The Government of India offers numerous schemes for low-risk investors. The small investors who are too apprehensive to make investment in stock-markets can choose the safe route of parking their money in government securities, PPF, gold bonds, among other options.
The following government schemes are considered safest investment options:
Public Provident Fund
It is the most preferred scheme for low-risk investors. Public Provident Fund is a long-term investment scheme with high-interest rates and attractive returns on the amount invested. The amount invested under PPF during a year is claimed under section 80C deductions.
G-secs are usually debt instruments issued by the government (both central and state). Investing in them gives the investor a regular interest income. The risk factor is negligible since the investment products are backed by the Government of India and also have high market ratings. As G-secs are auctioned, RBI uses their online platform Core Banking Solution (CBS) ‘E-Kuber’ for auctions.
Sovereign Gold Bonds
Gold has always been considered a good investment option, SGBs on the other hand are the bonds issued by the Government of India and act in accordance to the market fluctuations. They are floated in the market and allow the investor to keep a check on price movement, and give a fixed interest.
National Savings Certificate
National Savings Certificate is a long-term financial investment scheme by the Government of India which can be opened with any post office branch. The scheme encourages small to mid-investors who are low-risk takers and want to save their income tax. The risk in the scheme is extremely minimal as it is backed by the Government itself.
National Pension System
National Pension System is an investment cum pension scheme by the Government of India as a security for the citizens in their old-age. The scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA). The current interest rate is 8-10% on the investment made. The minimum investment required is INR 6,000 in a financial year which can be paid in installments as well.
Post Office Monthly Income Schemes
The scheme is another safe option offered by the post offices across the country. Post Office Monthly Income Scheme is a scheme where the investor invests and earns interest after every month. It’s a low-risk scheme that also ensures a steady income for the investor. The interest rate is 6.6% up till October and is payable every month. Once the scheme has reached its maturity, the investor can choose to either withdraw the whole amount or shift it to their Saving Account electronically.
Each of these investment schemes has its set of advantages and limitations, and should be embraced based on what benefits one is looking for. One must take an informed decision based on an interplay of various factors which include interest offered, lock-in period and risk involved.