Looking to Earn Fixed Income? Invest in these Top 6 Fixed-Income Securities for Stable Returns

Fixed-income securities offer peace of mind as they generate regular and guaranteed returns. Mostly, the interest offered remains fixed, and investors receive consistent payments regardless of market conditions. It must be noted that when organisations issue these securities, they create a liability, as they are obligated to pay back the principal amount and interest to investors.

Moreover, before the security matures, its final value is predetermined and even communicated to investors upfront. This predictability appeals to conservative investors who prefer low-risk options that generate secure returns. In this article, let’s check out the top 6 fixed-income securities you can invest in 2025 to achieve financial stability.

If you are looking for a safe investment option, you can consider fixed deposit. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.

• Fixed-income securities provide guaranteed returns and are suitable for conservative investors.
• Several fixed-income securities available in India are SCSS, FDs, PSU Bonds, ETFs, Debt Mutual Funds, and Post Office Savings Schemes.
• Many fixed-income securities even offer tax deductions under Section 80C with a maximum limit of Rs. 1,50,000.

The Senior Citizen Savings Scheme (SCSS) provides financial stability for people aged 60 and above. It offers a fixed interest rate (
currently 8.20% p.a.), which is determined by the Ministry of Finance. This scheme offers regular income by crediting interest quarterly in the bank accounts of beneficiaries.

After the latest changes announced in Budget 2023, the maximum investment limit under SCSS has been increased to Rs. 30,00,000 (from the previous limit of Rs. 15,00,000).

Moreover, the scheme comes with tax benefits under Section 80C up to a maximum limit of Rs. 1,50,000 per financial year. However, please note that only the principal amount qualifies for a tax deduction. Any interest earned will be taxed as per the applicable slab rates.

Fixed deposits are one of the most popular fixed-income securities in India. They allow investors to deposit money for a fixed period at a pre-determined interest rate. Usually, the tenures range from 7 days to 10 years, and the interest rate varies between 3% and 9%.

Premature withdrawals before maturity result in a penalty, which is generally a deduction of 1% from your original FD rate.

In India, fixed deposits are offered by several financial institutions, such as:

• Commercial banks
• Small finance banks
• Non-banking finance companies (NBFCs)
• Credit cooperative societies

These fixed-income securities are ideal for risk-averse investors who wish to earn guaranteed returns regularly.

You can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 8.85% p.a.

Public Sector Undertaking (PSU) bonds are fixed-income securities issued by government-owned companies. They are considered low-risk investments as they are backed by well-performing public sector organisations. It must be noted that PSU bonds offer attractive returns, which are often higher than bank fixed deposits.

Notably, you can invest in PSU bonds through two different methods. Firstly, in the primary market, investors can buy these bonds during their initial public offerings (IPOs) when they are first issued by the government or public sector companies. Secondly, in the secondary market, investors can buy existing bonds from other investors who already own them. Be aware that all the bonds you purchase are reflected in your Demat account.

Another option to generate fixed income is by investing in bond ETFs. These fixed-income securities invest in a wide range of debt securities (corporate bonds, government bonds, T-bills) to offer regular and fixed returns. By investing in a wide range of debt securities, bond ETFs strategically spread risk across different issuers and sectors. This reduces the impact of any single default or market fluctuation.

If we talk about redemption, investors can sell the shares in the open market and receive the principal amount they invested. ETFs are highly liquid and are traded on stock exchanges, just like stocks. You can sell or buy them anytime during market hours.

Debt mutual funds pool investors' money to invest in fixed-income securities like:

• Corporate bonds
• Government bonds
• Commercial papers
• PSU debentures
• Money market instruments

Again, they are a good option for risk-averse investors who are looking to earn higher returns compared to bank savings accounts or fixed deposits. It must be noted that debt funds carry a lower risk equity-based investments.

To encourage savings, even the Government of India offers several fixed-income securities that come with a sovereign guarantee. These investment options are offered through post offices.
Some popular savings schemes offered are: