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An investment is an economic activity acquired with the goal of generating a future economy. It is very important to invest your money so that the funds can be used in the future, for child education, marriage, or any medical emergency. There are various investment options like mutual funds, investment in real estate, shares, gold, fixed deposits, bonds, commercial papers, etc.

The top five safest investment options in India are:

1. Bank Fixed Deposit/
Recurring deposits

Bank FDs are one of the safest investment options in India. A fixed deposit is a type of deposit in which a sum of money is locked for a fixed period of time. Bank FDs offer a higher rate of interest than a regular savings bank account. The tenure of a fixed deposit can be from a few days to years. Investments in 5-year tax-saving FDs are covered under Section 80C of the Income Tax Act, 1961. However, FDs offer a slightly higher rate of interest for senior citizens. If one wishes to withdraw within the lock-in period, then the bank would levy penalties in the form of deducting interest accrued on the investment. Fixed Deposit provides fixed assured income in form of interest; it is easy to open with flexible tenure as per choice. No TDS is deducted if the interest income is 10,000. So it provides comfort to small deposit holders. It is relatively easy to liquidate FDs. The bank offers a loan against a fixed deposit. However, the disadvantage of fixed deposit is a low rate of interest penalties on breaking before tenure

A recurring deposit is an alternative to FDs. Under RDs, individuals invest a fixed sum on regular basis. A certain amount is deducted monthly. Like FDs, RDs too offer a much higher rate of interest than a regular savings bank account.

2. Public Provident Fund

PPF is a government-backed investment option. PPF has a lock-in period of 15 years. It is one of the safest investment options. It offers a much higher rate of interest as compared to regular saving accounts or fixed deposits.

Some advantages of a PPF account are:

  1. Tax benefits can be availed under section 80c.
  2. It is risk-free investment, backed by Central Government
  3. It offers a higher rate of interest as compared to a savings account. the current rate of interest is 7.10%.
  4. A loan facility can be availed between the 3rd to 6th financial year.

The disadvantages of PPF account;

  1. It cannot be opened by HUF.
  2. It cannot be easily liquidated.
  3. It has a big lock-in period of 15 years
  4. There is a capping of Rs 1.5 lakh per annum on deposit of the amount in a PPF account.

3. Gold

GOLD investment is a traditional method of investing money. Indians are very fond of the yellow metal or gold. Traditionally people use to invest in gold for future marriage or any occasion. Gold investment can be done in form of golden jewellery, coins, bars, or sovereign gold bonds. The investment in gold doesn’t provide the interest but its price changes as per inflation. It is easily liquid-able but difficult to store. Bank offers loans against gold. However one should prefer to invest in other options also. Investing whole savings in a single investment option is not a good decision.

4. National Pension scheme

NPS is one of the safest investment options as it is a government-backed retirement scheme. It is very important to invest for the future and meet future financial needs. The scheme is managed by the Pension Fund Regulatory and Development Authority. The NPS investment is eligible for deduction under section 80c. It provides a higher rate of interest. However, NPS restricts the withdrawals before the investor reaches the age of 60 years.

5. Equity-linked Saving Scheme

ELSS is the only equity-linked and mutual fund scheme that is covered under Section 80C of the Income Tax Act, 1961. ELSS has the lowest lock-in period (3 years). ELSS offers the highest rate of returns and hence, it is one of the most popular investment options in India. It provides the twin benefit of tax deductions and wealth growth. Investing in ELSS has moderate risk.

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