Diwali is considered to be the most auspicious time for making money. People invest, buy properties, trade in equities and engage in financial transactions around Diwali. For people who are aggressive investors, investment in equities is a top bet. However, for risk-averse investors, fixed income instruments – which guarantee a specific rate of return – are ideal, say experts. Investment in fixed deposits (FDs), public provident fund (PPF), recurring deposit, national savings certificates (NSC), and Kisan Vikas Patra (KVP) may be considered by investors looking to make safe returns.
Here are five investment ideas that guarantee safe returns
Fixed deposits (FDs): FDs are secure instruments that guarantee pre-determined returns. FD interest rates are decided on the basis of the tenor of the instrument. Leading banks like State Bank of India (SBI), HDFC Bank, ICICI Bank and private lenders such as Yes Bank and Kotak Mahindra Bank offer FDs. Usually small finance banks offer higher returns on FDs than larger peers. FD accounts can also be opened in post offices.
Public Provident Fund (PPF): PPF is a long-term investment scheme which comes under the exempt, exempt, exempt (EEE) status. This means that returns are exempt from tax, the maturity amount is tax-free and the main investment qualifies for a deduction under section 80C of the Income Tax Act. Investors can invest a maximum of Rs. 1,50,000 for a maturity period of 15 years. For the quarter ending December, PPF investments will fetch an annual return of 8 per cent. PPF accounts can be opened d in banks and post offices.
Recurring Deposits (RDs): Instead of depositing a lump sum amount, RDs require periodic investments. RDs help customers build on their savings in small, regular pay-outs. RDs do not offer any income tax benefit. RD accounts can be opened in banks as well as in post offices.
National Savings Certificates (NSCs): NSC certificates, which mature in five years, can be purchased from post offices. Interest rates on NSCs are fixed at 8 per cent per annum for the quarter ending December. For example, if you a purchase an NSC certificate of Rs. 100, it grows into Rs. 146.93 after five years. NSC deposits qualify for deduction under Section 80 C of the Income Tax Act.
Kisan Vikas Patra (KVPs): KVP certificates, which mature in 2.5 years, can be purchased from post offices. For the quarter ending December, KVP certificates are offering a return of 7.7 per cent per annum. At this rate, the amount invested doubles in 112 months (nine years and four months), says India Post.