In India, fixed-income investment options come with guaranteed returns, safety and liquidity. It's important for investors to consider that the intention of fixed income investing is not only to optimise returns. The COVID-19 pandemic has infected the economy, backed by a wave of lockdowns. This has affected commercials, household, employees, etc. Therefore, investors want to invest in secure and fixed income investment options during this pandemic stage across India. And by keeping this in mind we have categorised 7 best investment options that not only provide guaranteed returns but also ensure the safety of capital.
1. Bank Fixed Deposits
Bank FDs reflect the most common investment opportunity in our country for risk-averse investors. Fixed deposit is a stable savings opportunity with income tax deductions that promises consistent interest rates, higher interest rates for senior citizens, different interest payment options and no market-related risks. Before opening a new fixed deposit or renewing an existing one it is necessary to compare the latest fixed deposit rates across leading banks in the country. The tenure of the fixed deposits may range from 7 days to 10 years and the interest rate currently starts from 3.30% to 7.75% which varies from bank to bank and is compounded quarterly.
2. Public Provident Fund
PPF is among the best investment in the fixed income category as the returns are not related to market risks. PPF offers guaranteed returns as it is backed by the government of India. PPF has a tenure of 15 years and can be extended further for another five years. It facilitates premature withdrawals under certain conditions, after five years of account opening date. A PPF account can only be opened by an Indian resident and the investor is also eligible for tax deduction under Section 80C. Currently, PPF is fetching an interest rate of 7.1 per cent p.a and the interest rate is updated every quarter by the government.
3. RBI Floating Rate Savings Bonds
This investment option is currently fetching an interest rate of 7.15% for the period of July 1 to December 31. The tenure period is 7 years and after six months the interest rate on RBI Floating Rate Savings Bond will be modified. Interest on the RBI Floating Rate Savings Bond is completely taxable, and tax is exempted while interest payments on bonds are made periodically. One can invest in RBI Floating Rate Savings Bonds for a minimum of Rs.1000 with no upper limit and also a senior citizen can reap premature withdrawal facility.
4. Sukanya Samriddhi Accounts
This scheme is backed by the government of India, especially for a girl child. Parents can open an account on behalf of their girl child up to the age of 10 years only from the date of the birth. Currently, Sukanya Samriddhi Account provides a 7.6 per cent p.a. interest rate, calculated on an annual basis, compounded annually. One can open make deposits up to 15 years from the date of opening the account and also can take advantage of partial withdrawal facility once the girl child reaches the age of 18. Sukanya Samriddhi qualifies for tax deduction up to a limit of 1.50 lakh under Section 80C of the IT Act and interest earned on the maturity is completely tax-free.
5. Senior Citizen Savings Scheme
An individual of age 60 years or more is eligible to invest in SCSS. One can make deposits up to 15 lakhs and earn interest at the rate of 7.4 % per annum at present. An investor can open an account under SCSS individually or jointly with his spouse. The maturity tenure of the scheme is 5 years and further can be extended for three years. The interest is payable on a quarterly basis on 1st working day of April, July, October and January.
6. National Savings Certificates
NSCs are widely known for the security and safety of capital. Under NSCs the interest rate is compounded annually and paid after the maturity. Currently, NSCs is fetching an interest rate of 6.8 per cent and also the deposits made on NSCs are eligible for tax deduction under Section 80C of IT Act. However, the interest for the first four years is reinvested, the interest earned in the fifth year is taxable according to the latest tax slab. And one can also purchase certificates on behalf of a minor above 10 years of age.
7. Post Office National Savings Monthly Income Account
POMIS comes with a maturity tenure of 5 years and a single holder can invest up to a maximum of Rs,4.5 lakh. In case of joint account holders the maximum investment threshold of Rs,9 lakhs. POMIS provides an interest rate payable monthly of 6.6 per cent. This scheme also comes with a nomination facility and one can transfer his / her account from one post office to another across the country.