Best Investment Options For Low-Risk Investors In India

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Investment returns largely depend on the risk bearing capacity of investors as returns and risk are inversely related. Returns on any investment also vary with the tenure of the instruments.

Individuals who are keen to protect their capital irrespective of returns should go for low-risk instruments where the returns can be low but your capital will be safe. Unlike investing in short term equities and mutual funds where there is no guarantee of the capital invested.

Investors who have already invested in risky assets and looking to invest some amount in safe instruments, here is the list.

Fixed Deposit

Bank fixed deposits are one of the safe instruments as it is protected by insurance up to an amount of Rs 1 lakh per branch.

The fixed deposit can fetch you a return of 7-8 per cent depending on the tenure and bank.

Individuals who can bear little risk can consider investing in company fixed deposits where the returns and risk will be higher compared to bank fixed deposits.

However, AAA rated deposits from companies are very safe.


Public Provident Fund or PPF as we call it, is one of the popular financial instruments in the country with a decent returns along with tax benefits, which makes it an attractive instrument.

Individuals can invest up to Rs 1.5 lakh to avail tax benefits under sec 80C of Income Tax Act. The interest rate will be fixed every quarter by the government. Importantly, the interest is totally exempted from tax in India. 


A National Savings Certificate known as NSC are issued at the post offices. These are highly secure instruments along with tax benefits under Section 80C of the Income Tax Act.

Investors should note that interest earned on the NSC is taxable but TDS will not be applicable. So, while you get SEC 80C benefits, unlike PPF, the interest is fully taxable.

Tax-Free Bonds

Tax-free bonds are issued by government-owned institutions and offers a coupon rate of between 7-8.05 per cent and the interest earned are tax-free.

Individuals who missed to buy these bonds during launch can buy the same from the secondary market.

These bonds are listed on the BSE and NSE and can be purchased from the same. However, they are not very liquid.

Post office savings scheme

Post Office Monthly Income scheme can be opened by any individuals with a minimum amount of Rs 1500. The interest rate is applicable at 7.80% per annum payable monthly.

A maximum investment which can be made in the account is Rs 4.5 lakhs in a single account and Rs 9 lakhs in a joint account. It is also important to note that the interest income earned is fully taxable.

The interest is fixed by the government and keeps changing from time to time.

Tax Saving Fixed Deposit

Individuals in the high tax bracket should go for tax saving fixed deposit available with banks. Note that the interest earned on tax savings fixed deposit are taxable, though you get tax benefits under Sec 80C of the Income Tax Act.

When filing tax returns, invested amount can be deducted from your taxable income, thus reducing your tax liability.

Debt mutual funds

Debt mutual funds are considered as safe as funds invest their money in different debt instruments such as corporate bonds, government securities, fixed deposits of banks, money market instruments etc. However, returns are not guaranteed.

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