Investing is a key to safeguard your financial future. No longer can you rely on interest earned on savings account to meet the future expenses. Especially for salaried individuals it is very essential to invest money regularly because of uncertainty in the job market coupled with the rising inflation.
Whether the amount is small or large, regular investment for a long term is the best recommended solution to generate sufficient corpus that can take care of your daily needs during the retirement period or other future expenses such as child’s marriage, higher education, medical expenses, and others.
In this article we will consider investing Rs. 500 every month (i.e. Rs. 6, 000 annually) and the estimated returns. Such investments are best recommended for conservative investors who do not want to take risk with their hard earned money.
There are many options where an individual can put their money giving 100% assured returns i.e. zero risk products. The only drawback of such investment is that the returns are small. Safety of money is of high importance.
Instruments falling under zero risk category are – public provident fund (PPF), bank fixed deposit (FD), Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC), and few others.
Here’s the table showing the returns (post maturity) after investing Rs. 500 every month i.e. Rs. 6, 000 (yearly):
|Investment Product||Interest Rate||Standard Tenure (In Years)||Invested Amount (In Rs.)||Expected Return/Maturity Amount (In Rs.)|
|Sukanya Samriddhi Yojana||8.3%||14||84, 000||2, 71, 061|
|Bank Fixed Deposit||10.25%||10||60, 000||1, 98,096|
|Tax Saving FD||6.9%||5||30, 000||40, 350|
|Public Provident Fund||8.1%||15||90, 000||1, 77,484|
|National Savings Certificate||8.4%||5||6, 000||9, 053|
|Recurring Deposit||6.5%||10||60, 000||84, 494|
|Senior Citizen Savings Scheme (SCSS)||8.6%||5||30, 000||42, 900|
As you can see above, Sukanya Samriddhi Yojana (SSY) is the best investment option especially when you have a girl child. You need to invest only for 14 years and the returns are very significant. Read more on SSY here.
The tenure for few products is varying and its upto the investor to decide for what period investment should be done. For e.g. bank fixed deposit can be opened for minimum 7 days and each bank offers different interest rate, interest rate on government run schemes such as PPF & SSY keep on changing periodically, recurring deposit can be done for 1 year as well and so on. But as mentioned above, long term investment in low risk products will only provide higher return. Although the returns are less compared to high risk high return products.
Also, the interest rates for the above listed risk-free investments keep on changing and also vary with each entity.
There are other products for no risk taking investors such as gold, silver, diamond, tax-free bonds but the investment amount required is significant. But the ones listed above are the highly recommended and used by the low income investors.