Hey young investor,
So you finally decided to invest for your future, congrats!
Starting investment early is one of the best ways to secure your future in advance. If you are a young investor or you are looking for an investment with good returns with the least risk then you have come to the right place.
Pros of Choosing an Investment that typically carries less Risk
- Good for inevitable goals.
- Highly beneficial if you are keeping away some amount as an ‘emergency fund’
- Returns are not great but you will not lose your money.
- Perfect for newbie investors.
Investments like gold, silver are good investments with very less risk of loss. But still, you can not be confined to buying just gold and silver right? But it is also to be kept in mind that investment with less risk yields fewer returns, those returns are not 18% but they can be decent like 4% to 5%
Here is some other investments type that typically carries the least risk.
Investment types Typically Carry The Least Risk
Here is a list of investment that carries the least risk.
Bank Fixed Deposit (FD)
If we take the Indian population as a whole, FDs are very popular among us. Almost every household has a bank FD. The sole reason for investing in an FD rather than a savings account is that an FD gives a higher return percentage than a savings account.
FD also gives a slightly higher return percentage to senior citizens. The rate of Intrest depends on the factors like the term of investment, amount, residential status, etc.
Fd has a lock-in period which means that you will only be allowed to withdraw your deposits after a fixed time.
Though FDs are highly criticized by investors but still if you want to start investing FD is a better option than a savings account.
Pros of FD
- Assured returns that are predefined.
- Less risk and decent returns.
- You can withdraw partial money when needed.
National Pension Scheme (NPS)
NPS is a government-backed retirement scheme and is managed by PFRDA (pension fund regulatory and development authority).
If you have a non-government job in India you can still enjoy the benefits of pension on retirement and that is why this scheme is so good. There are various schemes available under NPS and they have different rates of interest, you can choose the one you like.
Pros of NPS
- Even employees of the non-government sector can enjoy the benefits of pension on retirement.
- It’s a government-backed scheme hence there is no chance of loss of wealth.
- You can manage your portfolio automatically or actively.
One of the most preferred investment instruments is gold. Indians love their yellow metal to the extent that its price remains at peak all the time obviously with little bumps.
The benefit of investing in gold is that you can have something physical in your hands either a piece of jewelry or a brick, it gives you a sense of ownership.
Today gold is not limited to just physical gold, you can even invest in gold bonds that you can buy for as low as Rs. 200.
Pros of Investing in Gold
- You can use this investment, you can wear your jewelry and then sell it off.
- It provides a hedge against inflation.
- The price of gold is inversely related to the stock market.
- The price of gold never experiences a significant fall.
If you still want to invest in companies you can go for their corporate bonds. They have relatively low risk, you can select bonds that mature in a few years as long-term bonds can change as they are sensitive to change in interest.
Corporate bonds are less risky than stocks themselves but they do have some risk, but still, they are a good low-risk option for investment.
Pros of Investing in Corporate Bonds
- Less risky than stocks.
- High-quality bonds from reputable companies contain risk.
If you are afraid that you will lose money on investing in the stock market directly you can go with mutual funds. The benefit of a mutual fund is that it diversifies your investment which results in a secure and risk-free investment.
Still, mutual funds invest directly in stocks which means that there are some risks involved, but it is better to take that small fraction of risk.
Pros of Investing in Mutual Funds
- High rate of interest.
- Can start investing from as low as Rs 500.
- Follows the principle of not putting all your eggs in one basket.
- Much secure when compared to stocks.
High Yield Savings Accounts
Saving accounts have bad reputations because of their less rate of interest, but still, they have very high liquidity, you need some cash now, you can get it from your nearest ATM.
Many saving accounts give good returns.
Now, saving accounts are not the best investment but it is better to keep your ‘emergency funds’ into your savings accounts because they will either grow or remain the same but they will never decrease.
Pros of High-Yield Saving Accounts
- Gets you cash when needed.
- Decent rate of return.
- Good for your emergency fund.
- If the amount remains untouched it can give decent returns.
So these were some of the best low-risk investment options.
Investing is a long process, and low-risk investments are great for your goals that are inevitable, lets’s say you plan to buy a house for your parents so you saved some money. Now you do not want to lose that money because of market trends, hence it’s wise to invest it somewhere safe where it will grow slowly but will not diminish.
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