Some avenues for those who cannot afford to risk their corpus
Everyone tries to set aside some savings for future needs. These savings are built based on some factors of life. People invest savings in various investment instruments in order to protect their value from inflationary pressures. There are various types of investment instruments available in the market that can be segmented based on returns offered, lock-in period, risk etc.
An investor should select and invest in instruments based on his risk appetite and look at building a portfolio that covers various needs that may arise in the future.
These are some options that come with a low risk level:
Bank deposit
The basic features of a bank deposit are safety of the principal amount, easy liquidation of the deposit and accumulation of regular interest. The interest rates on bank fixed deposits are on the rise after the Reserve Bank of India's (RBI's) decision to tighten the monetary policy.
Those looking at parking their excess funds for a short term can use a savings bank account. Investments in saving bank accounts have become more attractive after the RBI's mandate to calculate interest on a daily account balance basis. Although, the interest accrued on bank deposits attract income tax, some tax planning can take care of it in most cases.
Analysts suggest a bank deposit should be the choice when it comes to safety and easy liquidation along with guaranteed returns.
Debt-based bond
Investments in liquid and debt-based mutual funds are also equivalent to bank deposits. These funds invest in risk-free government securities and top-rated corporate deposits. They offer slightly higher returns than bank deposits.
Investors looking at a regular income can select schemes under monthly income plans. Investors looking for long-term investment instruments should also consider taxsaving instruments such as provident funds (PF, PPF, VPF etc), NSC, infrastructure funds etc.
Gold
Investments in gold or gold-based instruments have been a haven for risk averse investors. Gold based instruments have yielded good returns in times of financial crisis. Some analysts believe the financial turbulence at the global level has more unpleasant surprises to come in the near future. As a result, the outlook for precious metals remains positive in the short to medium terms.
Investors can look at buying gold or silver coins. However, it is important that investors should buy from reliable outlets. Gold exchange-traded funds (ETFs) are like mutual funds. Their value depends on the price of gold. Usually, each unit of gold ETF represents one gram or half a gram of gold as the underlying asset. The units of gold ETFs are tradable in the markets and easy to maintain.
Combo schemes
There are many mixed schemes available in the market that provide the flavour of more than one investment class. For example, equity-linked insurance scheme, equity plus debt combo saving scheme etc. These schemes are a good way to balance investments. It is important to understand the various terms and conditions well before investing.
Property
Investors looking for a long-term investment option can go for a property. An investment in property earns a regular income in the form of rent, and gets capital appreciation. An investment in property is a low risk option. It is important for investors to complete their due diligence before investing in property.
