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12 Best Safe and low-risk investment options in India

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.

Here are 12 Best safe investment options in India. Some of these investments are also very tax effective.

KTDFC Fixed Deposits

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

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.

Remember the interest rate on Mahindra Finance will drop marginally to 8.80 per cent, when not invested online. So, one needs to carefully consider online investment only. A good safe investment to bet on.

 Monthly Income Scheme

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)

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

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.

A Look at Senior Citizen Savings Scheme from ICICI Bank

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.

Sukanya Samriddhi Account

Sukanya Samriddhi Account

Sukanya Samriddhi Account is only for girl child to encourage education.

This account can be opened at post offices and commercial banks. There are several advantages of placing money in the Sukanya Samriddhi Account. The first and the foremost is that you get tax benefits under Sec 80C of the Income Tax Act. The second is that you build a corpus for the girl child. If you are a long term investor, this is a great bet.

The only worry is that the scheme has a very long term holding tenure, which is very high. The rate of interest on the scheme is currently 8.5 per cent per annum. Again, like most other post office schemes the interest rate on this scheme varies and is changed on a quarterly basis. Though the govt. at its discretion can keep rates unchanged as in Q1 of FY 2018-19.

Do study the lock-in and other aspects before investing. The interest earned is tax free in the hands of the investor.

Tax Saving Fixed deposits

Tax Saving Fixed deposits

Investing in tax saving fixed deposits will provide tax benefits under Section 80C of the Income Tax Act.

You can deduct the invested amount from your taxable income, thus it will reduce your tax liability.

However, TDS is applicable on the interest income if it exceeds Rs 10,000 in a financial year.

Make sure you update the PAN in your account or else 20 per cent TDS is applicable instead of 10 per cent. The interest rates vary from 6 to 7.5% per cent and recently banks like SBI are increasing the interest rates on the instrument. Currently SBI 5-year tax saving fixed deposit fetches 6.75%. DCB offers the highest interest rate of 7.2% on such deposits.

Select company deposits

Select company deposits

The government of Kerala owned KTDFC, offers an interest rate of 8.50 per cent for three years. However, one will have to courier the form to one of the branches in Kerala. The deposits are guaranteed by the government of Kerala and offer one of the best interest rates in the country. These KTDFC deposits are one of the safest investment options for Indians currently.

Company deposits are also safe, if you invest in the AAA rated deposits. For example, some deposits like Bajaj Finance and Mahindra Finance are AAA rated and offer good scope for earning higher interest rates than bank deposits.

Most of these can offer you up to 1 per cent higher interest rate. However, we suggest that while these are good safe long term investments, there is an element of risk as well, as the nature of these deposits (unsecured) make them unsafe.



You can also consider what we call fixed maturity plans, which generally have a tenure of below 1 year. These are mutual fund units that are considered safe, as the amount is invested in safe AAA rated instruments. If you are looking for safe and best investments, this should not be a bad idea.

Look to invest for say at least a period of 1 year. It is only then that you could see some benefits in terms of profits. These are short term kind of instruments that can be considered as relatively safe. So, go for it. Remember, that these are not tax free investments and are hence fully taxable in the hands of the investor. So, to that extent your returns are greatly reduced.

Post office recurring deposits

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.

Schemes of debt mutual funds

Schemes of debt mutual funds

One can also consider investment in select safe debt mutual fund schemes. These would offer you good investment opportunities for the more medium to long term perspective.

Debt mutual fund park their money in safe government bonds, debentures, commercial paper etc., which naturally makes them very safe.

However, there can always be an element of risk as well, which you should not ignore altogether. In the past in one particular debt fund, there has been a default risk for a corporate instrument. So, it is not always that you get the best possible result from a debt mutual fund though they are considered as safe.

Opt for the GILT Funds, which offer security and safety, as the money is invested in safe sovereign government owned securities. However, returns will largely be in line with other interest rates in the economy.

Sovereign Gold Bonds (SGBs)

Sovereign Gold Bonds (SGBs)

In times of uncertainty, any investment in gold is deemed as a safe haven, so the yellow-metal is a must have in an investor’s portfolio. SGBs are nothing but an alternative to holding physical gold which are backed by the government of India. These securities are denominated in units of gold (grams).

The bond is issued by the RBI on behalf of the GoI. Investors to secure these SGBs need to pay the issue price upfront. An option to invest in these government-backed securities online is also available with a discount of Rs. 50. Investors at the time of maturity can redeem the bonds in cash.

Thus apart from the likely capital appreciation that can accrue to the SGB holder due to increase in market price of gold at the time of maturity or premature redemption, investors in SGBs will also be eligible for periodic interest payment @ 2.5% p.a payable semi-annually.

Also, these securities unlike physical gold do not entail any storage costs or risks being held in demat form. Other concerns such as purity of gold and making charges are also done away with investing in SGBs as against physical gold.

Retail investors are allowed to invest a maximum of 4 kg in a financial year (from April to March); each of the security or SGB is available in a denomination of 1 gm. While trusts and similar entities notified from time to time by the government are allowed a maximum subscription of 20 kgs.

Nonetheless, you cannot ignore the risk of capital loss if the market price of gold declines.

FDs of TN Power Finance

FDs of TN Power Finance

This is another safe investment options, for those who are looking at timely payment of interest and principal amount.

The cumulative deposits offer an interest rate of upto 8.25 per cent for a tenure of 36, 48 and 50 months.

Senior citizens on the other hand for the same tenure are offered an interest rate of 8.75 per cent, which is not bad at all, considering a trend of declining interest rates that we are now witnessing. Remember the tax liability that would emerge on these deposits. A good long-term bet.

Small Finance Banks

Small Finance Banks

Among the other safe investment options, also include the FDs of small finance banks. These small finance banks like Suryoday, Ujjivan etc., can give you interest rates ranging from 8 per cent to 9 per cent.

These interest rates are pretty decent, when compared to interest rates that banks offer their customers.

These banks are also safe, as they come under the guidelines of the RBI. Go for them, if you wish to get higher interest rates.

You need to compare these banks against the nationalized banks, though the interest rates are much better. One can check the latest interest rates before applying.

Jana Small Finance Bank offers you an interest rate of 9 per cent for three years. Senior citizens are entitled to an interest rate of 9.60 per cent. The yield on these deposits can reach as high as 11.36 per cent, depending on the category of investors you are. The deposits are relatively safe, given that Jana Small Finance Bank like other banks, comes under the ambit of the Reserve Bank of India. Of course these deposits are fully taxable.

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