cent per annum, which is not bad at all. One problem right now for KTDFC is that investors may have to courier their forms as the company is not dealing through brokers.
It has various branches in Kerala where you could dispatch your forms. The deposits are very safe as they are backed by the government of Kerala. The interest is the best that one can presently get.
A thing to note is that interest rates are headed higher, hence, it would be sensible not to put money for long tenures.
Mahindra Finance FDS
These FDs are safe and also offer a very high interest rate. The FD offers an interest rate of 9 per cent per annum, if you apply online. This is over a tenure of 33 and 40 months.
The 15-month deposit fetches you an interest rate that is much lower.
This is not bad at all considering a falling interest rate regime that we are currently living in.
One can also look at some of the safe small finance banks, where you can get interest rates that are as high as 9.50 per cent. These too are safe and sound instruments to invest in. They were recently given a license by the Reserve Bank of India.
Monthly Income Scheme
Post office monthly income scheme is for individuals who are risk averse and look for safe investment option with decent returns.
Unlike the Public Provident Fund, the income from the instrument is fully taxable. So, your actual returns from the scheme turns out to be low. At the same time, the investment does not attracts TDS.
Presently, the Post Office Monthly Income Plan gives you an interest rate of upto 7.8 per cent, which is not bad at all. This is one of the best and the safest investment option in India, since it is guaranteed by the government of India.
Again, the interest changes every quarter as the government revises the interest rates based on the benchmark 10-year bond yield.
Public Provident Fund (PPF)
Public Provident Fund (PPF) is one of the favorite instrument of a salaried individual.
PPF offers many advantages. The first is that the interest income is not taxable. The second is that there is tax benefits under Sec 80C of the Income Tax Act. It is a good way to save for your retirement.
The interest rate on this has now increased to 8 per cent per annum from nearly 7.6 per cent a few months ago. However, if you are a long term investor, there is nothing to worry.
For the ongoing quarter the govt. has kept the rates unchanged for PPF investment. This is one of the best safe saving instruments in India since it allows you to build a corpus as well for retirement. The biggest hazard with the PPF right now is that there is a lock-in period and one cannot withdraw the funds. Premature withdrawal to a maximum of 50% of the accumulated amount is allowed in case of emergencies by the fifth year of investment.
The only worry is that interest rates on these funds keep changing as the government keeps revising the interest rates every quarter.
Senior Citizen Savings Scheme
The Indian government has taken several measures in various sectors for the benefits of the Senior Citizens.
The Senior Citizens Savings Scheme is one such effort.
The interest rate is decided by the government and will be set every quarter. The interest rates have now risen to 8.7 per cent, from nearly 8.4 per cent a few months ago.
The scheme can be opened in post office as well as banks such as ICICI, SBI etc. As suggested by the name, it is important to note that this investment is only meant for senior citizens in the country.
This is overall a good scheme, but one would have expected that the returns would not be taxable, given the fact that these are meant for senior citizens. However, there are no tax benefits here. There is a TDS that would be applicable on these deposits. The one problem right now for the Senior Citizens Scheme is that the government will keep monitoring and changing the interest rates at regular intervals.
Post office recurring deposits
If you are looking at a safe investment option, you should also consider the post office recurring deposit. The interest rates have dropped recently, but, this is a great option for investors looking at building a corpus for the long term. The one disadvantage that is worth mentioning is that these deposits are very much taxable in the hands of the investors. However, there are relatively safe, if you have a long term perspective in mind. We suggest that you invest for at least 5 years, so as to lock interest rates at higher levels. this is a great option for the salaried class.Currently the PO RD fetches 7.3% interest rate per annum for a tenure of 5 years.