8 Best Low Risk Investments for your Portfolio
During the current economic turndown, a lot of investors are looking for low-risk investments for their portfolios. The most popular low-risk investment with the promise of a secured retired life is PPF. With the help of a reliable PPF return calculator, you can always predict your gains at the end of the term. In this article, we will provide eight best low-risk investments for your portfolio.
- High-Interest Saving Account
Saving bank accounts that provide higher interest rates always come first when coming to low-risk investments. In developed countries like the United States, the banks offer very low-interest rates. But, in a developing country like India, many banks offer a decent interest rate on savings accounts.
- Bank Fixed Deposits
In India, many banks offer good returns on fixed deposits. Even in the current economic slowdown also, some banks are providing FD returns up to 7.25%. Bank fixed deposits are one of the safest and low-risk forms of investments.
- Money Market Fund
Money market funds are one of the less risky assets when compared to others like
equity or gold. These are mutual funds that invest in diversified CS, short-terms bonds and other low-risk asset classes. The main objective of these funds is capital protection and liquidity.
- Certificate of Deposits (CD)
Certificate of deposit is similar to a fixed deposit, but the only difference is that the CD cannot be withdrawn before the maturity period. Since CDs cannot be withdrawn before the maturity period without penalty, banks prioritise a certificate of deposits and offer high-interest rates. In India, most banks offer CDs to an amount of Rs. 1 lakh or above.
- Treasury Bills
T-bills or treasury bills are one of the short term investments which governments offer. The Indian government offers three types of T-bills which have short term durations of 91, 182 and 364 days. T-bills offer capital protection and belong to a low-risk class.
- Corporate Bonds
Various companies issue corporate bonds. These are low-risk investments.
But the risk of investment depends on the type of bonds in which you invest. Generally, the corporate bonds which blue-chip companies issue are less risk when compared to smaller companies. The high-risk bonds are called “junk bonds”. They have high chances of capital default.
- Gold in the form of SGB
Many of us buy gold in physical form, which is not effective for investment purposes. The Government of India offers sovereign gold bonds(SGB); using this SGB one can invest in gold and store it in demat form. The main advantages of SGB are they offer an extra 2.5% per annum other than the gold price in the form of dividend; these bonds can act as a surety for taking loans. The major drawback is it comes with a lock-in period of 8 years.
- PPF (Public Provident Fund)
PPF is not only safe, but also it provides higher returns when compared to the other options. Historically, PPF offered around 7.5 to 8%, which is better than corporate bonds and treasury bills. But the only issue with PPF is that they come with lock-in periods. The significant advantage is the investments under PPF are accepted under section 80C.
Using ppf calculators shall help you make an informed decision about getting the best value of your hard-earned money.