As cost of living indices continue to rise consistently, it is important to start looking for sustainable investment avenues that ensure assured returns with low risk. With increasing market volatility, it is important to create a diversified investment portfolio that ensures higher returns with lower risks.
While there are several investment avenues that provide higher returns with lower risk, you can invest as per your goals, and look for options with lower risk of capital.
municipal bond is a debt instrument issued by urban local bodies that promises to repay a fixed principal amount with interest periodically, which may be paid at fixed intervals or at the end of the tenor, with the principal. Investing in such municipal bonds is generally very safe, since the likelihood of municipality bankruptcy is very low.
Certificate of Deposit
You can get a Certificate of Deposit from commercial banks and some financial institutions. However, you would need to deposit a minimum amount of Rs. 1 lakh for a set period of time and receive guaranteed returns in exchange. A Certificate of Deposit ensures you get a fixed interest rate for that time period regardless of interest rates. However, you have to pay a penalty if you wish to retrieve your funds ahead of time.
The government guarantees that you will not suffer a loss, while the financial institution offers additional interest. This is determined by the length of your Certificate of Deposit and current interest rates.
These instruments offer short-term investment opportunities, usually up to 1 year. The Government of India offers three types of treasury bills through auctions—91-day, 182-day, and 364-day. The minimum amount for investment is Rs. 25,000, and the amount increases in multiples of Rs. 25, 000. They are associated with zero risk because of issuance by the government, and you can opt for one electronically from the Negotiated Dealing System (NDS).
These are one of the safest investments to make, and provide a respectable rate of return if you compare them with most other low-risk investments. Investing in fixed deposit from well-reputed financiers provides additional advantages, like flexibility, periodic interest payouts, high stability and credibility.